HomeNewsBriefHonduras Closes Bank as Elite Money Laundering Case Hits Savers
BRIEF

Honduras Closes Bank as Elite Money Laundering Case Hits Savers

CACHIROS / 13 OCT 2015 BY MICHAEL LOHMULLER EN

One of Honduras’ biggest banks is to be liquidated as a result of the money laundering investigation into the powerful Rosenthal family, raising concerns over due process and how the scandal could affect ordinary Hondurans.

On October 11, Honduras’ banking regulator the National Commission of Banks and Securities (CNBS) ordered the closure of Banco Continental — Honduras’ eighth largest bank — following the revelation bank owner Jaime Rosenthal had been indicted in the United States on money laundering charges, reported EFE. Officials said the bank will remain closed until October 14 and will eventually undergo a “forced liquidation.” 

The news sparked alarm among Banco Continental’s more than 220,000 clients, who Honduran President Juan Orlando Hernandez assured could begin withdrawing around $9,000 of their deposits starting October 14.

The move also raised concerns over the future of the other companies that are part of the Rosenthals’ umbrella company, Grupo Continental, which has around 11,000 employees, according to the AP. Mario Solis, manager of Seguros Continental, the Rosenthals’ insurance company, called the bank’s liquidation a “financial tsunami” for Honduras, adding that it raises uncertainty over questions such as the future of company employees.

The US indictment that initiated the action also named Jaime Rosenthal’s son Yani, his nephew Yankel, who was arrested in Miami on October 6, and a company lawyer. In addition, the US Treasury Department named the three Rosenthals as “Specially Designated Narcotics Traffickers.”

US prosecutors allege the Rosenthals used their network of businesses, including the bank, to launder money for Central American drug traffickers. This includes the Cachiros, whose members were designated in 2013 by the US Treasury Department and have been linked to Mexico’s Sinaloa Cartel.

InSight Crime Analysis

Honduran authorities’ sudden decision to liquidate Banco Continental raises several concerns.

First is a question of due process. The indicted Rosenthals have not yet faced a judge, much less been tried and convicted of the money laundering charges for which they are accused. Additionally, despite the US indictment, Honduras’ attorney general has no existing investigations into the Rosenthals for either money laundering or drug trafficking. Nonetheless, the family is being ruined financially.

SEE ALSO: Coverage of Elites and Organized Crime

Next is a concern over the effects the bank’s liquidation will have on ordinary Hondurans, particularly employees of the Rosenthals’ business empire. By closing down the family’s financial arm, it is possible thousands of people will lose their jobs, potentially pushing the newly unemployed into more informal — or even criminal — means of earning a living.

Such an occurrence is not without precedent in Honduras. For instance, following the seizure of properties of the Valle Valle clan — another powerful Honduran family implicated in drug trafficking — hundreds of employees found their livelihoods had disappeared and marched in protest, demanding the government guarantee their future employment.

Ultimately, Honduran authorities need to be taking steps to tackle corruption and crime — within due process — but the deep intertwining of elites and organized crime in the country means removing the former from the picture may produce a damaging trickle down effect on average citizens.

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