Peter Schiff Finally Sees Puerto Rico Allow Euro Pacific Bank Liquidation
Euro Pacific Bank (EPB) owner Peter Schiff and Puerto Rico’s Office of the Commissioner of Financial Institutions (OCIF) have reached an agreement on the liquidation plan for the bank. The decision comes two months after the territory’s regulators issued a cease-and-desist order against the bank based on inadequate capital levels and compliance controls.
This follows the earlier agreement reached in August 2022 between the two parties to close down the bank and devise a plan to return all of the customers’ deposits.
“EPB arranged to transfer all customer deposits, cash, and physical precious metals, as well as ownership of the bank’s four wholly owned subsidiaries, to Qenta, a U.S. based global financial services and technology company,” the bank said in a statement.
The bank customers are being given the option to get their deposits back through wire transfer to an alternative financial institution of their choosing.
But it’s been a long road for the bank and its owner from two months ago. Schiff has maintained that OCIF made a mistake when it ordered the halt of the banks operations instead of allowing the sale of the financial institution, “to a highly qualified buyer promising to inject capital far in excess of regulatory minimums.” Instead, the Puerto Rico authorities chose to close the bank for capital issues, “despite no evidence of crimes,” according to the bank’s sole shareholder.
The recent decision comes in as a vindication for the bank owner who wanted to liquidate EPB from the start–even via bitcoin despite him being a bitcoin skeptic. Instead, the sale was blocked with Schiff citing OCIF’s contention on him still owning 4% post-transaction as the reason.
“They never let me know they objected,” Schiff said in a tweet back in July. “Had they ever told the 4% stake was a problem I would have restructured the deal. I just wanted out.”
It seems Schiff was so pleased with the agreement, he tweeted about it twice.
But this doesn’t mean that Schiff is pushing through without registering the treatment he and his bank received from the Puerto Rico regulators. His camp maintains that while the liquidation agreement is a nod in the right direction, it is happening despite no official charges on wrongdoing were handed down to cause the bank to close.
“The IRS agent at the June 30, 2022 press conference in Puerto Rico, at times, inferred the criminal conduct of money laundering and tax evasion by EPB. However, he did not announce that EPB, any employee or Mr. Schiff, the sole shareholder, were charged with any crime despite an apparently extensive 2+ year investigation,” Schiff’s legal counsel Lanny J. Davis said.
The lawyer is also not letting go of the interrupted sale two months ago, noting his wonderment of “why Schiff’s proposal to OCIF for Qenta to purchase EPB several months before at a fair market price was rejected.” This comes as a contradictory point when the recent agreement reached included Qenta purchasing EPB assets and customer deposits “out of receivership at a fire sale price—but to take all operations, jobs, and benefits out of Puerto Rico.”
In essence, for Schiff’s camp, the bank closure and liquidation is still much ado about nothing since “despite claims to the contrary, and the bank being put into receivership, the bank always had enough cash and cash equivalent reserves to cover all deposits.”
“Depositors were always safe with their money in EPB… Plus, the bank made no loans, so EPB had sufficient capital to operate,” Schiff maintained.
Nevertheless, it would still take time for the bank customers to get their deposits back, and Schiff is working on returning it all “as promised.”
On OCIF’s part, the regulators believe it is acting to protect the interest of the bank’s customers, claiming that “Euro Pacific has a long history of noncompliance.”
“We will not allow or tolerate any financial entity with a license issued by the government of Puerto Rico to operate outside the law or ignore the clear mandates of applicable laws and regulations,” Commissioner Natalia Zequeira Díaz said in a statement back in July.
The Puerto Rican move to stop the bank’s operations is said to be part of the larger investigation launched by the Joint Chiefs of Global Tax Enforcement in 2018 as a response to the leaked Panama Papers. The so-called “J5” is composed of tax regulators from the United States, Australia, Britain, Canada, and the Netherlands.
One of the key investigations by the task force was focused on EPB as a suspected vehicle for tax evasion and money laundering.
But now, after the agreement was reached, Davis pointed out that when asked if EPB helped its customers launder money or evade taxes, the Commissioner replied by saying that it is “a conclusion that has not been made.”
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