Lloyds TSB Faces money laundering charges

WASHINGTON, DC - US prosecutors have charged Lloyds TSB and the Bank of Cyprus with money laundering offences. The two banks face fines of $130 million and $162 million respectively from the US Attorney's office if found guilty of knowingly assisting Lycourgos Kyprianou, chairman of software company AremisSoft, after his indictment on fraud charges.

US prosecutors claim a letter sent from Lloyds TSB's Geneva branch to an auditor in March 2001 confirming holdings of almost $10 million in AremisSoft's account was one of dozens of false letters that helped Kyprianou steal around $500 million through Lloyds TSB accounts from the US-listed software company's shareholders between June 2000 and January 2004. Although AremisSoft did not hold a Lloyds TSB account, the false letter helped Kyprianou evade suspicion for months. He held the money in his own account under an alias. Prosecutors also allege that Lloyds TSB continued to conduct transactions with Kyprianou after his 2002 indictment by a federal grand jury.

Last year Lloyds TSB successfully defended a lawsuit launched by AremisSoft's trustees, when a New York judge ruled that a Swiss court ought to hear the compliant. It is likely the bank will use the same argument to defend against the new claim. Kyprianou resides in Cyprus, and remains a fugitive from justice in the US, having failed to return to face the charges against him.