Bank liquidation on money laundering charges creates uncertainty in Honduran

October 11 Honduras’ banking regulator said it will take control of Banco Continental and force its liquidation after the lender was accused by USA authorities of laundering the proceeds of drug money for more than a decade.

Banco Continental SA, headquartered in San Pedro Sula, was sanctioned under the Foreign Narcotics Kingpin Designation Act in connection with a major money laundering case brought in federal court in the Southern District of New York.

The United States 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. One of Honduras’ most powerful businessmen, Jaime Rosenthal, said Sunday that his family will honor all of its financial commitments, especially those of their Banco Continental. Clients and employees had lined up for days over the weekend in hopes of making withdrawals.

Hernández promised the approximately 11,000 employees of Grupo Continental, the Rosenthals’ umbrella company, they would be paid. The U.S. Justice Department accuses the Rosenthals and others connected to their sprawling Grupo Contintental company of laundering money for Central American drug traffickers and their criminal organizations.

Officials have emphasized that the bank is not being liquidated for lack of funds, though the freezing of its accounts in the United States did cut its access to about $20 million of its funds, leaving it slightly below the threshold of the percentage of its deposits it must hold in cash.

Banco Continental, the communique added, proposed that the CNBS accept “the voluntary liquidation of the bank” because the “prohibition” on other financial institutions negotiating with the bank “makes it impossible to operate”.

Evasio Asencio, who the Honduran government designated to liquidate the bank, said doors would open on Wednesday. “You can’t say that a bank has capital and cancel it this fast”.