The Office of the Commissioner of Financial Institutions of Puerto Rico issued an emergency cease-and-desist order and immediately revoked Banex International Bank’s international financial entity license after concluding that the institution was insolvent. A concurrent order appointed Driven, P.S.C. as receiver and directed Banex’s liquidation and dissolution. Banex may no longer accept deposits, service correspondent banking relationships, execute transfers or dispose of assets except as authorized by the receiver. The regulator found that more than USD 24 million recorded in an in-transit account could not be located, traced or confirmed, while more than USD 18 million in receivables was owed by Banex’s sole shareholder and entities he controls. An independent monitor also found that reported capital had been funded with depositors’ money and identified inaccurate regulatory reports, manufactured assets and weak accounting controls. As of June 30, Banex reported USD 10.2 million in cash and cash equivalents, including USD 2.9 million in frozen funds, against USD 46.9 million payable to depositors. The order initiates an adjudicative proceeding in which Banex may challenge the cease-and-desist measures and license revocation. The regulator also proposed USD 534,000 in administrative fines for capital, reporting, related-party and consent order violations, with certain daily fines continuing to accrue. The fines will become payable only if imposed in a final order, while the receivership and liquidation are governed separately.

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