Judge Dismisses Puerto Rican Bank's Bid to Retain Fed Access

A U.S. judge dismissed Banco San Juan Internacional's lawsuit against the Federal Reserve Bank of New York after its access to the U.S. central banking system was revoked over links to Venezuela. The bank claimed rights to a 'master account' but the court ruled in favor of the Fed's discretion to close accounts.

In a significant ruling, a U.S. judge has dismissed Banco San Juan Internacional's lawsuit challenging its cutoff from the Federal Reserve Bank of New York's system, citing concerns over the bank's links to Venezuela.

U.S. District Judge John Koeltl emphasized that the Federal Reserve Act allows the New York Fed the discretion to close 'master accounts,' in which case, BSJI's due process rights were not infringed. The decision pointed to the bank's compliance issues as justifying the account's closure.

While BSJI has until January 27 to amend its complaint, lawyer Kelly Librera criticized the Fed's move as undermining state regulators. The bank industry in Puerto Rico has longstanding ties with Venezuela, underpinning this sensitive case.

(With inputs from agencies.)