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  • Latest conviction in Venezuelan oil company bribery case

    Financial Crimes

    On July 16, 2018, a dual U.S.-Venezuelan citizen pleaded guilty to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering. The citizen’s convictions relate to allegations that he bribed officials at Venezuela’s state-owned oil company and laundered money for bribes to other company employees. FCPA Scorecard provided earlier coverage of this case here.

    The citizen admitted to soliciting and directing bribes from two U.S. citizens in exchange for securing payment priority for their companies from the oil company and for awards of the company's contracts. The citizen also admitted to conspiring with these individuals to launder and conceal the proceeds of the scheme through a series of financial transactions, including wire transfers to offshore accounts. Sentencing is scheduled for September 24.

    His conviction underscores how wide investigations can become as the DOJ continues pulling threads and obtaining guilty pleas. The DOJ has charged 15 defendants in the company's cases, 12 of whom have pleaded guilty to date, including the citizen. The DOJ also credited the assistance of the Swiss Federal Office of Justice and the Spanish Guardia Civil.

    Financial Crimes DOJ FCPA Anti-Money Laundering Bribery

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  • FinCEN director comments on cooperative efforts to freeze assets belonging to transnational criminal organization

    Financial Crimes

    On July 14, FinCEN Director Kenneth A. Blanco issued a statement regarding recent actions taken by Argentina’s Unidad de Informaciὀn Financiera de la República Argentina (UIF-AR) to freeze assets belonging to Clan Bakarat, a transnational criminal organization with ties to Hezbollah leadership. According to Director Blanco, FinCEN’s cooperative efforts with UIF-AR led to the action against Clan Barakat, which is currently listed with the Treasury Department’s Office of Foreign Assets Control as a Specially Designated Global Terrorist for its suspected involvement with money laundering and terrorist financing among other things.

    Financial Crimes FinCEN International OFAC Department of Treasury Anti-Money Laundering

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  • Federal Reserve issues enforcement actions against New York branch of Pakistani bank, former bank employee

    Federal Issues

    On July 12, the Federal Reserve Board released an enforcement action taken against a Pakistani bank’s New York branch concerning deficiencies in the branch’s Bank Secrecy Act/anti-money laundering (BSA/AML) compliance program. Under the terms of the written agreement, the branch is required to (i) submit a written governance plan to strengthen the board of director’s oversight of BSA/AML compliance; (ii) retain an independent third party to conduct a BSA/AML compliance review; (iii) submit a revised, written compliance program that complies with BSA/AML requirements; (iii) submit an enhanced, written customer due diligence program plan; and (iv) submit a revised program to ensure compliant suspicious activity monitoring and reporting. On a parallel basis, the Federal Reserve terminated an enforcement action taken against the branch in 2013.

    The Federal Reserve also issued a separate enforcement action against a former bank employee for engaging in unsafe or unsound banking practices by concealing an unreconciled balance using improper accounting practices. The consent order of prohibition prohibits the former employee from, among other things, participating in any manner in the conduct of the affairs of any insured depository institution, holding company, or subsidiary of an insured depository institution.

    Federal Issues Federal Reserve Enforcement Bank Secrecy Act Anti-Money Laundering Bank Compliance

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  • DOJ announces task force on market integrity and consumer fraud

    Federal Issues

    On July 11, the Deputy Attorney General, Rod Rosenstein, announced the establishment of a new task force on market integrity and consumer fraud pursuant to an Executive Order (EO) issued by President Trump on the same day. The task force, led by Rosenstein, will provide guidance for the investigation and prosecution of cases involving fraud on the government, financial markets, and consumers. The announcement lists a wide range of fraudulent activities, including (i) cyber-fraud; (ii) fraud targeting older Americans and service members; (iii) securities and commodities fraud; and (iv) corporate fraud affecting the general public, such as money laundering and other financial crimes. Rosenstein emphasized that the task force will work to achieve “more effective and efficient outcomes” to identify and stop fraud “on a wider scale than any one agency acting alone.”

    While the EO requests senior officials from numerous federal agencies be invited by the DOJ to participate in the task force, Rosenstein was joined by acting Director of the CFPB, Mick Mulvaney; Chairman of the SEC, Jay Clayton; and Chairman of the FTC, Joe Simons in the announcement. Mulvaney stated, “[t]he Bureau takes its mandate to enforce the law seriously, and the Bureau will continue to apply the law to achieve this end of combatting fraud against Americans…. This task force is an example of the growing cooperation of the Bureau’s work with other federal and state authorities to combat a multitude of bad actors out there today.”

    Federal Issues Fraud Consumer Finance Anti-Money Laundering Financial Crimes DOJ SEC FTC CFPB

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  • OCC issues updates to Comptroller’s Handbook

    Federal Issues

    On June 28, the OCC issued Bulletin 2018-18, which revises and updates certain booklets of the Comptroller’s Handbook. Among other things, the revisions and updates (i) clarify the applicability of each booklet to community, midsize, and large banks: (ii) incorporate Uniform Interagency Consumer Compliance Rating System revisions; (iii) provide asset management and Bank Secrecy Act/Anti-Money Laundering/Office of Foreign Assets Control risk assessment examiner guidance to ensure consistency with the Federal Financial Institutions Examination Council BSA/AML Examination Manual’s appendixes J and M; (iv) incorporate relevant aspects of the Dodd-Frank Act; (v) clarify the roles of banks’ boards of directors and management; and (vi) “include revised concepts and references regarding third-party risk management; new, modified, or expanded bank products or services; and corporate and risk governance.” The revised booklets are: Bank Supervision Process, Community Bank Supervision, Compliance Management Systems, Federal Branches and Agencies Supervision, and Large Bank Supervision.

    Federal Issues OCC Comptroller's Handbook Bank Secrecy Act Anti-Money Laundering Dodd-Frank Third-Party OFAC

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  • Native American tribes to forfeit $3 million in profits made from payday lending scheme

    Federal Issues

    On June 26, the Department of Justice (DOJ) filed two forfeiture complaints, which cover agreements with two Native American tribes to forfeit a combined $3 million in profits made from their involvement in an allegedly fraudulent payday lending scheme (see here and here). As previously covered by InfoBytes, in October 2016, the FTC required a Kansas-based operation and its owner to pay more than $1.3 billion for allegedly violating Section 5(a) of the FTC Act by making false and misleading representations about costs and payment of the loans. The business owner and his attorney were subsequently found guilty in October 2017 of operating a criminal payday loan empire. As part of the agreements, the two tribes admit that representatives filed affidavits containing false statements in the legal actions against the payday loan scheme. If the tribes comply with agreement requirements, the DOJ will not pursue criminal action for the specified violations.

    In February, multiple federal agencies entered into a $613 million deferred prosecution agreement over Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance program deficiencies with a national bank, which included allegations that the bank was on notice of the owner’s use of the bank to launder proceeds from his fraudulent payday lending scheme. (Previously covered by InfoBytes here.)

    Federal Issues DOJ Payday Lending FTC Consumer Finance Bank Secrecy Act Anti-Money Laundering FTC Act

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  • House Financial Services Committee examines implications of “de-risking”

    Federal Issues

    On June 26, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit held a hearing titled, “Examining the International and Domestic Implications of De-Risking,” which examined financial institutions terminating “high risk” relationships to minimize compliance exposure. The press release notes that high-risk entities can also include legitimate businesses such as firearms sellers and payday lenders. Subcommittee Chairman, Blaine Luetkemeyer (R-MO), stated that the termination of these relationships has “resulted in the elimination of consumer and small business access to financial products and services, a decrease in the availability of money remittances, and reduced flow of humanitarian aid globally.” Agreeing with the Chairman, many witnesses emphasized the impact de-risking has on the international financial system, including access to banking in the U.S. southwest border region and in the Caribbean and Central America. While recognizing the importance of anti-money laundering regulations and financial sanctions policies, the witnesses encouraged Congress to consider opportunities to ensure equal access to the financial system for legitimate businesses.

    Federal Issues House Financial Services Committee Anti-Money Laundering Financial Crimes Sanctions

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  • Aruban telecom official sentenced for money laundering conspiracy involving FCPA violations

    Financial Crimes

    On June 27, Judge Frederico Moreno of the United States District Court of the Southern District of Florida sentenced an Aruban telecom official to 36 months in prison following his guilty plea for money laundering charges in connection with a scheme to arrange and receive corrupt payments to influence the awarding of contracts in Aruba. According to the DOJ’s press release, the official, between 2005 and 2016, used his position as the company’s product manager to influence the awarding of lucrative mobile phone and accessory contracts with the Aruban state-owned telecommunications company. He also admitted to providing favored vendors with confidential company information in exchange for more than $1.3 million in corrupt payments. The official was ordered to pay over $1.3 million in restitution and to serve three years of supervised release following his prison term.

    Previous Scorecard coverage of this matter can be found here.

    Financial Crimes DOJ Anti-Money Laundering FCPA

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  • Comptroller Otting discusses regulatory priorities during congressional testimonies

    Federal Issues

    On June 13 and 14, Comptroller of Currency Joseph Otting appeared before the House Financial Services Committee and the Senate Committee on Banking, Housing, and Urban Affairs to discuss his priorities as Comptroller. As highlighted in the identical press releases for both House and Senate hearings, Otting testified about the OCC’s achievements and efforts since being sworn in as Comptroller in November 2017. Among other things, Otting discussed the agency’s efforts to (i) modernize the Community Reinvestment Act (CRA); (ii) promote compliance with the Bank Secrecy Act and anti-money laundering regulations (BSA/AML); and (iii) simplify the Volcker Rule, particularly for small and mid-size banks. Otting emphasized in his written testimony that his priority is to reduce the regulatory burden on financial institutions, specifying that the CRA requirements have become "too complex, outdated, cumbersome, and subjective." To that end, Otting stated that the OCC, in coordination with other federal agencies, is preparing an advance notice of proposed rulemaking to gather information on potential CRA updates, which, in Otting’s view, should include (i) expanding the types of activities that are eligible for CRA credit; (ii) changing assessment areas so they are not based solely on where the bank has a physical presence; and (iii) providing clearer metrics. As for BSA/AML, Otting noted this was his “number two issue” behind reforming the CRA and the working group—the OCC, FinCEN, the FDIC, the Federal Reserve, and NCUA— will likely address key issues like de-risking and improvement of transparency over the next three to six months. Otting noted his pleasure with the Volcker Rule changes in the Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155/ P.L. 115-174) but cautioned that fine-tuning may be necessary as the OCC proceeds with implementation.

    Federal Issues OCC Bank Supervision Compliance Volcker Rule CRA Bank Secrecy Act Anti-Money Laundering

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  • OCC releases recent enforcement actions, issues $12.5 million penalty for BSA/AML compliance deficiencies

    Federal Issues

    On June 15, the OCC released a list of recent enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with such entities. The new enforcement actions include cease and desist orders, civil money penalty orders, and removal/prohibition orders. The consent order described below was among those in the OCC’s list:

    On April 14, the OCC issued a consent order and $12.5 million civil money penalty order against a New York-branch of an international bank for alleged deficiencies in the branch’s BSA/AML compliance program.  The alleged deficiencies included the failure to file timely Suspicious Activity Reports (SARs) as well as deficiencies in the branch’s compliance with Office of Foreign Asset Control (OFAC) requirements. Among other things, the consent order requires the branch to (i) develop and implement an ongoing BSA/AML and OFAC risk assessment program; (ii) adopt an independent audit program to conduct a review of the bank’s BSA/AML compliance program; and (iii) ensure the branch has a permanent and experienced BSA officer. The bank has neither admitted nor denied the OCC’s findings. 

    Federal Issues OCC Enforcement Bank Secrecy Act Anti-Money Laundering SARs OFAC

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