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  • DOJ Files Suit to Seize $144 Million in Laundered Nigerian Oil Bribes

    Financial Crimes

    The U.S. Department of Justice announced Friday, July 14, that prosecutors filed a civil complaint seeking to seize $144 million in assets that were allegedly the proceeds of corruption in Nigeria and were laundered in and through the U.S. According to the complaint, from 2011 to 2015, two Nigerian businessmen bribed Nigeria’s former Minister for Petroleum Resources, who oversaw Nigeria’s state-owned oil company. In return, the former Minister steered lucrative oil contracts to companies owned by the businessmen. The proceeds were then allegedly used to purchase assets subject to seizure and forfeiture, including a $50 million New York City condominium and an $80 million yacht.

    “The United States is not a safe haven for the proceeds of corruption,” said Acting Assistant Attorney General Blanco. “The complaint announced today demonstrates the Department’s commitment to working with our law enforcement partners around the globe to trace and recover the proceeds of corruption, no matter the source. Corrupt foreign officials and business executives should make no mistake: if illicit funds are within the reach of the United States, we will seek to forfeit them and to return them to the victims from whom they were stolen.”

    The suit was part of the Kleptocracy Asset Recovery Initiative.

    Financial Crimes DOJ Anti-Money Laundering Corruption Nigeria

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  • OCC Releases Spring 2017 Semiannual Risk Report

    Agency Rule-Making & Guidance

    On July 7, the Office of the Comptroller of the Currency (OCC) announced the release of its Semiannual Risk Perspective for Spring 2017 indicating key risk areas for national banks and federal savings associations. Acting Comptroller of the Currency Keith Noreika pointed out in his remarks that, “[w]hile these are risks that the system faces as a whole, we note that the risks differ from bank to bank based on size, region, and business model. Compliance, governance, and operational risk issues remain leading risk issues for large banks while strategic, credit, and compliance risks remain the leading issues for midsize and community banks.”

    The report details the four top risk areas:

    • Elevated strategic risk—banks are expanding into new products and services as a result of fintech competition. According to the report, this competition is increasing potential risks. The OCC hopes to finish developing a special purpose banking charter for fintech companies soon.
    • Increased compliance risk—banks must comply with anti-money laundering rules and the Bank Secrecy Act in addition to addressing increased cybersecurity challenges and new consumer protection laws.
    • Upswing in credit risk—underwriting standards for commercial and retail loans have been relaxed as banks exhibit greater enthusiasm for risk and attempt to maintain loan market share as competition increases.
    • Rise in operational risk—banks face increasingly complex cyber threats while relying on third-party service providers, which may be targets for hackers.

    The report used data for the 12 months ending December 31, 2016.

    Agency Rule-Making & Guidance OCC Risk Management Consumer Finance Payments Consumer Lending Privacy/Cyber Risk & Data Security Anti-Money Laundering Military Lending Act Compliance Bank Regulatory

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  • Florida Adds Virtual Currency to Anti-Money Laundering Law


    On June 23, Florida Governor Rick Scott signed H.B. 1379, which will incorporate virtual currency into the Florida Money Laundering Act. Specifically, the Bill adds virtual currency to the list of currency and negotiable instruments classified as “monetary instruments” under the Act. In addition, virtual currency will be included in the definitions section as a “medium of exchange in electronic or digital format that is not a coin or currency of the United States or any other country.” The law goes into effect on July 1.

    Fintech State Issues State Legislation Bitcoin Anti-Money Laundering Virtual Currency

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  • Former Swiss Bank Executive Pleads Guilty in FIFA Investigation

    Financial Crimes

    On June 15, the U.S. Attorney’s Office for the Eastern District of New York announced that a citizen of Argentina and a former managing director of a Swiss Bank pleaded guilty to money laundering conspiracy charges. His guilty plea came in connection with allegations that he facilitated the payment of more than $25 million in bribes to soccer officials by opening and managing bank accounts for those officials. In exchange for his assistance in facilitating these bribes, the former managing director received over $1 million in bonus payments from other co-conspirators, an amount he agreed to forfeit in connection with his plea. 

    The guilty plea came as part of the U.S. government’s investigation into corruption in international soccer which has been ongoing since May 2015. Previous FCPA Scorecard coverage of the FIFA investigation can be found here.

    Financial Crimes Anti-Money Laundering Bribery FIFA

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  • Filipino National Sentenced for Running $9 Million Cybercrime Ring

    Financial Crimes

    On June 8, a U.S. District Court Judge sentenced a Filipino national to over five years in prison and two years of supervised release after pleading guilty to conspiracy to commit bank fraud last year. The defendant operated a $9 million international cybercrime operation that utilized stolen credit and debit accounts to process unauthorized financial transactions, according to an investigation led by the District of New Jersey U.S. Attorney’s Office. To obtain credit and debit card account information, the defendant engaged in computer hacking and ATM skimming, whereby millions of dollars were “monetized” through a “global network of ‘cashers’” who encoded the data onto counterfeit cards and then used the cards to withdraw money and make purchases.

    Financial Crimes Privacy/Cyber Risk & Data Security Litigation Credit Cards Debit Cards Anti-Money Laundering Fraud ATM

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  • Charges Filed by SEC Allege Bank Secrecy Act Violations

    Financial Crimes

    On June 5, the SEC filed charges against a U.S. brokerage firm (firm) for failure to comply with suspicious activity reports (SARs) filing requirements, in violation of the Bank Secrecy Act (BSA), the Exchange Act Section 17(a), and Rule 17a-8. The complaint, filed in the U.S. District Court for the Southern District of New York, alleges that although the firm had a BSA Compliance Program, the program did not accurately reflect what the firm did in practice. More specifically, the SEC alleges thousands of violations including failure to file SARs, failure to file SARs within the required 30 days after the date the suspicious activity was detected, and filing incomplete SARs that did not include the requisite narratives describing what is “unusual, irregular, or suspicious” about the transaction. According to the SEC press release, “by failing to file SARs, [the firm] deprived regulators and law enforcement of critically important information often related to trades in microcap securities used to investigate potentially serious misconduct.”

    The SEC requested relief in the form of permanent injunctions and monetary penalties and interest.

    Financial Crimes Anti-Money Laundering SEC SARs Litigation Bank Secrecy Act Securities

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  • Treasury Audit Report Analyzes Responses to Threats by Office of Terrorist Financing and Financial Crimes

    Agency Rule-Making & Guidance

    On May 23, the Treasury Department’s Office of Inspector General issued an audit report presenting the results of its study into how, and to what extent, the Treasury’s Office of Terrorist Financing and Financial Crimes (TFFC) addresses threats to international financial systems. The OIG reviewed TFFC—which is responsible for leading and assisting tasks forces, including the Anti-Money Laundering Task Force—to determine how its collaboration efforts with the national security community and other federal agencies identifies and addresses “threats to the international financial system from money laundering and other forms of illicit finance.” According to the findings, while the majority of federal agency officials interviewed for the report were satisfied with TFFC’s collaboration efforts overall, others believed enhanced collaboration efforts were warranted. The OIG also found that TFFC failed to establish “policies or procedures for collaboration or a mechanism to monitor, evaluate, and report the results of its collaborative efforts as recommended by the Government Accountability Office” in a 2009 report. Accordingly, the OIG recommended that TFFC develop and improve upon the necessary policies and procedures needed to monitor the effectiveness of “interagency collaboration,” as well as address areas of concern regarding collaboration efforts with foreign countries. TFFC agreed with these recommendations and stated it is currently working to improve interagency collaboration.

    Agency Rule-Making & Guidance Bank Secrecy Act Anti-Money Laundering OIG Treasury Department Financial Crimes

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  • Big Bank Agrees to $41 Million Fine by Federal Reserve Over Lax AML Controls

    Financial Crimes

    On May 26, the Board of Governors of the Federal Reserve (Board) and a multinational bank agreed on a settlement over allegations of anti-money laundering (AML) and Bank Secrecy Act (BSA) violations. The settlement, which only relates to the bank’s U.S. operations, includes a $41 million fine and a cease and desist order. The agreement was reached after the most recent Board examination of the bank’s AML program identified “significant deficiencies” in the bank’s transaction monitoring capabilities as well as its risk management and compliance with BSA/AML requirements. According to the Board, among other things, the resulting regulatory compliance deficiencies prevented the bank from properly assessing potentially suspicious transactions between 2001 and 2015. Under the settlement, the bank must provide written plans to the Board within 60 days, which include the methodology and target date for enhancement of their transaction monitoring system. Within the same 60 days, the bank also must submit a strategy to “strengthen its oversight of anti-money laundering compliance across its U.S. operations.”

    Financial Crimes Anti-Money Laundering Bank Secrecy Act Federal Reserve

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  • California-Based Financial Institution Reaches Agreement with DOJ, Forfeits More Than $97 Million for Bank Secrecy Act Violations

    Financial Crimes

    On May 22, the U.S. Department of Justice announced that a California-based financial institution and its parent company have agreed to forfeit over $97 million to resolve an investigation into alleged Bank Secrecy Act (BSA) violations. The May 18 agreement between the Bank and the DOJ included a Statement of Facts in which the Bank admitted to criminal violations for willfully failing to maintain an effective anti-money laundering compliance program with appropriate policies, procedures, and controls to guard against money laundering, as well as willfully failing to file suspicious activity reports (SARs). It further admitted that from at least 2007 until at least 2012, it processed more than 30 million remittance transactions to Mexico with a total value of more than $8.8 billion, but, while its monitoring system issued more than 18,000 alerts involving more than $142 million in potentially suspicious remittance transactions, it conducted fewer than 10 investigations and filed only nine SARs. Notably, the nine SARs covered only 700 transactions totaling overall approximately $341,307. Furthermore, the financial institution recognized that over the same time period it needed to improve its monitoring of its money services businesses’ (MSBs) remittances but failed to provide appropriate staffing and resources, which led to its BSA department being unable to “conduct appropriate transaction monitoring.” This resulted in a failure to file SARs on suspicious remittance transactions. Although the financial institution recognized the need to enhance its monitoring process as early as 2004, it continued to expand its MSB business without adding staffing resources and failed to make necessary improvements to its transaction monitoring controls.

    However, the DOJ stated its decision to enter into a non-prosecution agreement with the financial institution was based on evidence of extensive remedial actions. According to the DOJ’s press release, the financial institution devoted significant resources to remediation of its BSA and anti-money laundering (AML) deficiencies, exited its MSB business entirely, and ultimately ceased all banking operations. It was further credited for its cooperation with the DOJ’s criminal investigation by: (i) providing factual presentations; (ii) voluntarily making available foreign-based employees for interviews in the U.S.; (iii) producing foreign documents without implicating foreign data privacy laws; and (iv) collecting, analyzing, and organizing voluminous evidence and information for the DOJ. Under the terms of the agreement, the financial institution and its parent company have agreed to fully cooperate in this and any future DOJ investigations relating to violations of the BSA and AML statutes, as well as report, for a period of one year, any evidence or allegations of such violations. The parent company has also agreed to report to the DOJ “regarding [the] implementation of compliance measures to improve oversight of its subsidiaries’ BSA compliance.”

    Financial Crimes Anti-Money Laundering Bank Secrecy Act DOJ SARs

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  • FinCEN Recognizes Law Enforcement Agencies for Use of BSA Reporting

    Financial Crimes

    On May 9, the Financial Crimes Enforcement Network (FinCEN) announced its third annual Law Enforcement Awards to law enforcement agencies that use Bank Secrecy Act data provided by financial institutions in their criminal investigations. The program seeks to recognize law enforcement agencies that made effective use of financial institution reporting to obtain a successful prosecution, and to demonstrate to the financial industry the value of its reporting to law enforcement. The following agencies were recognized:

    • Suspicious Activity Report Review Task Force Category—New York State Police. Based on a financial institution reporting an unusual pattern of cash deposits, the New York State Police Special Investigations Unit identified suspicious transactions occurring in the Hudson Valley Region indicative of money laundering. The investigations led to the identification of expansive criminal organizations responsible for bringing large quantities of narcotics into the region, operating business fronts used for money laundering, and extensive gang activity.
    • Transnational Organized Crime/Third Party Money Launderers Category—FBI. After receiving a referral from local law enforcement regarding an individual suspected of carrying out various fraud and money laundering schemes, the FBI conducted an investigation, and its review of sensitive financial information resulted in investigators uncovering a network of criminal actors located in the U.S. and Canada, which was bringing in $100-$300 million in annual criminal proceeds in North America alone.
    • Transnational Security Threats Category—FBI. The FBI used a high volume of sensitive financial information obtained in connection with its investigation into a criminal organization moving hundreds of millions of U.S. dollars to support foreign nuclear and ballistic missile programs, to identify two families  that operated a network of exchange houses, precious metals companies, trading companies, and front companies throughout the Middle East to carry out financial activity for the benefit of multiple OFAC-sanctioned entities, as well as several entities with close ties to foreign military organizations.
    • Cyber Threats Category—Internal Revenue Service-Criminal Investigation (IRS-CI). A multi-year, multi-agency investigation led by IRS-CI focused on several targets selling narcotics on the dark web and distributing them throughout the U.S. The investigation identified sensitive financial information, which enabled investigators to corroborate the financial and personal information of the targets. The data also indicated that the subjects used Bitcoins in an effort to conceal their illicit proceeds. The information identified in the financial data and from subpoenas issued to numerous financial institutions and Bitcoin exchangers helped clarify the series of transactions conducted to launder the funds.
    • Significant Fraud Category—Defense Criminal Investigative Service (DCIS). DCIS initiated a long-term investigation based on structuring and excessive credit card charges identified by multiple financial institutions on a single individual. Investigators determined that one of the subjects was transferring funds to a shell company owned by a U.S. military official. A detailed analysis of sensitive financial information and contract documents revealed that the U.S. military official had received bribes from the primary target in exchange for helping the primary target win military contracts in Afghanistan.
    • Third-Party Money Launderers Category—Immigration and Customs Enforcement Homeland Security Investigations (HSI). HSI investigators utilized an extensive volume of sensitive financial information to assist in their investigation into a large-scale illegal third-party money laundering organization. The investigation began based largely on information gleaned from a FinCEN-issued Geographic Targeting Order (GTO). The GTO information used by investigators allowed them to identify an “armored car company, which was importing U.S. dollars and Mexican pesos from casas de cambio in Mexico and depositing them into shell company bank accounts that were opened and operated by the two individuals who owned and operated the company.”

    Financial Crimes FinCEN Bank Secrecy Act Anti-Money Laundering

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