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  • Financial advisor pleads guilty to money laundering in Ecuadorian energy company case

    Financial Crimes

    On September 11, a Miami-based financial advisor pleaded guilty to one count of conspiracy to commit money laundering in connection with his role in making corrupt payments to officials of an Ecuador state-owned and state-controlled energy company. He is scheduled to be sentenced on Nov. 14 in the Southern District of Florida.

    He is the fourth individual, including two former officials of the company, to plead guilty in this case, which concerns efforts by an oil services contractor to make payments to the company's officials in an effort to retain existing contracts and win new business with the company. Another individual who was charged in the same indictment as him, has pleaded not guilty and is currently set to go to trial on October 15. His charges include one count of conspiring to violate the FCPA and one count of violating the FCPA.

    Financial Crimes Anti-Money Laundering Anti-Corruption FCPA

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  • FinCEN issues Spanish language version of its advisory on politically exposed persons and their financial facilitators

    Financial Crimes

    On September 11, FinCEN released a Spanish version of its advisory for U.S. financial institutions to increase awareness of the connection between high-level political corruption and human rights abuses. As previously covered in InfoBytes, FinCEN issued regulatory guidance in June to remind financial institutions of their risk-based, due diligence obligations, which include (i) identifying legal entities owned or controlled by “politically exposed persons” (as required by FinCEN’s Customer Due Diligence Rule); (ii) complying with anti-money laundering program obligations; and (iii) filing Suspicious Activity Reports related to illegal activity undertaken by senior foreign political figures.

    Financial Crimes FinCEN CDD Rule Anti-Money Laundering SARs

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  • FinCEN director discusses approach to virtual currency and emerging technology

    Financial Crimes

    On August 9, FinCEN Director Kenneth A. Blanco delivered remarks at the 2018 Chicago-Kent Block (Legal) Tech Conference to discuss, among other things, the agency’s approach to virtual currency and its efforts to protect financial institutions from being exploited for illicit financing purposes as new financial technologies evolve and are adopted. Blanco commented that while innovation provides customers with greater access to financial services, it can also create opportunities for criminals or serve as a vehicle for fraud. Blanco discussed several areas of focus, such as (i) the regulation of virtual currency and initial coin offerings (ICOs), along with coordinated policy development and regulatory approaches done in conjunction with the SEC and CFTC; (ii) examination and supervision efforts designed to “proactively mitigate potential illicit finance risks associated with virtual currency”; (iii) anti-money laundering/countering the financing of terrorism (AML/CFT) regulatory compliance expectations for companies involved in ICOs or virtual currency transmissions; (iv) enforcement actions taken against companies that fail to implement effective programs; (v) the rise and importance of virtual currency suspicious activity report filings which help the agency identify and investigate illicit activity; and (vi) the development of an information sharing virtual currency-focused FinCEN Exchange program. Blanco emphasized that “individuals and entities engaged in the business of accepting and transmitting physical currency or convertible virtual currency from one person to another or to another location are money transmitters subject to the requirements” of the Bank Secrecy Act.

    Financial Crimes FinCEN Bank Secrecy Act Virtual Currency Anti-Money Laundering Combating the Financing of Terrorism SARs SEC CFTC Fintech Initial Coin Offerings

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  • Former Malaysia Prime Minister charged with money laundering

    Financial Crimes

    On August 8, Malaysia’s former Prime Minister pleaded not guilty to money laundering charges filed against him in Malaysia in connection with the ongoing investigation of a Malaysian strategic development company. He had previously pleaded not guilty to three charges of criminal breach of trust and one charge of abuse of power. The money laundering charges relate to approximately $10 million that was allegedly deposited into the former Prime Minister’s personal bank account. That is a small portion of the total funds under investigation as misappropriated from the state fund.

    The day before, a $250 million super yacht was returned to Malaysia after it was previously seized in Indonesia following claims by the U.S. Department of Justice that is was purchased with funds misappropriated from the company. Back in July 2016, DOJ filed civil forfeiture complaints seeking recovery of more than $1 billion in assets associated with the alleged “international conspiracy to launder funds misappropriated from [the company].” In June 2017, DOJ filed additional civil forfeiture complaints to recover another $540 million in assets. The investigation into assets linked to the company continues with DOJ alleging that more than $3.5 billion in total funds were misappropriated from the company from 2009 through 2015.

    Financial Crimes DOJ Anti-Money Laundering

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  • Former Barbados Minister of Industry charged with money laundering

    Financial Crimes

    On August 6, the Department of Justice announced the arrest and first court appearance of a former Minister of Industry of Barbados who DOJ has charged with “laundering bribes that he allegedly received from a Barbadian insurance company in exchange for official actions he took to secure government contracts for the insurance company.” The indictment, which was initially issued under seal on March 15, charges him with one count of conspiracy to launder money and two counts of money laundering. It also seeks forfeiture of the funds he received as alleged bribes. The indictment alleges that as Minister of Industry, he caused an agency of the Barbados Government to renew two contracts with the Barbadian insurance company. In return, the insurance company purportedly paid him approximately $36,000, routing the payments through a dental company and its bank account located in New York. The indictment also references as co-conspirator, but does not name, the CEO of the dental company, a United States citizen and resident of Tampa, Florida. He is also a lawful permanent resident of Tampa, Florida.

    Financial Crimes DOJ Anti-Money Laundering

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  • OCC releases recent enforcement actions

    Federal Issues

    On July 20, 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, removal/prohibition orders, and terminations of existing enforcement actions. Two of the more notable actions by the OCC covered in this report are discussed below.

    On May 31, the OCC issued a consent order against an international investment bank’s federal branches located in Stamford, Miami, and New York, which identified alleged deficiencies in the branches’ Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance programs. The alleged deficiencies include failure to adopt and implement adequate BSA/AML compliance programs and failure to file timely Suspicious Activity Reports. Among other things, the consent order requires the branches to (i) develop and implement an ongoing BSA/AML risk assessment program; (ii) adopt an independent audit program to conduct a review of the bank’s BSA/AML compliance program; (iii) submit a written progress report within 30 days after the end of each calendar quarter that details actions undertaken to ensure compliance with the consent order’s provisions; and (iii) ensure each branch has permanent, experienced BSA officers responsible for compliance functions. The bank has neither admitted nor denied the OCC’s findings, and a civil money penalty was not assessed against the branches.

    In addition, on June 18 the OCC issued an order terminating a 2016 consent order against a national bank following the OCC’s determination that the bank had successfully completed the consent order’s requirements for complying with provisions of the Servicemembers Civil Relief Act.

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

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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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