Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations
Section Content

Upcoming Events

Filter

Subscribe to our InfoBytes Blog weekly newsletter for news affecting the financial services industry.

  • Swedish Telecom Company to Pay $965 Million to DOJ and SEC to Settle Bribery Claims

    Financial Crimes

    On September 21, a Swedish telecom company agreed to pay $965 million as a result of criminal and civil actions brought by the DOJ and SEC charging the company with paying bribes to an Uzbek government official from 2007 to 2010. The company entered into a deferred prosecution agreement with the DOJ that required the company to pay a $548.6 million criminal penalty for violating the anti-bribery provisions of the FCPA, $274 million of which will be paid to the Swedish Prosecution Authority and credited by the DOJ. $40 million of the total criminal penalty consisted of forfeiture by the company on behalf of its indirect subsidiary. According to the criminal information, around 2007, the company began operating a mobile telecommunications business in Uzbekistan through the subsidiary, and the companies allegedly then conspired to make approximately $331 million in bribes to an Uzbek government official to expand their share of the telecommunications market. 

    On the same day, the SEC issued a cease-and-desist order finding that the company violated the anti-bribery and internal accounting controls provisions of the FCPA and ordering the company to disgorge $457 million in illicit profits (but also agreeing to credit up to half that amount if disgorged to the Swedish Prosecution Authority). The SEC found that over the relevant time period, the company “paid bribes to a government official in Uzbekistan in order to obtain and retain business that generated more than $2.5 billion in revenues.” It found that the company paid the Uzbek official $330 million in bribes “funneled through payments for sham lobbying and consulting services to a front company controlled by the official.” The SEC agreed that the $40 million forfeiture to the DOJ would also offset.

    Financial Crimes DOJ SEC Bribery FCPA

    Share page with AddThis
  • FinCEN Issues Advisory Regarding Venezuelan Government

    Financial Crimes

    On September 20, the Financial Crimes Enforcement Network (FinCEN) issued an advisory to financial institutions to warn of public corruption and money laundering related to Venezuelan government agencies and bodies. The advisory lists several red flags specific to the Venezuelan government to assist financial institutions with identifying and reporting suspicious activity to FinCEN, including, among other things, payments for government contracts made to personal accounts or to companies in a different line of business, payments made from shell corporations, and certain real estate purchases by Venezuelan government officials, primarily in south Florida and Houston, Texas.

    As previously reported in InfoBytes, sanctions have recently been imposed on several Venezuelan political figures. (See previous InfoBytes coverage here and here.)

    Financial Crimes FinCEN Treasury Department Sanctions

    Share page with AddThis
  • Directors Plead Guilty in U.K. to Angola Bribe Scheme

    Financial Crimes

    On September 15, a logistics and shipping company, and six of its current and former directors pleaded guilty in the U.K. to charges of conspiracy to pay bribes in Angola. The trial against a seventh man charged in the conspiracy started this week in London. The U.K.’s Serious Fraud Office charged the company and the seven individuals last year with allegedly paying bribes when the company was seeking to obtain freight forwarding services contracts with the Angolan state oil company between January 2005 and December 2006.

    Financial Crimes UK Serious Fraud Office

    Share page with AddThis
  • Brazilian Petrochemical Company Reaches $10 Million Settlement With Investors

    Financial Crimes

    On September 14, a Brazilian petrochemical company, agreed to pay its U.S. investors $10 million for concealing its role in a corruption scandal involving a Brazilian multinational corporation in the petroleum industry. The settlement resolves a 2015 lawsuit brought by U.S. investors against the petrochemical company, which alleged the company had misled investors into believing its operations were legitimate. The settlement follows the December 2016 guilty plea by the company and its affiliated construction firm to violating the Foreign Corrupt Practices Act. Together, the companies agreed to pay $3.5 billion in a combined global settlement with U.S., Brazilian, and Swiss authorities.

    Financial Crimes FCPA Anti-Corruption Braskem SA Petrobras Brazil Switzerland

    Share page with AddThis
  • FinCEN Issues Advisory Regarding FATF-Identified Jurisdictions With AML/CFT Deficiencies

    Financial Crimes

    On September 15, the Financial Crimes Enforcement Network (FinCEN) issued an advisory to financial institutions based on June 23, 2017 updates to the Financial Action Task Force’s (FATF) list of jurisdictions identified as having “strategic deficiencies” in their anti-money laundering/combatting the financing of terrorism (AML/CFT) regimes. FinCEN urges financial institutions to consider this list when reviewing due diligence obligations and risk-based policies, procedures, and practices.

    The current jurisdictions (as further described in the Improving Global AML/CFT Compliance: On-going Process) that have AML/CFT deficiencies for which they have developed an action plan are: Bosnia and Herzegovina; Ethiopia; Iraq; Syria; Uganda; Vanuatu; and Yemen. Notably, Afghanistan and Lao PDR have been removed from this list for making “significant technical progress in improving [their] AML/CFT regime[s] and . . . establish[ing] the legal and regulatory framework to meet [their] commitments in [their] action plan[s].” North Korea, officially known as the Democratic People’s Republic of Korea, and Iran remain the two jurisdictions subject to countermeasures and enhanced due diligence (or EDD) due to AML/CFT deficiencies.

    Financial Crimes FinCEN Anti-Money Laundering FATF Combating the Financing of Terrorism

    Share page with AddThis
  • OFAC Imposes Additional Iranian Sanctions, List Includes Entities Involved in DDoS Attacks Against U.S. Financial Institutions

    Financial Crimes

    On September 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced it was imposing sanctions on 11 entities and individuals for supporting designated Iranian actors or for conducting malicious cyberattacks, including engaging in a series of distributed denial of service (DDoS) attacks against approximately 46 U.S. financial institutions. As reported in an indictment delivered by a federal grand jury in the Southern District of New York (see March 24, 2016 DOJ press release), the DDoS attacks—allegedly conducted by seven Iranian individuals between December 2011 and mid-2013—denied customers access to online bank accounts and collectively cost the affected financial institutions “tens of millions of dollars in remediation costs as they worked to neutralize and mitigate the attacks on their [computer] servers.” During a DDoS attack, a “malicious actor” gains remote control of a server through the installation of malicious software. Once compromised, the “malicious actor” can collect hundreds or thousands of these compromised devices (collectively known as a “botnet”), and, once control is achieved, will “direct the computers or servers comprising the botnet to carry out computer network attack[s] and computer network exploitation activity.” Three of the seven sanctioned individuals worked for a company that was added to OFAC’s updated SDN list on September 14 and oversaw a network of compromised computers that powered DDoS attacks. The other four individuals operated a second DDoS botnet on behalf of a different company listed on OFAC’s non-SDN list. Both Iranian-based private computer security companies perform work on behalf of the Iranian Government, including Iran’s Islamic Revolutionary Guard Corps. Pursuant to E.O. 13694, U.S. persons are prohibited from dealing with the designated entities and individuals, and “foreign financial institutions that facilitate significant transactions for, or persons that provide material or certain other support to, the entities and individuals designated today risk exposure to sanctions that could sever their access to the U.S. financial system or block their property and interests in property under U.S. jurisdiction.”

    In addition, pursuant to E.O. 13382, OFAC sanctioned an Iranian-based engineering company for engaging in activities related to Iran’s ballistic missile program, which include providing “ financial, material, technological, or other support for, or goods or services in support of, the [Islamic Revolutionary Guard Corps].” Two Ukrainian-based companies were also sanctioned pursuant to E.O. 13224 for assisting previously sanctioned Iranian and Iraqi airlines in obtaining U.S.-origin aircraft, as well as crew and services.

    Financial Crimes Sanctions Treasury Department OFAC DOJ Indictment Privacy/Cyber Risk & Data Security

    Share page with AddThis
  • FCPA Sting Operation Results in Conspiracy Charge for Retired U.S. Army Colonel

    Financial Crimes

    On August 29, the DOJ announced that it had unsealed a criminal complaint and FBI affidavit charging a retired U.S. Army colonel “for his alleged role in a foreign bribery and money laundering scheme in connection with a planned $84 million port development project in Haiti.” The DOJ alleges that he solicited bribes “from undercover [FBI] agents in Boston who posed as potential investors,” telling the agents “that he would funnel the payments to Haitian officials through a non-profit entity that he controlled . . . in order to secure government approval of the project.” The retired colonel allegedly received a $50,000 payment from the FBI, which he wired to his non-profit organization. While he ultimately used the payment for personal purposes, rather than his promised bribery, he allegedly “intended to seek additional money from the undercover agents to use for future bribe payments in connection with the port project.” The DOJ also alleges that FBI agents intercepted telephone calls where he “discussed bribing an aide to a senior Haitian official by giving him a job on the port development project after he left his position.”

    FCPA sting operations are relatively rare. An infamous FCPA sting operation involving Africa resulted in charges for 22 defendants, but it concluded unsuccessfully in 2012 after a series of acquittals and hung juries caused the DOJ to dismiss the remaining indictments.

    Financial Crimes DOJ Bribery Anti-Money Laundering

    Share page with AddThis
  • SFO Director Urges Department to Compete With DOJ on Home Turf

    Financial Crimes

    In a September 4 speech, Serious Fraud Office (SFO) Director David Green urged the SFO to lead anti-corruption enforcement efforts against UK-connected companies, warning that “if we take our foot off the pedal . . . , others will fill the void.” Green noted that the DOJ “is not shy about enforcing the [FCPA] against foreign companies,” and emphasized that seven of the top ten highest-dollar FCPA cases since 2008 were brought against non-American companies. Green said that “it is surely right that the UK should lead enforcement in relation to UK companies or companies with strong connections here,” because it not only “demonstrates our commitment to the level playing field,” but it also “ensures that hefty financial penalties go to UK public coffers rather than elsewhere.”

    Financial Crimes UK Serious Fraud Office DOJ FCPA

    Share page with AddThis
  • GAO Issues Report on Combating Narcotics-Related Money Laundering in the Western Hemisphere

    Financial Crimes

    On September 7, the U.S. Government Accountability Office (GAO) issued a report, Anti-Money Laundering: U.S. Efforts to Combat Narcotics-Related Money Laundering in the Western Hemisphere, detailing activities by the Treasury and State Departments to combat these illicit activities. In conducting the study, GAO reviewed laws, regulations, and budget data, and also conducted interviews with experts and U.S. officials, in order to examine anti-money laundering activities over the period of fiscal years 2011 through 2015. GAO also made site visits to Colombia, Mexico, and Panama, identified as “jurisdictions of primary concern for money laundering” by the State Department. Among other things, the report noted that “State and Treasury allocated about $63 million to support AML-related capacity-building and technical assistance” to fund training and equipment for financial intelligence units employed to detect illicit financial transactions in these countries. The report further provides that many entities are required to report suspicious activities to the Treasury’s Financial Crimes Enforcement Network, which was established to collect, analyze, and disseminate “financial intelligence information to combat money laundering.”

    Financial Crimes Anti-Money Laundering GAO Bank Secrecy Act Treasury Department Department of State FinCEN

    Share page with AddThis
  • FinCEN Releases Advisory Alert for Financial Institutions, OFAC Issues Sanctions Against South Sudanese Government Officials

    Financial Crimes

    On September 6, the Treasury Department issued a press release announcing multiple actions taken in response to the “continued deterioration of the humanitarian situation in South Sudan.” Under Secretary for Terrorism and Financial Intelligence, Sigal Mandelker, stated, “These actions send a clear message to those enriching themselves at the expense of the South Sudanese people that we will not let them exploit the U.S. financial system to move and hide the proceeds of their corruption and malign behavior.”

    Financial Crimes Enforcement Network (FinCEN). FinCEN issued an advisory (FIN-2017-A004) to financial institutions to address concerns that certain South Sudanese senior political figures may potentially move assets using the U.S. financial system. FinCEN projects that since 2013—when a new political conflict began in Sudan—certain senior political officials from both the government and opposition parties have “engaged in and profited from corrupt practices.” The advisory provides due diligence guidance for U.S. financial institutions, issues a reminder regarding suspicious activity report filing obligations, and warns financial institutions to “assess the risk for laundering of the proceeds of public corruption associated with specific particular customers and transactions.”

    Office of Foreign Assets Control (OFAC). Pursuant to Executive Order 13664, which blocks the property of certain persons with respect to South Sudan and authorizes sanctions against persons who threaten the peace, security, or stability of South Sudan, OFAC issued sanctions against three government officials and three entities owned by one of the sanctioned individuals. The identified individuals’ actions include, among other things, (i) “actions or policies that threaten the peace, security, and stability of South Sudan”; (ii) “actions or policies that have the purpose or effect of expanding or extending the conflict in South Sudan or obstructing reconciliation or peace talks or processes”; and (iii) “obstruction of the activities of international peacekeeping, diplomatic, or humanitarian missions in South Sudan, or of the delivery or distribution of, or access to, humanitarian assistance.” The sanctions prohibit any U.S. individual from dealing with the designated entities and individuals, and further states that “all of these individuals’ and entities’ assets within U.S. jurisdiction are blocked.” Additionally, individuals designated under Executive Order 13664 are banned from entry into the U.S.

    Financial Crimes OFAC FinCEN Sanctions Treasury Department

    Share page with AddThis

Pages