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  • Real estate broker and nephew of former UN Secretary-General pleads guilty to FCPA charges

    Financial Crimes

    On January 5, 2018, the Department of Justice announced that a real estate broker and nephew of former UN Secretary-General, pleaded guilty to charges that he tried to bribe a Qatari official in connection with a sale of a high rise building complex in Vietnam. He pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA before U.S. District Judge Edgardo Ramos of the Southern District of New York. He was charged with his father, who was an executive at a South Korean construction company, and an arts and fashion blogger in December 2016. 

    In his guilty plea, the nephew admitted to joining a conspiracy to make $2.5 million in bribe payments to a Qatari official between February 2014 and May 2015 in an effort to sell the South Korean construction company-owned buildings in Vietnam, which were worth $800 million. The nephew admitted that he andhis father agreed to pay $500,000 to a Qatari official to persuade the official to use the Qatari sovereign wealth fund to purchase the building. The $500,000 was then transferred to the arts and fashion blogger, who posed as an agent for the foreign official, but instead of passing the payment to the foreign official, he double-crossed his codefendants and stole the $500,000. 

    Although the scheme involved a South Korean construction company and a Qatari foreign official, the Indictment alleged that the nephew qualified as a “domestic concern” pursuant to 15 USC 78dd-2(h)(1) because he was a lawful permanent resident of the United States and resided in New Jersey at the time. 

    The nephew faces up to five years in prison on each count. The blogger previously pleaded guilty to charges of wire fraud and money laundering for his role in the scheme, and was sentenced to 42 months in prison. The father has been charged, but not yet arrested.

    Financial Crimes DOJ FCPA Bribery

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  • Senate Banking Committee: Sharpen the Focus of AML/BSA Enforcement and Oversight

    Financial Crimes

    On December 9, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing entitled, “Combating Money Laundering and Other Forms of Illicit Finance: Opportunities to Reform and Strengthen BSA Enforcement” to discuss anti-money laundering and Bank Secrecy Act (AML/BSA) enforcement and compliance. Committee Chairman Mike Crapo (R-Idaho) opened the hearing by stating that Congress and financial regulators must examine and address “decades-old” Bank Secrecy Act and anti-money laundering requirements in order “to sharpen the focus, sustainability and enforcement of a modernized, more efficient U.S. counter-threat-finance architecture.” During the hearing, the Committee stressed the need to move towards a more targeted, strengthened AML framework so that banks, law enforcement, and regulators can focus on specific threats such as the financing of terrorism and sanctions evasions.

    The three witnesses offered numerous insights related to reforming AML/BSA enforcement and regulatory structures, including: (i) establishing an approach that would utilize and track intelligence and analysis rather than focusing primarily on quantifiable metrics; (ii) increasing inter-agency coordination and improving information sharing between financial institutions and regulators, and among financial institutions themselves; (iii) recognizing the importance of law enforcement participation, specifically related to the sharing of suspicious activity reports; (iv) encouraging the participation of entities outside of the banking sector, such as persons involved in real estate or those acting as proxies for financial system access; (v) supporting beneficial ownership legislation for companies formed in the United States; and (v) understanding the ways in which financial institutions are addressing the anonymity of cryptocurrencies and blockchain technology. The witnesses were:

    • Mr. Dennis Lormel, President and CEO, DML Associates and former Chief, FBI Financial Crimes Program (testimony);
    • Mr. Greg Baer, President, The Clearing House Association (testimony); and
    • Ms. Heather Lowe, Legal Counsel and Director of Government Affairs, Global Financial Integrity (testimony).

    Financial Crimes Senate Banking Committee Anti-Money Laundering Bank Secrecy Act SARs Cryptocurrency Virtual Currency Blockchain

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  • OFAC expands Venezuelan and Iranian sanctions

    Financial Crimes

    On January 5, the Treasury Department’s Office of Foreign Assets Control (OFAC) imposed additional sanctions against four current or former officials of the Venezuelan government. The designations, issued pursuant to Executive Order 13692, identify officials who are “associated with corruption and repression in Venezuela” and have “forsaken the professional republican mission of the military institution, which . . . is to be ‘with no political orientation … and in no case at the service of any person or political partisanship.’” All assets belonging to the identified individuals subject to U.S. jurisdiction are frozen, and U.S. persons are generally prohibited from dealing with them. See here for previous InfoBytes coverage of Venezuelan sanctions.

    Separately on January 4, OFAC designated five Iranian entities, pursuant to Executive Order 13382 (E.O. 13382), for their ties to Iran’s ballistic missile program. The five entities identified in the designation are either owned or controlled by an Iranian group that is “responsible for the development and production of Iran's solid-propellant ballistic missiles, is listed in the Annex to E.O. 13382 and is currently sanctioned by the U.S., UN, and EU.” In addition to freezing assets subject to U.S. jurisdiction and prohibiting U.S. persons from engaging in transactions with the entities, “foreign financial institutions that knowingly facilitate significant transactions for, or persons that provide material or certain other support to, the entities 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.” See here for previous InfoBytes coverage of Iranian sanctions.

    Financial Crimes Department of Treasury OFAC Sanctions International Executive Order

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  • OCC fines national bank for failing to fix BSA deficiencies

    Financial Crimes

    On January 4, the OCC issued a consent order assessing a $70 million civil money penalty against a national bank for failing to comply with the agency’s 2012 cease and desist consent order related to Bank Secrecy Act (BSA) and anti-money laundering (AML) deficiencies. The 2012 order cited the bank for, among other things, failing to file suspicious activity reports in a timely manner and weaknesses in controls related to its correspondent banking from deposit capture/international cash letter instrument activity. According to the OCC, the $70 million civil money penalty results from the bank’s failure “to complete corrective actions to address BSA/AML compliance issues as required by the [2012] order.”

    Financial Crimes OCC Bank Secrecy Act Anti-Money Laundering SARs

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  • NYDFS fines global money service $60 million for AML deficiencies

    Financial Crimes

    On January 4, New York Department of Financial Services (NYDFS) ordered one of the largest global money transfer services to pay $60 million for willfully failing to implement an effective anti-money laundering (AML) program. According to the consent order, between 2004 and 2012, three of the company’s New York locations allowed the company’s services to be used to pay debts to human traffickers based in China. Additionally, the order emphasizes that the company was aware of weaknesses in its compliance program for years and failed to implement controls that could have detected and prevented the payments in question. The NYDFS investigation resulted from a January 2017 settlement with the Department of Justice, which found that during the same time period (2004-2012), the company processed hundreds of thousands of transactions for company agents and others involved in an international consumer fraud scheme, as previously covered by InfoBytes. In addition to the fine, the order requires that the company put in place stricter AML compliance measures, including the creation of an Independent Compliance Committee of the Board of Directors.

    Financial Crimes NYDFS Bank Secrecy Act Anti-Money Laundering Bank Compliance International

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  • Singapore-Based Shipyard Operator Agrees to $422 Million Penalty to Resolve Foreign Bribery Case

    Financial Crimes

    On December 22, 2017, Singapore-based shipyard operator and shipping vessel repair company, and its wholly owned U.S. subsidiary, agreed to pay a combined total penalty of $422 million to resolve foreign bribery charges by the DOJ. Authorities in the United States, Brazil, and Singapore alleged that the companies engaged in a decade-long scheme to pay tens of millions of dollars in bribes to officials in Brazil, including those of a state-owned oil company. As part of the resolution, the company entered into a deferred prosecution agreement while its U.S. subsidiary pleaded guilty, as did a former senior member of the company’s legal department. The settlement is one of the largest FCPA enforcement penalties and also represents DOJ’s first coordinated FCPA resolution with Singapore. The settlement represents a 25 percent reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range due to substantial cooperation by the companies with the investigation and the taking of remedial measures, including disciplining employees and implementing an enhanced compliance system. 

    Financial Crimes FCPA Enforcement Action DOJ Bribery FCPA

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  • $2.95 Billion Settlement Reached in Brazilian Multinational Corporation Class Action

    Financial Crimes

    On January 3, 2018, a Brazilian multinational corporation announced that it has agreed to pay $2.95 billion to resolve the securities class action pending in the U.S. District Court for the Southern District of New York regarding the company’s well-known corruption scandal in Brazil. The class action claimed that investors were harmed by alleged corruption when contractors overcharged the company and kicked back some of the overcharges through bribes to the company's officials. Under the proposed settlement, the company has agreed to pay the funds in three installments. The agreement does not constitute any admission of wrongdoing or misconduct by the company and the company claims that this reflects its status as a victim of the acts uncovered in Operation Car Wash, as the corruption investigation in Brazil is known. The settlement agreement is still subject to approval by the District Court.

    Past ScoreCard coverage related to the corruption allegations and investigation can be found here

    Financial Crimes Anti-Corruption

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  • NYDFS Orders Korean Bank to Pay $11 Million Civil Money Penalty for BSA/AML Compliance Deficiencies

    Financial Crimes

    On December 21, the New York Department of Financial Services (NYDFS) entered into a consent order with a Korean bank and its New York branch to resolve issues regarding alleged deficiencies in the branch’s Bank Secrecy Act and other anti-money laundering (BSA/AML) compliance and risk management. The alleged deficiencies were discovered during three examinations between 2014-2016 by NYDFS and the Federal Reserve Bank of New York. According to the consent order, among other things, the branch failed to maintain adequate transaction monitoring and suspicious activity reporting (SAR), lacked compliance staff with proper BSA/AML background experience, and lacked adequate BSA/AML and OFAC risk assessments.

    The Korean bank and its branch are required to pay an $11 million civil money penalty, and in addition must submit the following documentation (i) a BSA/AML compliance program; (ii) a customer due-diligence program; (iii) a SAR program; (iv) a revised internal audit program; and (v) a plan to enhance oversight of the branch’s BSA/AML compliance requirements. The Korean bank and branch are also required to submit quarterly reports for two years with updates on the branch’s compliance progress.

    Financial Crimes NYDFS Bank Secrecy Act Anti-Money Laundering SARs Settlement

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  • OFAC Amends Iraq Stabilization and Insurgency Sanctions Regulations, Sanctions Additional North Koreans

    Financial Crimes

    On December 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released amendments to its Iraq Stabilization and Insurgency Sanctions Regulations (ISISR) to implement Executive Order 13668 (“Ending Immunities Granted to the Development Fund for Iraq and Certain Other Iraqi Property and Interests in Property Pursuant to Executive Order 13303, as Amended”). Previously, the ISISR prohibited and deemed null and void “any attachment, judgment, decree, lien, execution, garnishment, or other judicial process” related to (i) the sale and marketing of petroleum and petroleum products involving U.S. persons; and (ii) “any accounts, assets, investments, or any other property of any kind owned by, belonging to, or held by the Central Bank of Iraq, or held, maintained, or otherwise controlled by any financial institution of any kind in the name of, on behalf of, or otherwise for the Central Bank of Iraq.” OFAC’s amendments remove these prohibitions, and also implement technical and conforming changes. The amendments took effect December 28.

    Separately, on December 26, OFAC announced that two North Korean individuals have been added to the Specially Designated Nationals List. Assets belonging to individuals on the list are blocked, and transactions by U.S. persons involving these individuals or that are otherwise subject to U.S. jurisdiction are also generally prohibited. See here for previous InfoBytes coverage on North Korean sanctions.

    Financial Crimes Department of Treasury OFAC Sanctions International

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  • FinCEN Updates Bank Secrecy Act FAQs

    Financial Crimes

    Recently, the Financial Crimes Enforcement Network (FinCEN) updated its “Answers to Frequently Asked Bank Secrecy Act (BSA) Questions.” The December update provided the following, among other things: (i) “depository institutions are not required to file a Designation of Exempt Person form . . . with respect to the transfer of currency to or from any of the 12 Federal Reserve Banks” (in accordance with amended 31 CFR 1020.315); (ii) guidelines for filing the Designation of Exempt Person form; and (iii) guidance concerning the types of identifying information financial institutions should obtain when a federal, state or local government official engages in a transaction over a certain amount in an official capacity. FinCEN stated that “the answers are not meant to be comprehensive, apply to all factual situations, or to replace or supersede the BSA regulations.”

    Financial Crimes FinCEN Bank Secrecy Act Department of Treasury Federal Reserve

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