Anytime a bribe is paid, the money must be transmitted and stored somewhere. In legal parlance, that is called money laundering. Short of bags of cash paid to a government official who then hides the money in a mattress or behind false walls in his house, most bribes go through the international banking system in some manner. Previously most prosecutions around bribery and corruption involved the bribe payor and bribe receiver. In the scandal that keeps on giving, the FIFA corruption scandal, we now have the first instance where prosecutors are going after these tertiary individuals who are necessary to facilitate such crimes.
Reports indicate that Jorge Luis Arzuaga, a former managing director at the Swiss bank Julius Baer, pled guilty to money laundering conspiracy last week. Arzuaga admitted to arranging the transfers of more than $25 million in bribes and other corrupt payments from 2010 to 2015 for corrupt FIFA officials. This is the first guilty plea in the plethora of service provides who facilitated the massive corruption scandal engaged in by FIFA officials. His former employer, the bank Julius Baer, which is under an unrelated Deferred Prosecution Agreement for helping wealthy Americans evade taxes, is also under investigation for its role in helping corrupt FIFA officials to launder money obtained through illegal bribery and corruption.
In a statement, Richard Weber, chief of the I.R.S. criminal investigation division said “We are pursuing the bad actors—including soccer officials, sports marketing companies, financial institutions and their bankers—who have intentionally and criminally violated the law by laundering illegal proceeds. Prospective private bankers and relationship managers should take note of Mr. Arzuaga’s conviction and think twice about the consequences of conspiring to launder money.”
Azuaga’s guilty plea not only opens a new front in the FIFA corruption scandal but also shines a light on services providers who help illegal actors. If bankers can be prosecuted, what about others who might facilitate such conduct. This expansion of the FIFA corruption scandal may portend a new and most welcome chapter in anti-corruption enforcement.