Many compliance practitioners are now being required to add data privacy and information security to their remit. As with most risks, they can be managed with a process with which many anti-corruption compliance practitioners are familiar. A recent report caught the eye of The Man From FCPA about the attempted takeover of the U.S. company MoneyGram International Inc. by the Chinese behemoth Ant Financial Services, owned by Chines billionaire, Jack Ma. Ant Financial (belying its name) is China’s largest online payments company.
The problem for U.S. regulators is two-fold. Obviously, an international online payments company not subject to U.S. sanctions requirements does not have to certify that complies with U.S. money-laundering laws and attendant concerns about terrorist financing. But there is also a data privacy angle to this potential merger. If it goes through, a Chinese company and potentially the Chinese government would have access to the full data of U.S. citizens who utilized a U.S. online payment company when it was U.S.-owned.
What protections would be maintained for such U.S. citizens? Both of these questions must be answered by the U.S. Committee on Foreign Investment in the United States, which is a multiagency group that makes recommendations to the President on blocking transactions on national security grounds. No matter what promises are made, once a company owns the data, it can pretty much do anything it wants with that data. While there are some data privacy laws on the books in the United States, any foreign entity which wants to violate with impunity would most probably do so.
What about foreign companies, not subject to the FCPA, which engage in bribery and corruption outside the United States and therefore have not violated the FCPA? They do exist. Would it be a national security concern if one of those such entities swallowed up a U.S. company via merger or acquisition? All interesting questions to consider and in light of the AML and InfoSec issues raised by the MoneyGram acquisition, becoming more relevant every day.