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Warren vs. Wells, Barclays vs. SFO, tax dodgers vs. everybody

Katherine O'Hara | June 23, 2017

It’s been another busy week on Washington, in Europe, and elsewhere. Here’s a selection of some of the most interesting compliance stories we have gathered from around the Web.

How Wells Fargo’s cutthroat corporate culture allegedly drove bankers to fraud
In case you forgot, Wells Fargo is still one big, hot, ethical mess. The whole ordeal boils down to bankers being encouraged to illegally open accounts so that they’d hit their goals. Vanity Fair broke the whole thing down, explaining what happened, why, and what it means for you. Bottom line: Culture matters, people. Without culture, you can’t really have compliance.

Elizabeth Warren wants the Wells Fargo board wiped out
This week, the Massachusetts Senator demanded that the 12 Wells Fargo directors that served during the 2011-2015 scandal be forcibly removed by the government. In a letter to the Federal Reserve, Warren cited a law that allows the Feds to make moves if an institution, “engaged or participated in any unsafe or unsound practice” that lead to financial loss. This isn’t the first time Warren has gone after Wells Fargo for not taking drastic enough action, demanding “[What] have you done to actually hold yourself accountable?” when the scandal first broke, and it probably won’t be the last.

Small and midsized banks could get regulatory relief from Senate. Wall Street? Probably not
Dodd-Frank is getting a new look, but it may not help big banks. To get the law rolled back, Senate Republicans need a majority vote—which they don’t currently have. So they’re working out a plan to give smaller banks a break and still keep Wall Street in check. Republicans are hopeful, but Dems are left saying sarcastically, “What could possibly go wrong?”

Canada proposes new bail-in regulations for country's banks
Canadians aren’t taking any chances when it comes to its economic safety. This week, its government proposed a three-pronged safety net in the event of banks needing a bail-out, protecting consumers and shareholders alike. This comes at a time when international regulators are making big moves to curtail shady (read: fraudulent) activity that could throw the global economy into another financial crisis. Speaking of which …

Barclays and ex-staff charged with fraud
The Serious Fraud Office is officially charging Barclays for its actions following the global financial crisis. Some background: After the economy plummeted in 2008, the U.K. bank said “No thanks” to a government bailout and raised money on its own. It then sidled up to a state-backed advisory firm, Qatar Holdings, and raised about £7.3b (U.S. $9.3) to get itself out of trouble. Around the same time, Barclays paid the Qataris £332m (U.S. $423M) for advisory services (that never happened), and then loaned them £2b (U.S. $3B). This didn’t sit well with the SFO—it just so happens that round-about lending yourself money is a big no-no.

European commission to crack down on offshore tax avoidance
The European Commision is cracking the whip when it comes to taxes. They have a plan in the works to force any organization to automatically hand over the books when they implement new offshore tax schemes for a client. While these deals usually happen in Hong Kong, U.S., or U.K., nearly 90% of those intermediaries are somehow linked to Europe. Which brings us to …

Azerbaijan bank took $900M Irish detour on way to default
Ireland is getting some serious side-eye from the European Union. In recent years the country has marketed itself as a choice home-base to financial institutions, but flimsy regulations have drawn fraudulent activity. This latest scandal has thrown a spotlight on the issue, and critics are saying it has better learn its lesson this time around before regulators come down hard or institutions begin to avoid setting up shop in Ireland.

Spanish prosecutors accuse Mourinho of 3.3 million euro (U.S. $3.7M) tax fraud
In the last week, former players Angel Di Maria and Cristiano Ronaldo and former coach Jose Mourinho were all accused of owing Spanish authorities millions in evaded taxes. Maria will be spending one year in prison, and Ronaldo has demanded his team foot the bill. Pretty sure Ronaldo thought that bust of his would be the low-point of his year…

Global risk analysis gets an artificial intelligence upgrade with GeoQuant
Big banks, governments, and hedge funds are getting a new glass ball with the launch of the AI service GeoQuant. In the months following its launch, the startup accurately predicted the rise in Italy and Mexico’s markets and Brazil’s crash. The software sucks up a slew of information and then splits out a score for a country’s political risk, helping to drive decisions about everything from foreign investments to foreign aid.

U.K. Financial Regulator Calls for Caution on Cryptocurrency Investing
Regulators are yelling “slow down” to people buying in big to cryptocurrency. In recent years, those markets (bitcoin and ethereum, among others) have skyrocketed, but a top financial regulator in the United Kingdom is offering a word of caution. He stressed that while those markets aren’t “inherently bad,” they are incredibly unregulated and have no protections for consumers who may fall prey to schemes.

Republicans debating remedies for corporate tax avoidance
It turns out there are some big loopholes for big corporations, and Congress has been tasked with figuring out how to close them. While some companies have been playing by the rules, analysts still guess the government is missing out on nearly $100 billion, or a third of what they gross annually in corporate taxes. But if Republican leaders decide to crack down on companies, experts believe they’ll just pack their bags and head overseas where the grass is greener and the rates are much lower.

A town’s ‘creative accounting’ leads to a fraud conviction
It’s not a huge shock when we hear local governments are riddled with corrupt leaders, but flimsy federal oversight means they usually don’t answer for their crimes. Recently, however, a town supervisor in New York was charged with fraud when he funneled some town funds to finance a local baseball stadium. The conviction is kind of a big deal—this is the first time in history someone’s gone down at the municipal level for cooking the books.

As laptop ban talks drag on, airlines see cargo bin and operational issues
As the U.S. government debates the finer points of banning laptops, many wonder whether or not they’ll fish or cut bait before the end of the travel season. Major airlines are quick to throw their support behind leaders, regardless of the outcome, but they do cite some big potential issues like major delays due to increased baggage checks, and angrier-than-usual passengers.

GOP senator warns against rushed vote on healthcare bill
Marco Rubio is hoping for a fair dialogue when it comes to the nation’s new healthcare bill. This week, the Republican Senator warned that rushing the bill along could have consequences further down the line and urged the Senate not to just whip something up behind closed doors and push it through to a vote. A badly drafted bill could be a regulation nightmare once it’s rolled out, leaving regulators and consumers alike in limbo.

After Grenfell fire, 11 other towers found to have combustible cladding
The Grenfell fire has shed light on England’s problematic safety regulations. Following the tragedy—and local uproar over how it was handled—the government set to testing hundreds of other buildings for combustible materials used during construction. While the definite cause of the fire is still unclear, officials aren’t taking chances.

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