One of the areas in the fight against bribery and corruption that regulators are beginning to focus on is the role of banks in facilitating such transactions. I thought about this connection when I read a recent article in the Financial Times about the banks now caught up in the FIFA corruption scandal. Numerous banks, such as BNP Paribas, JP Banamex, HSBC, Standard Chartered and UBS have paid heavy fines for failures around anti-money laundering controls and now some of these banks are in talks with the Justice Department about what they knew and when they knew it (sound familiar?) in connection with the FIFA investigation.
Once again, American authorities are bumping up against Swiss banking secrecy laws in the investigation. To remedy this, U.S. authorities are trying to reach an agreement with the Swiss government giving US authorities greater and more unrestricted access to information in FIFA-concerned bank accounts so that they will not have to make individual requests for data. U.S. regulators have reverted to the 2010 approval of legislation by Switzerland which allowed the Swiss bank UBS to provide the names of its American clients who were suspected of evading U.S. taxes.
UBS, JPMorgan Chase and a raft of other international financial institutions are all under Deferred Prosecution Agreements (DPAs) for their transgressions around money laundering. These DPAs contain language, which requires extraordinary cooperation in other areas such as bribery and corruption. At the very least, the banks are in a difficult position at this time.
I think these developments will also impact more traditional anti-corruption enforcement actions under the FCPA or UK Bribery Act by making banks more transparent about transactions, which may impact these laws going forward. While a payment from a corporate account might not raise a red flag, a multi-million dollar payment to one person or a newly opened account could be labeled as suspicious payment.
It is important to consider the recent Standard Bank DPA under the Bribery Act, where a cash withdrawal of $6 million was made. It was this transaction that tripped the banks AML system and led it to self-report itself. Such a system could also be brought to bear for bank customers.
The FIFA investigation continues to reverberate across the globe. For the anti-corruption world, it may well lead to new investigative tools and techniques for regulators.