Swiss bank Julius Baer entered a deferred prosecution agreement (DPA) and will pay $80 million for its role in a money laundering conspiracy linked to world soccer federation FIFA, the Department of Justice announced Thursday.
Julius Baer disclosed in November it had reserved the money for the penalty and expected to enter a DPA. In Thursday’s action, filed in federal court in the Eastern District of New York, the bank admitted to conspiring with sports marketing executives to launder more than $36 million in bribes through the United States to FIFA soccer officials and other soccer federations in exchange for broadcasting rights to soccer matches.
“Julius Baer conspired to execute these illegal transactions through accounts at the bank to conceal the true nature of the payments and promote the fraud,” the Justice Department stated.
AML failures: The misconduct occurred from approximately February 2013 to May 2015. At the time, Julius Baer’s anti-money laundering (AML) compliance controls “failed to detect or prevent money laundering transactions related to the bribery schemes,” according to the Justice Department.
Jorge Luis Arzuaga, a former Julius Baer relationship manager, pleaded guilty in June 2017 for his role in the scheme and was sentenced to three years of probation in November 2020. Had compliance personnel meaningfully reviewed Arzuaga’s due diligence on sports media and marketing company Torneos y Competencias and his responses to transaction alerts, they would have identified “multiple, significant red flags.”
These red flags included “facially false contracts, payments to third parties at the direction of a FIFA official, and services purportedly rendered by shell corporations—all of which would have alerted the bank to the bribery, money laundering, or other illegal activity,” the Justice Department stated.
According to Julius Baer’s admissions, it knew Arzuaga’s clients’ accounts were associated with international soccer, “which was generally understood to involve high corruption risks,” the Justice Department stated. “Nevertheless, a Julius Baer executive directed the opening of these accounts be fast tracked in the hope that these clients would provide lucrative business.”
DPA details: The $80 million payment includes forfeiture of approximately $36.4 million and a fine of $43.3 million. The Justice Department said it reached this resolution based on numerous factors, “including Julius Baer’s failure to voluntarily disclose the conduct to the Department; the nature and seriousness of the conduct, including that the bank played an essential role in this scheme for over two years; and the bank’s prior criminal history.”
Julius Baer did not receive cooperation credit, “because it made misleading representations about relevant facts in the case, which had the effect of hindering the Department’s investigation, and it did not come forward with all evidence pertaining to the involvement of senior management.”
However, the agency said, the bank “received some credit for its significant effort” to remediate its AML compliance program. This included a 5 percent reduction off its criminal penalty.
The DPA does not include the installation of a compliance monitor at Julius Baer, as the bank already has a Swiss monitor in place to oversee the remediation of its AML program.
In a statement, Julius Baer said it “welcomes the final resolution of this legacy matter. This marks another step in Julius Baer’s continued efforts to pursue the closure of remaining regulatory and legal matters in cooperation with the relevant authorities.”