A new anti-corruption committee has been established in Saudi Arabia, which has the power to conduct investigations, make arrests, issue travel bans, and freeze assets of individuals and companies. This committee is headed by Crown Prince Mohammed Bin Salman, son of King Salman bin Abdulaziz Al-Saud. However, rather than instilling confidence in foreign investors this anti-corruption committee has led to some uncertainty and confusion in Saudi business circles.
Mohammed Bin Salman is described by his supporters as a reformist with a desire to transform and modernize Saudi Arabia, get rid of extremist ideologies, ease restriction on women, and root out corruption. On the other hand, he is described by more traditional and conservative Saudis who disagree with his views as someone attempting to consolidate his power by purging political leaders and business leaders from the kingdom.
A year and a half after the release of the Panama Papers, another large data leak regarding offshore entities has been published. In November 2017 the International Consortium of Investigative Journalists released the Paradise Papers in cooperation with the German newspaper Süddeutsche Zeitung. The Paradise Papers primarily consist of documents leaked from the prominent offshore law firm Appleby, and contains names of more than 120,000 people and companies with holdings in offshore tax havens.
It's not enough to avoid risky behavior in your own business, it's important to take the time to check on your business partners, vendors, and even clients to be sure they aren't engaging in risky behavior either. Federal regulators with the Financial Crimes Enforcement Network (FinCEN) recently fined a small Texas bank for violations of the Bank Secrecy Act for a failure to conduct requisite due diligence and a lack of controls on foreign accounts. Essentially they didn't check out their depositors ahead of time and didn't monitor their activities once they had opened accounts.
Lone Star National Bank was fined $2 million dollars, though an earlier $1 million penalty the bank had already paid will credited toward that total. This case is interesting because FinCEN found no indication of actual money laundering; rather they noted suspicious activity involving a Mexican depositor, and found that Lone Star had not put in place adequate controls to serve foreign clients. The FinCEN assessment says "Without sufficient internal controls or experienced BSA staff, the Bank engaged in high-risk foreign correspondent banking services without conducting appropriate due diligence, and without adequately monitoring and reporting suspicious activity." This underscores the need to conduct due diligence on foreign clients.
She was extremely well known and popular in Malta. Her blog entries sometimes attracted more readers than the combined circulation of Malta's newspapers. The website Politico has described here as "a one woman wiki leaks."
Her work focused on rooting out corruption and holding politicians accountable. Her work focused not only on politicians, but also on banks that facilitated money laundering, and Malta's online gaming industry and it's links to organized crime. In the past several years she had written extensively about revelations regarding Maltese politicians that came from Panama Papers. Her work on the Panama Papers is credited with causing Malta's Prime Minister, Joseph Muskat, to have to go to the polls a year early.
Last month Brazil's new chief prosecutor, Raquel Dodge, was sworn in, replacing the very high-profile Rodrigo Janot. From Janot she inherits a number of high profile cases, including one filed during his last days in office against Brazil's President, Michel Temer, on charges stemming from the huge "Operation Car Wash" scandal. (We've talked about Operation Car Wash before.) Dodge said in her inaugural address that "no one is above the law and that no one is below the law" and she stressed that Brazilians today “do not tolerate corruption and not only expect, but demand, results.” Still, she also talked about the need for greater "harmony" between branches of government, as aspect of her speech that the President praised. As a result of this and other commetns some are concerned that her tenure in office might lead to a slowdown in investigations connected with Operation Car Wash and other investigations of high ranking politicians. But others think she may simply be more discreet in her investigations, whicl still aggressively persuing anti corruption efforts. While she was nominated for the position by the president, she was chosen from a list of three prosecutors chosen by a vote of the National Association of Prosecutors. Dodge was reportedly the top choice in that selection process.
Recently the Swedish Telecom company Telia Company AB has agreed to pay $965 Million in penalties for violating the FCPA. Some of that money will go to Swedish and Dutch prosecutors, with the rest going to the Department of Justice and the SEC. This is, by the reckoning of the authors over at the website FCPA Blog, the largest ever FCPA settlement.
The penalties stem from actions taken by the company after it purchased Coscom LLC, a company providing telecom services in Uzbekistan. After the purchase the company paid numerous bribes to government officials, including Gulnara Karimova, daughter of late Uzbek president Islam Karimova, in order to expand it's share of the Uzbek telecom market. Telia allegedly made payments to Karimova alone of up to $300 Million. A number of companies were also implicated in a bribery scandal involving Gulnara Karimova and dozens of her associates. The Amsterdam based company VimpelCom was also implicated in the bribery scandal in Uzbekistan, and itself paid $795 Million in penalties to US and Dutch authorities last year.
More recently the legislature passed a law to protect President Morales from prosecution, which triggered protests and the constitutional court stepping in and provisionally blocking the law from taking effect. On Thursday the Guatemala's congress announced it would be repealing the laws. What happens next is anyone's guess, but the protests were reported to be quite large, and many say that they are now disappointed in Morales. Morales was elected as an outsider who would clean up corruption, and many say they feel betrayed by the recent actions of Morales and the legislature. If the government pushes things too far it may face huge protests. Two years ago the capitals central plaza was filled with protesters for 20 straight weekends to protest corruption, and led to the resignation of former President Otto Pérez Molina. It's anyone's guess if the same thing will happen to President Morales, but it's clear that many people in the country take anti-corruption efforts seriously.
Despite common perceptions, public corruption is a problem which plagues even the most developed countries, including the United States. Elected officials can be bribed, as appears to be the case with New Jersey Senator Robert Menendez (D). Wednesday, September 6, 2017 marked the start of the federal case against Menendez, who is one of the highest-ranking Democrats in the US Senate. Menendez is on trial for bribery, and could face a lengthy prison sentence.
The Financial Crimes Enforecement Network (FinCEN), a division of the Treasury Department, has ordered new reporting and record keeping requirements for some real estate transactions in Honolulu, Hawaii. With this order, Honolulu joins six other areas in what's called a Geographic Targeting Order (GTO). FinCEN also extended the reporting requriments for all areas under GTOs through March of 2018.
GTOs are aimed at curbing the use of real estate transactions to launder money. Title Insurance companies in the effected areas are required to keep more detailed records on, and report to FinCEN, the ultimate beneficial owners involved in real estate transactions made with cash. Some areas of the United States have become notorious as places where individuals and organizations can launder money through cash real estate purchases made via shell companies and other means of obfuscating their identity. This order shines some sunlight on these transactions.
We talk a lot about the FCPA and US anti-corruption and anti-bribery laws, but other countries have their own sets of anti-corruption laws that firms have to keep in mind. In Canada the Corruption of Foreign Public Officials ActCorruption of Foreign Public Officials Act (CFPOA) is often referred to as the Canadian FCPA. This law impacts not just Canadian businesses but any business that engages activity in and with Canada.