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DOJ Announces Plea Agreements with Five Major Banks for Manipulating Foreign Currency Exchange Markets
On May 20, the DOJ announced plea agreements with five major banks relating to manipulations of foreign currency exchange markets. Four of the banks pled guilty to felony charges of “conspiring to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange (FX) spot market.” These four banks agreed to pay criminal fines totaling more than $2.5 billion and to a three-year period of “corporate probation,” which will be “overseen by the court and require regular reporting to authorities as well as cessation of all criminal activities.” A fifth bank pled guilty to manipulating benchmark interest rates, including LIBOR, and to violating a prior non-prosecution agreement arising out of the DOJ’s LIBOR investigation. That bank agreed to pay a $203 million criminal penalty. The DOJ emphasized that these were “parent-level guilty pleas” to felony charges and that it would continue to investigate potentially culpable individuals. The five banks also agreed to various additional fines and settlements with other regulators, including the Federal Reserve, the CFTC, NYDFS, and the U.K. Financial Conduct Authority. Combined with previous payments arising out of the FX investigations, the five banks have paid nearly $9 billion in fines and penalties.
FinCEN Names Jamal El-Hindi as New Deputy Director
On May 21, FinCEN announced Jamal El-Hindi as its new Deputy Director. Since January 2015, El-Hindi has been serving as the agency’s acting Deputy Director, and previously served as Associate Deputy Director for the Policy Division. Prior to joining FinCEN in June 2006, El-Hindi oversaw OFAC’s Compliance Outreach Division, Licensing and Policy Division as the Associate Director for Program Policy and Implementation, and was an Attorney-Advisor in the Office of Chief Counsel (Foreign Assets Control) within Treasury’s Office of General Counsel, serving on economic sanctions programs as a legal advisor. In his role as FinCEN’s Deputy Director, El-Hindi will work alongside law enforcement, intelligence, financial, and regulatory communities “to ensure the effective coordination of anti-money laundering and anti-terrorist financing initiatives.”
FinCEN Recognizes Law Enforcement Agencies For Use of BSA Data, Holds First-Ever Law Enforcement Awards Ceremony
On May 12, FinCEN held its first-ever Law Enforcement Awards, recognizing law enforcement agencies that made effective use of BSA data in criminal investigations which lead to a successful prosecution. The awards were presented in six different categories: (i) SAR Review/Task Force; (ii) Third Party Money Launderers; (iii) Transnational Organized Crime; (iv) Cyber Threats; (v) Significant Fraud; and (vi) Transnational Security Threats. In prepared remarks, FinCEN Director Jennifer Shasky Calvery noted the importance of BSA data to the financial industry, stating that the data is used to confront serious threats to the U.S. financial system including massive fraud schemes, cyberthreats, foreign corruption, drug trafficking, and terrorist organizations.
Former Export-Import Bank Loan Officer Pleads Guilty to DOJ Charges of Accepting Bribes
The DOJ released a statement regarding a plea agreement made with a former loan officer of the Export-Import Bank. According to the DOJ, the former loan officer accepted bribes totaling over $78,000 in exchange for providing favorable action on loan applications. From June 2006 through December 2013, the former loan officer managed the review of credit underwriting for companies and lenders submitting financing applications to the Export-Import Bank and admitted to recommending the approval of unqualified loan applicants on 19 different occasions. In addition, the former loan officer also pleaded guilty to improperly expediting the process of certain applications. The sentencing hearing is scheduled for July 20, 2015.
U.S. Senate Confirms Lynch As Next Attorney General
On April 23, the U.S. Senate confirmed Loretta Lynch to be the next U.S. Attorney General with a 56-43 majority vote, succeeding current Attorney General Eric Holder. With the confirmation, Lynch, who currently serves as the U.S. Attorney for the Eastern District of New York, becomes the first African-American woman to lead the DOJ.
DOJ Announces Real Estate Investor's Guilty Plea to Foreclosure Bid Rigging and Fraud Conspiracies
On April 2, the DOJ announced a guilty plea by a Northern California real estate investor to charges of bid rigging and fraud conspiracy at foreclosure auctions in violation of the Sherman Act. The charges are the outcome of the DOJ’s antitrust investigations into bid rigging and fraud at foreclosure auctions in Northern California, during the course of which 52 individuals have pled guilty to criminal charges. According to the DOJ, the Defendant allegedly worked with others to designate one bidder to win the selected properties at public foreclosure auctions and then held second, private auctions with the conspirators. The DOJ also charged the Defendant with conspiracy to commit mail fraud in connection with the bid rigging activities.
DOJ Announces Indictment of U.S. Senator Menendez and Friend Salomon Melgen for Conspiracy, Bribery, and Honest Services Fraud
On April 1, the DOJ indicted Senator Robert Menendez and Florida ophthalmologist Salomon Melgen for an alleged bribery scheme in which Menendez accepted financial gifts from Melgen in exchange for using his position of power to assist Melgen in furthering financial and personal interests. According to the DOJ, from January 2006 and January 2013, Menendez accepted gifts including a vacation on the coast of the Dominican Republic, hundreds of thousands of dollars to his 2012 Senate campaign, and numerous trips on Melgen’s private jet. In return for these gifts, which were never reported on the appropriate financial disclosure forms, Menendez (i) pressured executive agencies regarding a dispute between Melgen and the Dominican Republic government concerning a contract relating to the “exclusive screening of containers coming through the Dominican ports;” (ii) advocated on Melgen’s behalf in regards to a Medicare billing dispute; and (iii) actively supported the visa applications of persons related to or in a relationship with Melgen.
DOJ Enters Into Plea Agreement with Oil Company For Violating U.S. Sanctions Laws
On March 25, the DOJ entered into a plea agreement with an oil company that agreed to pay over $230 million and plead guilty for facilitating illegal transactions and participating in trade activities with Iran and Sudan. According to the DOJ, from 2004 through 2010, the oil company’s subsidiaries provided oilfield services to customers in Iran and Sudan, and failed to adhere to U.S. sanctions against Iran and Sudan and enforce internal compliance procedures, resulting in a conspiracy to violate the International Emergency Economic Powers Act. Pending court approval, among other stipulations, the plea agreement also requires the oil company to (i) cease all operations in Iran and Sudan during the probation period; (ii) submit to a three-year period of corporate probation and agree to continue to cooperate with the government and not commit any additional felony violations of U.S. Federal law; and (iii) respond to requests to disclose information related to the company’s compliance with U.S. sanctions laws when requested by U.S. authorities.
DOJ Assistant AG Delivers Remarks on Anti-Money Laundering and Financial Crimes
On March 16, DOJ Assistant AG Leslie Caldwell delivered remarks at the annual ACAMS anti-money laundering conference regarding the importance of establishing and maintaining robust compliance programs within financial institutions to prevent criminal activity, and recent DOJ enforcement actions taken against financial institutions in the anti-money laundering space. Caldwell outlined the integral parts of an effective compliance program, to include: (i) providing sufficient funding and access to essential resources; (ii) incentivizing compliance and ensuring that disciplinary measures are even handed for low-level and senior employees; and (iii) ensuring that third parties interacting with the institutions understand the institution’s expectations and are serious about compliance management. Caldwell emphasized that the strength of an institution’s compliance program is “an important factor for prosecutors in determining whether to bring charges against a business entity that has engaged in some form of criminal misconduct.” Caldwell highlighted the Criminal Division’s recent actions involving financial fraud and sanctions violations, observing that many have resulted in deferred prosecution agreements or non-prosecution agreements (DPAs and NPAs), enforcement tools the DOJ utilizes in the Criminal Division’s cases. Finally, addressing concerns that the DOJ and other law enforcement authorities have targeted the financial industry for investigation and prosecution, Caldwell stated, “banks and other financial institutions continue to come up on our radar screens because they, and the individuals through which they act, continue to violate the law, maintain ineffective compliance programs or simply turn a blind eye to criminal conduct to preserve profit.”
DOJ Announces Settlement with California Bank Over BSA & FIRREA Violations
On March 10, the DOJ announced a $4.9 million civil and criminal settlement with a California-based bank. The bank admitted to the DOJ’s allegations that, from December 2011 through July 2013, it ignored warning signs indicating that its third party processor was defrauding hundreds of thousands of consumers by allowing fraudulent merchants to withdraw money from customers’ accounts without consent. The bank chose to ignore the complaints and inquiries it received regarding the third party processor’s activity, failing to terminate its affiliation with the entity or file a Suspicious Activity Report. The DOJ’s complaint alleges that the bank violated FIRREA; the $4.9 million settlement will cover both the criminal and civil charges, however under an agreed deferred prosecution agreement, criminal charges will be deferred for two years contingent upon the bank admitting to wrongdoing and giving up claims to approximately $2.9 million from accounts seized by the government.