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Financial Services Law Insights and Observations


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  • FinCEN advises banks to detect foreign corrupt activity

    Financial Crimes

    On April 14, FinCEN issued an advisory on kleptocracy and foreign public corruption, urging financial institutions to direct their efforts on detecting the proceeds of foreign public corruption. The advisory provides typologies and potential indicators of kleptocracy and other forms of foreign public corruption, including bribery, embezzlement, extortion, and the misappropriation of public assets, and highlights financial red-flag indications of kleptocracy and foreign public corruption to assist banks in preventing, detecting, and reporting suspicious transactions. The announcement also refers to the U.S. Treasury Department’s Kleptocracy Asset Recovery Rewards Program, which offers rewards for information leading to seizure, restraint, or forfeiture of assets linked to foreign government corruption, including the Government of the Russian Federation (covered by InfoBytes here).

    Financial Crimes FinCEN Department of Treasury Of Interest to Non-US Persons Corruption Russia SARs

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  • Treasury says banks need to collaborate to combat corruption

    Financial Crimes

    On February 3, U.S. Treasury Department Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg spoke before the Union of Arab Banks Conference to discuss the importance of working with member institutions in the Middle East and Africa to fight corruption. While noting that countering terrorist financing remains a crucial priority, Rosenberg pointed out that terrorist financing is not the only threat affecting the financial system. “In countries across the region, we have seen trends in which some politically exposed persons have sought to hide their ill-gotten gains through transfers to secondary jurisdictions under both themselves as well as family members’ and associates’ names,” Rosenberg said. “This is something that banks have a responsibility, indeed an obligation, to identify and halt,” she added, emphasizing that “[w]e will all be stronger, more secure, if every bank represented here builds and maintains strong compliance programs” designed to “identify and disrupt the onboarding of customers and the processing of transactions involv[ing] bribes or expropriated government funds.” Rosenberg encouraged the banks to share information on corruption with each other and to ensure enhanced due diligence, especially when dealing with politically exposed persons. “Nearly every act of corruption flows through the formal financial system, the system we are all a part of, which means all of us have the ability—and the responsibility—to stop it,” Rosenberg noted, highlighting the “global corruption boom” in recent decades resulting from individuals seeking to conceal assets and ownerships though shell companies or transactions involving art, real estate, and cryptocurrencies. Rosenberg also informed the banks that as part of the Biden Administration anti-corruption strategy, Treasury “will soon require many U.S. and foreign companies to report their true beneficial owners and to update that information when those beneficial owners change.”

    Financial Crimes Of Interest to Non-US Persons Department of Treasury Corruption Beneficial Ownership

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  • Biden outlines anti-corruption strategy

    Federal Issues

    On December 6, the Biden administration released the United States Strategy on Countering Corruption (Strategy) in response to President Biden’s June Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest, which designated the “fight against corruption” as a top priority in preserving national security in the United States. (Covered by InfoBytes here.) According to a fact sheet issued the same day, the comprehensive Strategy is intended to “improve the U.S. Government’s ability to prevent corruption, more effectively combat illicit finance, better hold corrupt actors accountable, and strengthen the capacity of activists, investigative journalists, and others on the front lines of exposing corrupt acts.” To achieve this, the Strategy presents a “whole-of-government approach to elevating the fight against corruption,” including by taking expanded steps to reduce corrupt actors from accessing the U.S. and international financial system to hide assets and lauder proceeds derived from corrupt acts. The Strategy, which discusses enforcement and rulemaking under the FCPA, Bank Secrecy Act, and Corporate Transparency Act, among other statutes, is divided into the following five pillars:

    • “Modernizing, coordinating, and resourcing U.S. Government efforts to fight corruption,” including “prioritizing intelligence collection and analysis on corrupt actors and their networks.”
    • “Curbing illicit finance” by, among other things, “[i]ssuing beneficial ownership transparency regulations” to identify bad actors and reveal when ill-gotten cash or criminal proceeds is hidden in real estate transactions, as well as cooperating with other counties to strengthen anti-money laundering regimes to increase transparency in the international financial system.
    • “Holding corrupt actors accountable” by engaging with partner countries to detect and disrupt foreign bribery, developing “a kleptocracy asset recovery rewards program that will enhance the U.S. Government’s ability to identify and recover stolen assets linked to foreign government corruption that are held at U.S. financial institutions,” and working with the private sector to “encourage[e] the adoption and enforcement of anti-corruption compliance programs by U.S. and international companies.”
    • “Preserving and strengthening the multilateral anti-corruption architecture,” including working to implement robust transparency and anti-corruption measures with the G7 and G20 and “target[ing] corruption in finance, acquisition, and human resource functions.”
    • “Improving diplomatic engagement and leveraging foreign assistance resources to achieve anti-corruption policy goals” by, among other things, safeguarding government assistance funds from corrupt actors, “[e]xpanding anti-corruption focused U.S. assistance, and monitoring the efficacy of this assistance,” allowing for flexibility within “anti-corruption initiatives and broader assistance efforts to respond to unexpected situations worldwide,” and improving support for independent audit and oversight institutions.

    The Strategy will require federal departments and agencies to submit annual reports to President Biden on progress made to achieve its objectives.

    Federal Issues Biden Financial Crimes Corruption Agency Rule-Making & Guidance Of Interest to Non-US Persons Anti-Money Laundering Beneficial Ownership Bribery FCPA Bank Secrecy Act Corporate Transparency Act

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  • Biden national security memo takes on corruption

    Federal Issues

    On June 3, President Biden issued a memo designating the “fight against corruption” as a top priority in preserving national security in the United States. The memo notes, among other things, that corruption not only corrodes public trust and development efforts, it also decreases global gross domestic product by an estimated two to five percent. In establishing “countering corruption as a core United States national security interest,” the memo highlights that the Biden administration will “lead efforts to promote good governance; bring transparency to the United States and global financial systems; prevent and combat corruption at home and abroad; and make it increasingly difficult for corrupt actors to shield their activities.” This includes efforts that will significantly bolster the ability of the U.S. government to, among other things: (i) boost the ability of key executive departments and agencies to encourage fair governance; (ii) counter illicit finance in the U.S. and foreign financial systems; (iii) hold corrupt individuals accountable; (iv) “strengthen the capacity of civil society, media, and other oversight and accountability actors to conduct research and analysis on corruption trends”; (v) coordinate with international partners to counteract strategic corruption; and (vi) encourage partnerships with the private sector and civil society. The memo further points out that an interagency review must take place within 200 days of the date of the memo, and a report and recommendations will be submitted to the president for further direction and action.

    Federal Issues Agency Rule-Making & Guidance Biden Corruption Financial Crimes Of Interest to Non-US Persons

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  • Justice Department Official Stresses International Cooperation in FCPA Enforcement

    Financial Crimes

    In a recent speech before the Atlantic Council Inter-American Dialogue Event, Acting Assistant Attorney General Kenneth Blanco discussed the importance of foreign law enforcement cooperation in FCPA investigations. Blanco focused his remarks on cooperation between the United States and Brazil and also touched on the Justice Department’s Kleptocracy Asset Recovery Initiative. 

    Blanco noted: “As transnational crime continues to grow in scope and complexity, we increasingly find ourselves looking across the globe to collect evidence and identify witnesses necessary to build cases, requiring greater and closer collaboration with our foreign counterparts. As a result, we find ourselves relying more and more on the use of the various mechanisms of international cooperation with our foreign partners that permit for evidence exchange, fugitive apprehension, and asset recovery.” 

    Blanco’s remarks highlight the DOJ’s continued focus on international and transnational conduct with the cooperation of foreign law enforcement agencies. He concluded: “We at the Department of Justice will continue, like we have for years, pushing forward hard against corruption, wherever it is, and we welcome our fellow counterparts around the world who are fighting this important fight against corruption.”

    Financial Crimes FCPA Corruption DOJ International

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  • DOJ Files Suit to Seize $144 Million in Laundered Nigerian Oil Bribes

    Financial Crimes

    The U.S. Department of Justice announced Friday, July 14, that prosecutors filed a civil complaint seeking to seize $144 million in assets that were allegedly the proceeds of corruption in Nigeria and were laundered in and through the U.S. According to the complaint, from 2011 to 2015, two Nigerian businessmen bribed Nigeria’s former Minister for Petroleum Resources, who oversaw Nigeria’s state-owned oil company. In return, the former Minister steered lucrative oil contracts to companies owned by the businessmen. The proceeds were then allegedly used to purchase assets subject to seizure and forfeiture, including a $50 million New York City condominium and an $80 million yacht.

    “The United States is not a safe haven for the proceeds of corruption,” said Acting Assistant Attorney General Blanco. “The complaint announced today demonstrates the Department’s commitment to working with our law enforcement partners around the globe to trace and recover the proceeds of corruption, no matter the source. Corrupt foreign officials and business executives should make no mistake: if illicit funds are within the reach of the United States, we will seek to forfeit them and to return them to the victims from whom they were stolen.”

    The suit was part of the Kleptocracy Asset Recovery Initiative.

    Financial Crimes DOJ Anti-Money Laundering Corruption Nigeria

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