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It seems that at present in the UK hardly a week goes by without somebody calling for a public inquiry or the government announcing that it intends to launch one. There have been, and remain, many calls for a public inquiry or inquiries into issues related to the COVID-19 pandemic, but there are also calls…

With the 3 February 2021 announcement by Santander, the Madrid-based financial services company, that it is cooperating with a civil regulatory investigation by the U.K. Financial Conduct Authority (the FCA) into its compliance with the U.K. Money Laundering Regulations 2007 and potential breaches of FCA principles and rules relating to anti-money laundering and financial crime systems and controls, it is clear that financial crime is a significant area of focus for the U.K. in 2021.
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Continue Reading Financial Crime Controls Remain a Key Focus and Priority in the U.K.

In late December, the United States Court of Appeals for the Second Circuit affirmed the conviction of Chi Ping Patrick Ho on seven counts alleging multiple FCPA and money laundering (and related conspiracy) violations.[1] The decision is notable for its construction of various FCPA provisions, and further demonstrates the expansive jurisdictional reach of anti-money laundering laws to dollar-denominated transfers.

Ho, a citizen of Hong Kong, served as an officer and director of the Hong Kong-based non-governmental organization China Energy Fund Committee (CEFC-NGO), which was funded by Shanghai-based energy conglomerate China CEFC Energy Company Limited (CEFC).[2] Ho also served as an officer and director of a CEFC-affiliated US non-profit (US NGO), funded by CEFC NGO.[3]

Ho’s conviction, for which he was sentenced to 36 months imprisonment and a US$400,000 fine,[4] stemmed from two alleged bribery schemes involving (1) an attempted US$2 million cash delivery to the President of Chad (which was purportedly rejected by the President) and (2) a US$500,000 wire transfer to a charity associated with the foreign minister of Uganda.[5] Notably, the US dollar-denominated wire originated from a bank in Hong Kong, which was transmitted through its operating unit in the United States as a correspondent to another bank in New York, which in turn was acting as a correspondent for a beneficiary bank in Uganda for final credit to an ultimate beneficiary NGO. Both acts were allegedly made for the benefit of CEFC’s commercial interests in Africa.[6]…

Continue Reading United States v. Ho

On August 18, 2020, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) published a statement outlining the agency’s approach to enforcement of the Bank Secrecy Act (“BSA”), including anti-money laundering (“AML”) regulations issued by FinCEN pursuant to the BSA.  As described in a press release accompanying the statement, the document “aims to provide clarity and transparency to [FinCEN’s] approach when contemplating compliance or enforcement actions against covered financial institutions that violate the BSA.”

This relatively brief statement apparently represents FinCEN’s first published guidance that comprehensibly identifies the agency’s enforcement priorities and policies, and it may reflect an effort by FinCEN to place more emphasis on its enforcement function.   The statement lacks the details of enforcement guidance published by other agencies on issues of trade and financial regulation, such as Treasury’s Office of Foreign Assets Control (“OFAC”).  While many of the topics covered by the FinCEN statement will be familiar to covered financial institutions, there are also a few noteworthy clarifications in the statement.…

Continue Reading FinCEN Publishes Statement Setting Forth Agency’s Approach to BSA Enforcement

The FBI, in a leaked intelligence bulletin, has made a high-confidence assessment on the likely use of Private Investment Funds (PIFs) by “threat actors” for money laundering. Threat actors are defined in the FBI report as financially motivated criminals and foreign adversaries, and PIFs are defined to include hedge funds and private equity funds.

Of note, the FBI “assumes AML programs are not adequately designed to monitor and detect threat actors’ use of private investment funds to launder money.” The FBI’s assumption is based on open source reporting from DOJ, as well as intelligence from corroborated human and financial sources. The FBI also lists examples which highlight threat actors’ use of shell companies to launder money, and the failure of the PIFs’ standardized due diligence, if any, in establishing the source of funds. In one case, the FBI noted the involvement of a “former partner of a major US law firm” who “assisted others in laundering more than $400 million . . . through a series of purported private equity funds holding accounts at financial institutions . . . to conceal and disguise the nature, location, source, ownership, and control of the proceeds.”

While traditional US broker-dealer funds are required to have an anti-money laundering (AML) program, make Bank Secrecy Act filings, and perform customer due diligence, the FBI noted that these requirements are not mandated for PIFs, which are largely exempt from regulatory oversight by the Securities Exchange Commission and other federal financial regulatory authorities. As a result, even where PIFs had in place AML measures, the FBI assessed that money launderers could circumvent traditional AML programs.…

Continue Reading FBI Assessment Notes AML Risk to Private Investment Funds from use of Standardized Due Diligence

On March 4, the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department imposed a $450,000 civil money penalty against Michael LaFontaine, former chief operational risk officer at US Bank National Association (US Bank), for his alleged role in failing to prevent violations of US anti-money laundering (AML) laws and regulations that occurred during his tenure. FinCEN’s unprecedented individual enforcement action is the latest sign that US AML regulators intend to hold individual executives accountable for their roles in financial institutions’ violations of law. It serves as a reminder of the importance of strengthening compliance programs in order to minimize the likelihood of findings of individual liability.
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Continue Reading FinCEN Penalizes Compliance Officer for Anti-Money Laundering Failures