Over the past decade, the Fédération Internationale de Football Association (FIFA) has been embroiled in several overlapping scandals associated with a reported $150 million in bribery related to FIFA and regional soccer-federation officials.[1] Investigations by U.S. and Swiss authorities to date have led to criminal charges against numerous individuals (including former FIFA and other soccer-federation, sports-marketing, and media executives) and companies,[2] as well as a deferred prosecution agreement (DPA) with an Israeli bank that required the bank to pay more than $340 million for its role in laundering tens of millions of dollars in bribe payments to corrupt soccer officials in multiple countries.[3]
The latest development in the long-running scandal occurred on May 27, when the U.S. Department of Justice announced that a leading Swiss bank, Bank Julius Baer, had agreed to enter into a deferred prosecution agreement (DPA) requiring it to pay more than $79 million in penalties and to admit that it conspired to launder more than $36 million in bribes through the United States to soccer officials with FIFA and other soccer federations.[4]
Factual Background
According to publicly filed admissions, from approximately February 2013 to May 2015, the Bank, through a now-former Bank relationship manager (who pleaded guilty and was separately sentenced for his role in the bribery), conspired with sports marketing executives — including the controlling executive of an Argentina-headquartered sports media and marketing company who also pleaded guilty to FIFA bribery-related charges — to launder through the United States at least $36 million in bribes to soccer officials in exchange for broadcasting rights to soccer matches. The Bank “conspired to execute these illegal transactions through accounts at the Bank to conceal the true nature of the payments and promote the fraud.”[5]
The sports media and marketing firm and its co-conspirators also agreed to pay tens of millions of dollars in bribes to several officials of the Confederación Sudamericana de Fútbol (CONMEBOL) — all of whom were also FIFA officials — for the rights to the Copa América tournament (including the 2015, 2019 and 2023 editions of the tournament and the 2016 Copa América Centenario, a commemorative centennial edition of the tournament played at stadiums across the United States). Bribes were also paid through the Bank to numerous CONMEBOL officials in furtherance of a scheme to obtain the broadcasting rights to the Copa Libertadores tournament.
AML Compliance Failures
At the time of the conduct, according to the Justice Department, the Bank’s Anti-Money Laundering (AML) controls failed to detect or prevent money laundering transactions related to the bribery schemes. Had [the Bank relationship manager’s] supervisors or compliance personnel meaningfully reviewed [his] due diligence on [the sports media and marketing company] and his responses to transaction alerts, they would have known there were multiple, significant red flags, including 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.[6]
According to BJB’s admissions, the Bank knew that accounts of the relationship manager’s clients “were associated with international soccer, which was generally understood to involve high corruption risks. Nevertheless, a Bank executive directed the opening of these accounts be fast tracked in the hope that these clients would provide lucrative business.”[7]
Terms of the DPA
The Department and the Bank agreed to a three-year DPA that required the Bank to pay a total of $79,688,400, consisting of a fine of $43,320,000 and forfeiture of $36,368,400. As part of the DPA, a criminal information was filed against the Bank in the U.S. District Court for the Eastern District of New York, charging the Bank with conspiring to commit money laundering.
The Department stated that it reached this resolution with the Bank based on a number of factors, including the Bank’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 the scheme for more than two years; and the Bank’s prior criminal history.[8] Previously, the Bank had entered into a separate DPA with the Department in 2016, relating to the Bank’s “conspiring with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide billions of dollars in offshore accounts from the IRS and to evade U.S. taxes on the income earned in those accounts.”[9] In addition, in 2020 the Swiss Financial Market Supervisory Authority imposed a number of measures and sanctions on the Bank for serious failings in its AML program.[10]
Notably, the Department also stated that the Bank did not receive any 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 Bank received some credit for its significant effort to remediate its compliance program.
Accordingly, the total criminal penalty that the Bank ultimately received reflected only a five percent reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range
Under the Justice Department’s Corporate Enforcement Policy,[11] which the Department treats as “nonbinding guidance” in all Criminal Division corporate criminal cases,[12] a company that did not voluntarily self-disclose, but that later fully cooperated with the Department and timely and appropriately remediated would be eligible for up to a 25 percent reduction off the low end of the Guidelines sentencing range.[13] The Bank’s five percent reduction off the low end therefore can be seen as no more than a token credit by the Department for the Bank’s remediation without either voluntary self-disclosure or full cooperation.
Takeaways
AML legal and compliance experts in financial institutions should use the information in this DPA as an opportunity not only for general in-house training on the importance of AML compliance, but for briefings and focused training for senior executives on the need both for consistent support of their AML compliance programs and for wholehearted and consistent cooperation with the authorities should their institution come under criminal or civil investigation.
Moreover, if a financial institution has previously been convicted of or admitted to criminal offenses such as money laundering violations, it needs to redouble its compliance efforts to avoid further significant compliance violations. There is no excuse for any financial firm that has already run afoul of the criminal law to neglect its compliance obligations and compromise its reputation further in the name of short-term profit.
Footnotes
[1] See, e.g., Austin Knoblauch and Barry Stavro, A timeline on the FIFA scandal, Los Angeles Times, June 2, 2015, https://www.latimes.com/sports/soccer/la-sp-fifa-scandal-timeline-20150603-story.html; Michael E. Miller and Fred Barbash, U.S. indicts world soccer officials in alleged $150 million FIFA bribery scandal, Washington Post, May 27, 2015, https://www.washingtonpost.com/news/morning-mix/wp/2015/05/27/top-fifa-officials-arrested-in-international-soccer-corruption-investigation-according-to-reports/.
[2] See, e.g., U.S. Department of Justice, Release: Three Media Executives and Sports Marketing Company Indicted in FIFA Case, April 6, 2020, https://www.justice.gov/usao-edny/pr/three-media-executives-and-sports-marketing-company-indicted-fifa-case; U.S. Department of Justice, Release: Nine FIFA Officials and Five Corporate Executives Indicted for Racketeering Conspiracy and Corruption, May 27, 2015, https://www.justice.gov/opa/pr/nine-fifa-officials-and-five-corporate-executives-indicted-racketeering-conspiracy-and.
[3] See U.S. Department of Justice, Release: Bank Hapoalim Agrees to Pay More Than $30 Million for its Role in Money Laundering Conspiracy Involving FIFA Bribery Scheme, April 30, 2020, https://www.justice.gov/usao-edny/pr/bank-hapoalim-agrees-pay-more-30-million-its-role-money-laundering-conspiracy-involving.
[4] See U.S. Department of Justice, Release: Bank Julius Baer Agrees to Pay More than $79 Million for Laundering Money in FIFA Scandal, May 27, 2021, https://www.justice.gov/opa/pr/bank-julius-baer-agrees-pay-more-79-million-laundering-money-fifa-scandal.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] U.S. Department of Justice, Release: Criminal Charges Filed Against Bank Julius Baer of Switzerland with Deferred Prosecution Agreement Requiring Payment of $547 Million, as Well as Guilty Pleas of Two Julius Baer Bankers, February 4, 2016, https://www.justice.gov/opa/pr/criminal-charges-filed-against-bank-julius-baer-switzerland-deferred-prosecution-agreement.
[10] See Jonathan J. Rusch, FINMA Imposes Measures and Sanctions on Julius Baer for Serious Anti-Money Laundering Failings, Compliance & Enforcement, March 13, 2020, https://wp.nyu.edu/compliance_enforcement/2020/03/13/finma-imposes-measures-and-sanctions-on-julius-baer-for-serious-anti-money-laundering-failings/.
[11] U.S. Department of Justice, Justice Manual 9-47.120 – FCPA Corporate Enforcement Policy (updated March 2019), https://www.justice.gov/criminal-fraud/file/838416/download.
[12] See U.S. Department of Justice, Release: Deputy Assistant Attorney General Matthew S. Miner of the Justice Department’s Criminal Division Delivers Remarks at the 5th Annual GIR New York Live Event, September 27, 2018, https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-matthew-s-miner-justice-department-s-criminal-division.
[13] See U.S. Department of Justice, supra note 11.
Jonathan J. Rusch is a Senior Fellow at New York University School of Law’s Program on Corporate Compliance and Enforcement, Adjunct Professor at Georgetown University and American University Washington College of Law, and Principal of DTG Risk & Compliance LLC. He is a former Deputy Chief in the U.S. Department of Justice’s Fraud Section, and former Senior Vice President and Head of Anti-Bribery & Corruption Governance at Wells Fargo.
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