Global Financial Integrity

Ukrainian real estate play in Cleveland highlights need to know the beneficial owner

Editor’s note: this piece was originally published in the Cleveland Plain Dealer on August 28, 2019. Earlier this year, an important legal complaint filed in the state of Delaware alleged that two Ukrainian oligarchs laundered hundreds of millions of...

Cryptocurrency and the rise of new illicit financial flows

By Ben Iorio With the rise of Bitcoin and cryptocurrency, the norms for currency have changed. Cryptocurrencies allow transactions to take place with a currency not regulated by any country. In essence, cryptocurrencies are currencies existing completely...

Taking stock of 2018’s money laundering scandals: When is enough enough? (Part 2)

A systemic problem persists in banks’ ability and willingness to stop dirty money from flowing through the financial system. But when will it stop, or even diminish?

Rabobank: Similar Facts, Different Outcome–Signal of a New DOJ Approach?

Yesterday’s announcement of a guilty plea by Rabobank NA with corresponding penalty and forfeiture of $369 million did not immediately strike people as new or surprising.  In fact, the pattern of anti-money laundering/Bank Secrecy Act (AML/BSA) violations...

What’s Going to Happen to the FIFA Forfeiture Money?

GFI’s Heather Lowe Proposes Reinvesting FIFA Forfeiture Funds in Inner-City Youth Soccer Programs

Following from my blogs on Friday and Monday about different aspects of the FIFA case, I’d like to talk a little bit about the forfeiture funds and penalty payments that the U.S. Department of Justice (DOJ) will be collecting in this case and what will happen to them. A proceeding like the FIFA case can result in a really large pile of cash that will be under DOJ control. Unless the Defendants are acquitted of the charges against them at trial or the DOJ decides to drop the case against a Defendant for some reason, we can expect that the DOJ will be collecting from those Defendants the bribe money that they received, anything they bought with that money that will then be auctioned off (for example, check out the list of real estate that will likely go under the hammer in Florida and Georgia from paragraph 343 of the indictment), and, possibly, additional fines in the form of penalties. It is going to add up.

Recouping Expenses

It is obviously critical that the DOJ, Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS) and other government agencies that were involved in this case are able to recoup the money they spent working on this investigation over the past few years. Another way of looking at it is that they need to keep a sizable chunk in order to ensure that they have the resources to work cases like this over the next few years. No matter how you slice it, that’s important to American taxpayers as well, who pay less in taxes because the DOJ and other agencies are able to fund part of their work through forfeiture and penalty payments instead of through tax dollars. Win-Win.

Can FIFA Victims Sue for Damages?

The ‎FIFA Bribery Case Could Lead to Compensation for the Victims of FIFA’s Alleged Corruption

You may have noticed that the U.S. Department of Justice (DOJ) is making sure that we have an idea of whom the victims in this FIFA corruption case are. They noted it in their press release, talked about it at their press conference, and included it in the indictment at paragraph 73. I agree with the Department of Justice that the victims of this case are important. This blog is about why this case could potentially lead to compensation for those victims in a way you might not have considered.

So who are those victims? The DOJ’s indictment describes how FIFA, the FIFA confederations, the confederation members (including national member associations), youth leagues, and development programs all lost out on funds from the marketing contracts that may have been more lucrative for FIFA if there had been competitive bidding for the contracts. In addition, other sports marketing companies that may have lost out on a bid to secure the marketing rights—or may never even had a chance to bid—are also victims.

For those of us that work on development issues, this is a particularly important point. Commercial bribery distorts markets. Among other things, it can:

1. prevent honest firms from winning bids and therefore stymie their growth,
2. block new companies from entering a market, and
3. weaken that market in general because the best service, price, processes, etc., are no longer going to rise to the top, keeping market standards low and depriving consumers of better quality services and products.

When a country or industry is plagued by endemic bribery, these negative economic effects increase exponentially and a country’s economy cannot grow. That’s why the DOJ doesn’t want large-scale bribery taking root in the U.S., and rightly so.

FIFA: The Bribery Case with No Bribery Charge

This was a very exciting week for lawyers who are sports enthusiasts – the Department of Justice indicted fourteen FIFA officials, alleging that they are part of what one could conclude from reading the indictment is a massive, multifaceted, bribery ring. Informal allegations have been made before, and the whispers that FIFA is synonymous with bribery and corruption have been growing louder over the years. But this week the Department of Justice shouted it from the mountain top (or, perhaps more accurately, in front of a lot of the international press corps, which was probably more effective).

There are a number of interesting facets to the case that is now before us. The first is that for a case about bribery, a charge of bribery seems to be conspicuously absent. The Defendants were indicted for a “pattern of racketeering activity,” including charges of violating the Travel Act in aid of racketeering, money laundering, money laundering conspiracy, wire fraud, wire fraud conspiracy, and other charges that do not expressly include bribery. Why is that?

Checking up on the Banks: Yet More of the Same

Until Global Financial Crime Punishments include Individual Prosecutions, Rogue Banks Will Continue to Do as They Please, Writes GFI’s Joshua Simmons

After the recent spate of massive money-laundering, sanctions-busting, and tax-evasion scandals involving large international banks, sometimes it seems more difficult to name a single bank that has not been exposed for wrongdoing than list all those that have. One might think that, having worked their way through so many financial institutions, investigators and prosecutors would be at a loss for what to do next. The banks, though, seem more than willing to provide more work, with many either failing to meet their ends of their settlement agreements, continuing to move money for criminals and tax-evaders, or both.

Standard Chartered, which settled charges in mid-2012 related to its widespread activities violating U.S. sanctions on Iran, Burma, Libya, and Sudan, paid an additional fine this summer for failing to uphold its obligations under the settlement. The bank may now be in line for even more punishment, after new information seems to indicate additional transactions with Iranian entities that weren’t disclosed or admitted in the original settlement. It’s not presently clear whether Standard Chartered retained a relationship with Iranian customers after its settlement in 2012, but it certainly continued to take their money after the initial investigation began.