Agency Roundup—other actions and matters of note from the DOJ, SEC, FinCEN and more:
- March 9, 2016—DOJ announced that two Cayman Island financial institutions pleaded guilty to hide $130 million in Cayman bank accounts: The DOJ said that this represented its "first convictions of financial institutions outside Switzerland for conspiring with U.S. taxpayers to evade their lawful and legitimate taxes." The DOJ said that the two companies, Cayman National Securities Ltd. (CNS) and Cayman National Trust Co. Ltd. (CNT), pleaded guilty to a criminal Information charging them with conspiring with U.S. taxpayer-clients from 2001 to 2011 to hide from the IRS more than $130 million in offshore accounts in order to evade U.S. taxes on the income earned in those accounts. In connection with their guilty pleas, CNS and CNT agreed to pay an aggregate of $6 million, consisting of forfeiture, restitution of outstanding unpaid taxes and a fine.
- March 3, 2016—SEC announced that health sciences company Nordion (Canada) Inc. agreed to pay $357,000 to settle charges that it violated the books and records and internal controls provisions of the FCPA: The SEC alleged that, from 2004 to 2011, one of Nordion's engineers paid bribes to Russian government officials to obtain approval to distribute TheraSphere, Nordion's liver cancer treatment, in Russia.
- February 25, 2016—FinCEN announced that it assessed a $4 million civil penalty against Florida bank for "willful violation" of the Bank Secrecy Act's anti-money laundering laws: FinCEN announced the assessment of a $4 million civil money penalty against Gibraltar Private Bank and Trust Company for willfully violating federal anti-money laundering laws under the Bank Secrecy Act as part of disbarred attorney Scott Rothstein's Ponzi scheme. According to FinCEN's press release, since first warned of its deficiencies in 2010, Gibraltar's compliance failures persisted until its primary regulator, the Office of the Comptroller of the Currency (OCC), placed Gibraltar under a Consent Order in 2014. The OCC concurrently issued a $2.5 million civil money penalty against Gibralter.
- February 19, 2016—FinCEN announced that it withdrew money laundering finding against Andorra bank: FinCen announced that it had withdrawn its Section 311 money laundering finding against Banca Privada d'Andorra (BPA) because the bank "no longer operates in a manner that poses a threat to the U.S. financial system." FinCEN said that, in connection with bribes allegedly paid by organized crime figures to bank executives in exchange for money laundering services, authorities in Andorra assumed control of BPA management and operations, arrested the chief executive officer on money laundering charges, and are in the final stages of implementing a resolution plan that is isolating the assets, liabilities, and clients of BPA that raise money laundering concerns. FinCEN said that it believes that these steps taken by the Andorran authorities sufficiently protect the U.S. financial system from the money laundering risks previously associated with BPA.
- February 14, 2016—OFAC fined Barclays Bank $2.5 million for 159 Zimbabwe sanctions violations: OFAC said that the fines resolved potential civil liability in connection with the processing by Barclays of 159 transactions worth $3.4 million in violation of the Zimbabwe sanctions regulations. The transactions were processed through financial institutions in the U.S., including Barclays' New York branch, between 2008-2013.
- March 2, 2016—CFPB fined online-payment company Dwolla, Inc. $100,000 for deficient cybersecurity: This is the first such penalty imposed by the Consumer Financial Protection Bureau. It fined the company $100,000 for "deceptive acts and practices" and "false representations" in connection with data security measures it instituted between 2010 and 2014 (no actual breach was alleged).
- February 1, 2016—FDIC issued cybersecurity guidelines for financial institutions: The FDIC published the article, entitled "A Framework for Cybersecurity," in the Winter 2015 edition of its Supervisory Insights newsletter. The article details the continuing cybersecurity threat to financial institutions and provides a framework for a "robust cybersecurity program." A key theme of the article is that bank board members and management must be involved in implementing a cybersecurity program.
- January 31, 2016—CFTC launched whistleblower website: The CFTC launched a new website to provide the public with information about whistleblower rights and protections and to allow the public to submit tips about potential violations of the Commodity Exchange Act.
- February 26, 2016—Bill to expand whistleblower protections introduced: Rep. Elijah E. Cummings, D-Md., ranking member of the House Committee on Oversight and Government Reform, and Senator Tammy Baldwin, D-Wis., introduced the Whistleblower Augmented Reward and Non-Retaliation Act of 2016 (WARN Act), which would expand protections for those who blow the whistle on financial crimes.
- February 16, 2016—President Obama's fiscal 2017 budget proposal included doubling the SEC's funding over the next five years: The announced proposal earmarked an 11% increase to the SEC's budget, which would reach $1.8 billion over the next five years. According to reports, the SEC is looking to increase its scrutiny of the approximately 11,500 registered investment advisers and this budget increase would allow it to add 100 employees to its adviser-exam staff.
Talks about town:
- March 4, 2016—Assistant Attorney General Leslie Caldwell spoke at the ABA's 30th Annual National Institute on White Collar Crime about the DOJ's focus on collaboration with international authorities to combat financial crimes on a global level, citing to the recent Vimpelcom resolution, among others.
- March 1, 2016—Attorney General Loretta Lynch spoke at the RSA Conference of Cybersecurity in San Francisco.
- February 19-20, 2016—SEC officials, including Chairman Mary Jo White, spoke at the 45th annual SEC Speaks conference in Washington D.C. about the ongoing areas of focus for the SEC (e.g., cybersecurity) and what to expect in 2016 and beyond. In particular, Kara N. Brockmeyer, Chief of the SEC Enforcement Division's FCPA Unit, announced a renewed scrutiny of the pharmaceutical industry in 2016.
- February 1, 2016—Chief of the DOJ's Criminal Division Fraud Section Andrew Weissmann and DOJ Compliance Expert Hui Chen conducted a Q&A with the Ethics and Compliance Initiative about the DOJ's expectations and enforcement efforts with respect to corporate FCPA compliance programs.