In April 2015 we considered the FIFA scandal and how the allegations interacted with the obligations on financial institutions in Hong Kong.
FIFA continues to be the subject to ongoing allegations of corruption and bribery linked to the process of finding a host for FIFA’s World Cup – held once every 4 years.
FIFA’s own investigative process
The latest headlines come out of an apparent leak of FIFA’s own internal report. The 42 page report covering the World Cup bid process, published in November 2014, was a summary of the final 430 page report compiled by FIFA. When the summary was released, accompanied by a FIFA announcement that there was nothing to see here, the report’s author promptly resigned.
A German newspaper has now reportedly obtained that full report.
Full details are yet to emerge but initial reports allege that USD2million was paid to the 10 year old daughter of a FIFA official. If this is true it raises serious questions, not only in respect of how that money came to be there and from whom, but again places the World Cup bidding process under a cloud – a process which the summary report had cleared of major corruption violations.
International criminal action
In our previous post, we noted that the United States had laid charges in respect of a number of high ranking FIFA officials. Criminal action continues to be pursued in the United States and elsewhere.
United States investigations
Individuals continue to appear before United States Courts in connection with corruption charges associated with FIFA, including members of FIFA’s audit and compliance committee (a US citizen with Hong Kong links), a Swiss banker and a Cayman Islands soccer official who all pleaded guilty to relevant charges.
In the United States Department of Justice’s Press Releases accompanying the guilty pleas, the Department stated that these are a part of a wider investigation involving the FBI, the IRS and INTERPOL.
Swiss authorities are also undertaking investigations in connection with the FIFA scandal. It was recently reported that Swiss investigators were looking at 53 possible cases of money laundering and 104 incidents of suspicious activity in connection with Swiss bank accounts as part of their scrutiny of the awarding of the 2018 and 2022 World Cup hosts.
Impact on the banking sector
So far we have not seen allegations levelled against financial institutions themselves – although they have clearly been caught up as conduits for the relevant behaviour.
Tips for financial institutions
With prosecutors ready, willing and able to bring criminal actions, it is a timely reminder of the obligation to know your customer and monitor for, and report, suspicious transactions.
“Sports” has already been identified as a sector “known to be exposed to corruption levels”, in the Financial Action Task Force’s (“FATF”) Guidance on Politically Exposed Persons. Its “Money Laundering through the Football Sector” also identified very specific vulnerabilities, cases and typologies.
“Sports” as a risk factor has yet been formally adopted in all jurisdictions, but financial institutions are clearly on notice of the risk. As a result, it should be factored into:
- risk classifications;
- source of wealth / funds reviews; and
- transaction monitoring.