First wave of United States sanctions against Iran re-imposed on 7 August 2018, as the amended EU Blocking Statute comes into effect on the same day
Following President Trump’s decision on 8 May 2018 to withdraw the United States from the Joint Comprehensive Plan of Action (“JCPOA”), the US government announced that it would re-impose pre-JCPOA nuclear related sanctions (both primary and secondary) that were lifted under the JCPOA. As we reported previously, two ‘wind-down’ periods – of 90 and 180 days respectively – commenced from the day of the announcement, during which non-US, non-Iranian companies were encouraged by the US government to withdraw from operations in Iran that would be affected by re-imposed sanctions.
On 6 August 2018 the first of these wind-down periods expired. President Trump issued a new Executive Order re-imposing sanctions effective as of 7 August 2018. In response, the EU updated its Blocking Statute to seek to counter the effect of the re-imposed US measures. For our full briefing on the matter, please click here.
DoJ sentences Bitcoin trader to 41 months for money laundering
The Department of Justice ("DoJ") has announced that on July 30, 2018, a Bitcoin trader was sentenced by US District Judge G Murray Snow to 41 months’ imprisonment, with credit for time served since his arrest in April 2017. The defendant was found guilty of money laundering, by a federal jury on March 28, 2018, of money laundering. The evidence at trial showed that federal agents initiated an investigation in 2014, after identifying an advertisement posted on a peer-to-peer bitcoin exchange website. The jury found that over a two-year period, the defendant took $164,700 in cash from the agents (whom he believed to be heroin and cocaine traffickers) and exchanged it for bitcoin in order to conceal and disguise the nature, location, source, ownership, and control of the drug proceeds.
Israel's Mizrahi Bank rejects $342 million DoJ settlement offer
Mizrahi-Tefahot Bank, Israel's third-largest bank has announced that it has rejected a settlement offer from the DoJ for $342 million to settle the DoJ's investigation into whether the bank assisted US taxpayers in evading US federal tax. The bank announced that it reserved only $46.1 million in its financial statements for Q1 2018 to settle with the DoJ and also states that the DoJ failed to provide calculations of how it arrived at the sum of $342 million. Hapoalim, Israel’s largest bank, has set aside $365 million to cover a possible future settlement in a similar investigation into suspected tax evasion by the bank’s US clients. Bank Leumi underwent a similar investigation and paid $400 million in fines in late 2014
DoJ extends FCPA Corporate Enforcement Policy to M&A
In a speech delivered on 25 July 2018, Deputy Assistant Attorney General Matthew Miner of the Justice Department’s Criminal Division announced the extension of the department’s FCPA Corporate Enforcement Policy to acquiring/successor corporations in M&A transactions. The Corporate Enforcement Policy allows for a presumption against prosecution in the event a company self-discloses corrupt activity, fully co-operates with the government and puts in place remediation measures, such as making changes to compliance programs. Despite this, the company must also disgorge any ill-gotten gains.
In the speech, Mr Miner extended the Corporate Enforcement Policy to acquiring companies that uncover corruption issues during due diligence, as well as those that uncover foreign corruption post-acquisition.
CFTC announces first whistleblower award to an individual outside of the US
The Commodity Futures Trading Commission ("CFTC") has announced its first award of over $70,000 to a whistleblower living in a foreign country. The whistleblower is stated to have contributed to an ongoing CFTC investigation that led the CFTC to a successful settlement following allegations of violations of the Commodity Exchange Act ("CEA").
CFTC announces $45 million whistleblower award
The CFTC has announced multiple whistleblower awards totaling more than $45 million; the August 2 announcement follows on from July announcements of an award of approximately $30 million to one whistleblower and the first award made to a whistleblower living in a foreign country. The CFTC’s Whistleblower Program was created by Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Whistleblowers are eligible to receive between 10 percent and 30 percent of the monetary sanctions collected. All whistleblower awards are paid from the CFTC Customer Protection Fund established by Congress and financed entirely through monetary sanctions paid to the CFTC by violators of the CEA.
Walmart beats DoJ in FCPA privilege case
In a judgment delivered on 27 June 2018, the US Court of Appeals for the Fourth Circuit has ruled in favour of Walmart in a dispute that bars the US government from compelling a former in-house lawyer at the company to disclose information previously discussed under attorney-client privilege to investigators, to a grand jury. An agreement was struck between Walmart and the DoJ which allowed an in-house lawyer at the firm to speak with prosecutors. It was contended by the US government that the clauses in the agreement provided a basis for Walmart to only assert privilege against third parties. The appellate court found the Government's interpretation of clauses "unpersuasive" and contended that the clauses plainly conveyed Walmart's intent not to waive any privileges.
SEC proposes changes to whistleblower programme
The Securities and Exchange Commission ("SEC") has issued proposed amendments to its whistleblower programme which include reducing the size of whistleblower awards in cases in which the US recovers $100 million or more to an amount that does not exceed “what is reasonably necessary to reward the whistleblower and to incentivize other similarly situated whistleblowers”. According to the SEC’s statement, whistleblower reports have led to enforcement actions in which it has ordered over $1.4 billion in financial remedies.
Public comment on the proposed changes is open for 60 days.
SEC signs agreement with CFTC
The SEC has announced the signing of a memorandum of understanding (MoU) with the CFTC aimed at improving coordination and information sharing between the two agencies. The MoU updates and enhances a 2008 MoU to make it more relevant in the current market environment and promote efficiency in rulemaking, regulatory oversight, and enforcement. The agencies anticipate that they will continue to cooperate primarily through ongoing informal consultations and meetings.