Former Guinean Minister of mines convicted for receiving and laundering bribes

On 4 May 2017, the Department of Justice (DOJ) announced that a former Minister of Mines and Geology of the Republic of Guinea, who is a US citizen, has been convicted of one count of transacting in criminally derived property and one count of money laundering for his role in a scheme to launder bribes paid to him by executives of two Chinese companies. According to the charges, the funds that were laundered were proceeds derived through violations of Guinean bribery laws. The two Chinese companies paid the bribes to obtain a series of agreements with Guinea that gave them lucrative mining rights.To conceal the bribe payments, the defendant falsely claimed to banks in Hong Kong and the United States that he was employed as a consultant and that the money was income from the sale of land which he earned before he was made a minister.

Former executives of Singaporean defence contractor plead guilty in Navy corruption scandal

On 9 May 2017, the Department of Justice (DOJ) announced that two former executives of a Singaporean defence contractor had pleaded guilty for participating in a conspiracy to submit bogus bids, claims and invoices to the U.S. Navy in an effort to receive tens of millions of dollars as part of a corruption and fraud scheme. The contractor provided ship husbanding services such as trash and sewage removal, food, water, security and fuel to U.S. Navy ships. As part of their pleas, the defendants admitted that they and other members of the contractor’s management team created and submitted fraudulent bids. These bids were either entirely or partially fictitious. This ensured that the contractor’s quote would be selected by the U.S. Navy as the supposed lowest bidder. As a result, the contractor could control and inflate the prices charged to the U.S. Navy without engaging in any competitive bidding, as required. Additionally, the defendants admitted that they and others knowingly created fictitious port authorities with fraudulently inflated tariff rates and approved the presentation of these fraudulent documents to the U.S. Navy. Both defendants were arrested by authorities in Singapore at the request of the U.S. government and were extradited. 

Twenty U.S. Navy officials have been charged so far in the fraud and bribery investigation. Additionally, to date, five executives of the contractor have been charged and pleaded guilty.

DOJ sues Fiat Chrysler for 'defeat devices'

On 23 May 2017, the DOJ announced that on behalf of the Environmental Protection Agency (EPA) it has filed a civil complaint against several Fiat Chrysler entities, alleging that nearly 104,000 diesel vehicles are equipped with software functions that were not disclosed to regulators during the certification application process, and that the vehicles contain defeat devices.  The complaint alleges that the undisclosed software functions cause the vehicles’ emission control systems to perform less effectively during certain normal driving conditions than on federal emission tests, resulting in increased emissions of harmful air pollutants.  The civil complaint seeks injunctive relief and the assessment of civil penalties.  

Target settles with multiple states for data breach

On 23 May 2017, it was announced that multiple state governments have reached a record $18.5 million settlement with Target, in response to allegations that over 40 million customers had their payment card information compromised during the 2013 holiday season after the company failed to provide reasonable data security. California will be receiving more than $1.4 million from the settlement, the largest share of any state.  As part of the settlement, Target is required to adopt advanced measures to secure customers’ information. The settlement requires Target to employ an executive to oversee a comprehensive information security program in order to advise its CEO and Board. Target is also required to protect payment card information and adopt other technological measures to protect cards once they are stolen.  

Johnson & Johnson reaches nationwide settlement for quality issues

On May 23, 2017, it was announced that Johnson & Johnson have secured a $33 million settlement nationwide.  According to the announcement, Johnson & Johnson violated federal regulations between 2009 and 2011 that ensure the quality of medicines, including many consumed by children. Certain over-the-counter drugs produced by Johnson & Johnson were reported to fail to dissolve properly and contained unwanted particulates and bacteria.  The settlement resolves allegations that some McNeil-PCC and McNeil Consumer Health Care division manufacturing facilities, which are a part of Johnson & Johnson, failed to abide by federal regulations. As a part of the settlement, McNeil will be required to ensure its marketing and promotional practices do not unlawfully promote over-the-counter drug products.

Banamex USA agrees to $97 million for Bank Secrecy Act violations

On May 22 2017, the DOJ announced that Banamex USA (BUSA), a subsidiary of Citigroup Inc., agreed to pay $97.44 million and enter into a non-prosecution agreement (NPA) to resolve an investigation into BUSA’s Bank Secrecy Act (BSA) violations.  BUSA admitted to criminal violations by wilfully failing to maintain an effective anti-money laundering (AML) compliance program with appropriate policies, procedures, and controls to guard against money laundering in addition to wilfully failing to file Suspicious Activity Reports (SARs).  According to admissions contained in the NPA and the accompanying statement of facts, from at least 2007 until at least 2012, BUSA processed more than 30 million remittance transactions to Mexico with a total value of more than $8.8 billion. During the same period, BUSA’s monitoring system issued more than 18,000 alerts involving more than $142 million in potentially suspicious remittance transactions. BUSA, however, conducted fewer than 10 investigations and filed only nine SARs in connection with these 18,000-plus alerts, filing no SARs on remittance transactions between 2010 and 2012.

US administration extends Iranian sanctions waivers but emphasises missile issues  

On 17 May 2017, the US State Department made its semi-annual report to Congress under the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA). The report condemns Iran as having "compiled one of the world's most egregious records on human rights". Despite this, the State Department also announced that the current administration will continue to waive sanctions as contemplated by the Joint Comprehensive Plan of Action (JCPOA). In relation to this however, the Treasury Department announced new sanctions related to Iran's ballistic missile program, outside of the JCPOA framework. The actions taken can be said to lack clarity in demonstrating the new administration's intentions with respect to the US's Iranian sanctions program.

Details of the administration's decision can be found at our e-bulletin here.

Former compliance officer of MoneyGram settles anti-money laundering case

On 4 Nay 2017, it was announced that the United States Department of the Treasury has settled its claims under the BSA against the former chief compliance officer of MoneyGram International, Inc. (“MoneyGram”). The defendant was alleged to have been failing to ensure that MoneyGram implemented and maintained an effective AML program and file timely SARs. The defendant has agreed to a three-year injunction barring him from performing a compliance function for any money transmitter as well as to pay US$ 250,000. The defendant has admitted, acknowledged, and accepted responsibility for, among others: failing to terminate specific MoneyGram outlets after being presented with information that strongly indicated the outlets were complicit in consumer fraud schemes; failing to implement a policy for terminating outlets that presented a high risk of fraud; and structuring MoneyGram’s AML program such that information that MoneyGram’s Fraud Department had aggregated about outlets, including the number of reports of consumer fraud that particular outlets had accumulated over specific time periods, was not generally provided to the MoneyGram analysts who were responsible for filing SARs.