- Source: uscourts.gov
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Recently, the U.S. District Court for the District of Connecticut upheld a conviction against a foreign national for money-laundering charges which rested on underlying bribery allegations. The defendant, who was sentenced to a 15-month prison term for his money laundering conviction, was a British citizen working for a UK company and its French subsidiary. The defendant was charged with violations of the Foreign Corrupt Practices Act (FCPA), as well as money laundering violations, since the bribery scheme involved a U.S. subsidiary of the defendant’s UK employer. The defendant’s conviction for violations of the FCPA was vacated when the District Court held that his conduct failed to satisfy the specific FCPA requirements that as a foreign national outside of the U.S., he must act as an agent for an issuer or a “domestic concern.” However, his conviction for money laundering charges was upheld. The Court’s decision is an interesting read and provides a good lesson on the far reach of money laundering enforcement and the need for companies to maintain a robust anti-money laundering (AML) program.
I recently wrote an article discussing how the Securities and Exchange Commission (SEC) used violations of U.S. economic sanctions and export control laws as the backbone to support a violation of the FCPA against a U.S. public company.1 The lesson there: despite not having authority to enforce sanctions and export control laws, the SEC relied on the defacto conclusion that such underlying sanctions violations occurred as support for bringing its FCPA charges. While not the same factual scenario as in the SEC case, the Connecticut District Court’s recent decision, nevertheless, provides an interesting comparison. It demonstrates how violations of anti-money laundering requirements can be upheld even if they are predicated on the same conduct that failed to produce a conviction (or finding) on the underlying conduct, which here was bribery under the FCPA. This case also shows the extent of the Department of Justice’s reach to charge individuals, including foreign nationals, with criminal violations of U.S. money laundering statutes, even in situations where there is insufficient evidence to support the predicate offense.
The District Court’s decision is yet another example of why all companies with an international footprint, particularly public companies, should be proactive instead of reactive when it comes to their AML program. Establishing strong internal controls is essential, however, additional steps such as performing ongoing robust risk assessments, conducting periodic independent testing and audits, enhancing new employee and refresher compliance training, as well as monitoring key employee activities and communications are all critical to stay current with evolving legal requirements and regulatory guidance.