New Reward Opportunities for Bank Money Laundering Whistleblowers
The Justice Department announced that Swiss bank, Julius Baer & Co admitted in court that it conspired to launder $36 million in bribes to soccer officials with the Fédération Internationale de Football Association (FIFA). As part of the court proceedings, Julius Baer entered into a three year deferred prosecution agreement. The bank had been charged with criminal conspiracy to commit money laundering
As part of the plea deal, the bank has agreed to pay more than $79 million in penalties (including a fine of $43,320,000 and forfeiture of $36,368,400).
In announcing the agreement, a senior Department of Justice official said,
“Today’s resolution sends a strong message to all banks and other financial institutions that if they knowingly misuse our financial system to hide their clients’ criminal proceeds or to promote a corrupt scheme, they will be held to account. From the time of the first FIFA-related indictment, the department has promised to hold accountable the financial institutions involved in this global criminal scheme. We are delivering on that promise.”
According to court documents, between February 2013 to May 2015, Julius Baer, working through relationship manager Jorge Luis Arzuaga, conspired with sports marketing executives including the controlling executive of Torneos y Competencias S.A., an Argenine sports media and marketing company, to launder through the United States at least $36 million in bribes to soccer officials in exchange for broadcasting rights to soccer matches. Julius Baer conspired to execute these illegal transactions through accounts at the bank to conceal the true nature of the payments and promote the fraud. Arzuaga pled guilty in 2017 and was sentenced last year.
Banks have a requirement to monitor accounts for money laundering. Prosecutors say that Julius Baer’s AML controls miserably failed to detect or prevent the money laundering transactions that facilitated the bribery scheme. Although a senior bank relationship manager (Arzuga) was part of the scheme, his supervisors and the bank’s compliance department should have alerted to numerous red flags.
The Justice Department says,
“[T]hey would have known there were multiple, significant red flags, including facially false contracts, payments to third parties at the direction of a FIFA official, and services purportedly rendered by shell corporations — all of which would have alerted the Bank to the bribery, money laundering or other illegal activity… According to [the bank’s] admissions, the bank knew that Arzuaga’s clients’ accounts were associated with international soccer, which was generally understood to involve high corruption risks. Nevertheless, bank executive directed the opening of these accounts be fast tracked in the hope that these clients would provide lucrative business.”
The fines in this case were enhanced because prosecutors say that Julius Baer initially hindered the investigation and made misleading statements about their role in the conduct.
AML Whistleblower Rewards
Employees, compliance officials and other insiders of banks are eligible for large cash whistleblower rewards for reporting misconduct. Assuming the bank is insured by the FDIC or NCUA, there may be rewards of up to $1.6 million under the Financial Institutions Reform Recovery and Enforcement Act (FIRREA).
A new whistleblower program enacted in 2021 specifically providers for even larger rewards for information about anti-money laundering violations. The new Anti-Money Laundering Act (AMLA) provides rewards of up to 30% of any monies recovered from the wrongdoers. There is no cap on rewards. And unlike some whistleblower programs, there are no prohibitions on compliance officers from receiving a reward.
Another benefit of AMLA is the ability to remain completely anonymous.
Yet another provision protects whistleblowers from retaliation.
AML and bank whistleblower cases accepted worldwide. All information protected by the attorney – client privilege and kept completely confidential.