UK: Cross-Border Investigations Update August 2018

Since the publication of our November 2017 issue, the following significant cross-border prosecutions, settlements and developments have occurred.

Enforcement Trends

Ex-HSBC Forex Trader Wins Appeal Against Extradition to US

On July 31, 2018, the Administrative Division of the High Court of Justice of England and Wales, overturning a lower court decision, blocked the extradition of Stuart Scott to the United States. Scott, the former head of currency trading at HSBC Bank plc and a resident of the U.K., faces charges in the U.S. of conspiracy to commit fraud in connection with a $3.5 billion foreign exchange (forex) trade. The High Court found that Scott's extradition would not be in the interest of justice because most of the alleged harm took place in the U.K. and Scott lacked a significant connection with the U.S. Scott's alleged co-conspirator was convicted in October 2018 after a month-long trial in New York and was sentenced to two years in prison. The U.S. Department of Justice (DOJ) is expected to appeal the ruling to the Supreme Court, the U.K.'s highest court.

Singapore Introduces Deferred Prosecution Agreements to Prosecute Corporate Crimes

On March 19, 2018, Singapore passed legislation to allow prosecutors to make use of deferred prosecution agreements (DPAs) in investigations of corporations, a method of resolution already employed in the U.S., U.K., Brazil and France. The move was prompted by Singapore's increased collaboration with other jurisdictions in anti-corruption and money laundering investigations. Most recently, in December 2017, Keppel Offshore & Marine Limited, a Singapore Exchange-listed company and Singapore's largest oil rig builder, resolved an anti-corruption investigation by law enforcement authorities in the U.S., Brazil and Singapore and agreed to pay a total of $422 million in fines. According to the DOJ's press release, this case represented "the first coordinated [U.S. Foreign Corrupt Practices Act (FCPA)] resolution with Singapore." Under the new law, only a narrowly defined list of offenses are DPA-eligible — including corruption, money laundering and receipt of stolen property — and the framework only applies to corporations, not individuals. The Singaporean DPA framework is similar to the U.K.'s in that DPAs must be approved by the court and will be a matter of public record.

French Prosecutors Begin Entering DPAs

In a move that signaled a new phase of government enforcement in France, on November 27, 2017,1 French authorities published a "convention judiciaire d'intérêt public" (CJIP) with HSBC Private Bank Suisse SA,2 the first such agreement under the Sapin II law that was enacted in December 2016 and provided for the use of CJIPs by French prosecutors.3 Shortly thereafter, on February 23, 2018, French authorities signed two CJIPs settling bribery charges against two sub-contractors to Electricité de France (EDF): SAS SET ENVIRONNEMENT (SET) and Kaefer Wanner (KW).

The EDF CJIPs involve related facts. On July 1, 2011, an EDF service provider informed EDF that one of its purchasing department employees had solicited undue payments for the award of contracts. EDF informed the authorities. A preliminary investigation was opened in 2011 and a formal investigation, led by an investigating judge, was opened in December 2011 for offenses that included corruption and misuse of corporate assets. Investigations revealed that employees of KW and the president of SET paid commissions to the EDF purchasing department employee in order to obtain or uphold contracts concerning the maintenance of thermal power plants.

As part of the CJIPs, KW and SET agreed that their conduct met the legal definition of corruption. KW was fined €2.71 million, plus €290,000 to cover the costs of an 18-month monitorship, while SE was fined €800,000, plus €200,000 to cover the costs of a two-year monitorship. According to the CJIP, the penalty calculations considered aggravating factors including the length of the offenses and involvement of state-owned companies, as well as mitigating factors such as the implementation of remedial measures, cooperation with authorities and dismissal of certain employees.

More recently, in June 2018, Société Générale announced that it had entered into a CJIP with a French law enforcement agency to resolve anti-corruption charges — the fourth CJIP executed under the Sapin II law. This resolution is discussed in more detail below.

SocGen Resolves Investigations by DOJ, CFTC and PNF

Société Générale resolved long-standing investigations by (i) the DOJ and the U.S. Commodity Futures Trading Commission (CFTC) into certain of Société Générale's interbank offered rate submissions, and (ii) the DOJ and the French Parquet National Financier (PNF) into violations of the FCPA and French anti-corruption laws in connection with historical conduct involving Libyan counterparties. The settlements are highly unusual in that they combine unrelated investigations into a single deferred prosecution agreement, and because it is the first time the DOJ and the PNF have cooperated in reaching coordinated resolutions in a corruption case. As part of the settlements, Société Générale agreed to pay penalties totaling approximately $1.3 billion, to enter into a three-year DPA with the DOJ and a similar CJIP with the PNF, to a guilty plea in the U.S. by one of its subsidiaries and to undertake various remedial enhancements. No corporate monitor was imposed by the U.S. authorities, and the bank's anti-corruption program will be monitored for two years by the French agency created by last year's Sapin II legislation, the Agence Française Anticorruption.

US Authorities Extend Compliance Review of Standard Chartered

On July 28, 2018, Standard Chartered announced that it had agreed to a further extension of its DPAs with U.S. regulators until the end of the year. The bank initially entered into the DPAs with the DOJ and the New York County District Attorney's Office in December 2012 after the bank admitted to illegally processing payments to unauthorized entities in countries including Iran, Burma, Sudan and Libya. The bank avoided prosecution in exchange for a settlement of $327 million, an agreement to improve its sanctions compliance and the hiring of an independent compliance monitor. The agreements were extended for three years in December 2014 and for nine additional months in November 2017. The parties have also agreed to extend the term of the monitorship to December 18, 2018.

Criminal Tax Enforcement

Zürcher Kantonalbank Pays $98.5 Million to Resolve Tax Evasion Investigation

On August 13, 2018, Zürcher Kantonalbank (ZKB) entered into a DPA to resolve a charge that it conspired to help clients evade their U.S. tax obligations, file false federal tax returns and hide hundreds of millions of dollars in offshore bank accounts. Two ZKB bankers also each pleaded guilty to a misdemeanor charge of conspiracy.

The settlement is just the latest in 10 years of enforcement actions against Swiss banks by the DOJ. ZKB was one of the remaining so-called Category 1 banks — banks that were already under DOJ investigation when the U.S. and Swiss governments announced the Swiss Bank Program in August 2013. The program resulted in agreements with 81 Swiss banks to resolve similar tax evasion-related conduct. As a Category 1 bank, ZKB was ineligible to participate.

In its DPA, ZKB agreed to a three-year term and to pay a total of $98.5 million in restitution, forfeitures and penalties. DOJ agreed to a 50 percent reduction in ZKB's penalty calculation, but the total amount of cooperation credit was reduced because ZKB's in-house counsel and employees in the human resources department had initially made statements that caused the bankers who pleaded guilty to "feel dissuaded from reaching out to the [U.S.] Attorney's Office in order to explore the possibility of cooperating."

EU 'Blacklist' of Tax Havens Shrinks

The Economic and Financial Affairs Council of the European Union released a list of countries it deems "non-cooperative jurisdictions for tax purposes," thereby exposing the listed countries to potential economic sanctions. The EU officials said the list "is intended to promote good governance in taxation worldwide, maximizing efforts to prevent tax avoidance, tax fraud, and tax evasion." The initial list, a so-called "blacklist," which was released in December 2017, named 17 nations: American Samoa, Bahrain, Barbados, Grenada, Guam, Macau, the Marshall Islands, Mongolia, Namibia, Palau, Panama, St. Lucia, Samoa, South Korea, Trinidad and Tobago, Tunisia and the United Arab Emirates. The council has since removed countries from the list that have committed to address the EU's concerns. Those nations were added to the so-called "gray list," which contains over 60 jurisdictions that are in the process of adhering to EU standards. Nations on the gray list could be moved to the blacklist if they do not honor their commitments. Seven jurisdictions are currently on the blacklist: America Samoa, Guam, Namibia, Palau, Samoa, Trinidad and Tobago, and the U.S. Virgin Islands.

Business Executive Sentenced to Six Months' Imprisonment for Scheme to Avoid Taxes on $28 Million Held in Swiss Bank

On January 25, 2018, Hyong Kwon Kim, a citizen of South Korea and legal permanent resident of the U.S., was sentenced by a federal judge in the U.S. District Court for the Eastern District of Virginia to six months' imprisonment following a guilty plea in which Kim admitted to violating bank secrecy laws, failing to file the required Report of Foreign Bank and Financial Accounts (FBAR) as part of an effort to conceal $28 million in assets maintained in Swiss bank accounts, and filing false tax returns from 1999 through 2010. Kim was also sentenced to fines, civil penalties, and ordered to pay restitution of approximately $14 million stemming from the same charges. Kim acknowledged conspiring with Swiss attorneys and bankers to conceal his ownership of the funds held in two Swiss banks — obtained by inheritance and from a variety of domestic and international business ventures — by a variety of means, including by opening accounts in the names of relatives and through use of sham corporate entities. Kim then used these accounts to engage in transactions for his own benefit, without filing the necessary FBAR. Kim cooperated with the government in its investigation over a five-year period, which the judge took into account at sentencing.

Fraud

Deutsche Bank Traders Charged With Metals Market Spoofing

Two former Deutsche Bank traders — a U.K. resident and a dual citizen of France and the United Arab Emirates — were indicted for their involvement in a years-long scheme of "spoofing": placing and then canceling orders to manipulate the precious metals market. The former traders, based in London and Singapore, allegedly conspired with each other and with others to place orders they did not intend to fill, for the purpose of maximizing profits on other orders. Deutsche Bank is one of nearly a dozen banks whose metals trading came under scrutiny in early 2015. The bank entered a settlement with the CFTC for $30 million in January 2018 as part of this investigation.

BNP Paribas Pleads Guilty and Pays $90 Million for Forex Rigging Scheme

On January 25, 2018, BNP Paribas pleaded guilty to violating the Sherman Act and agreed to pay a $90 million fine to the DOJ to resolve allegations that it participated in a price-fixing conspiracy in the foreign currency exchange market. The DOJ alleged that from late 2011 through mid-2013, traders in BNP Paribas' U.S. unit conspired to fix prices of currencies from Central and Eastern European, Middle Eastern and African countries by creating fake trades on an electronic foreign exchange trading platform, coordinating bids and offers on that platform, and agreeing to quote specific customers currency prices. BNP Paribas USA has agreed to cooperate with the government's ongoing criminal investigation into the forex market and report relevant information to the government.

Ex-Deutsche Bank Trader Pleads Guilty to Rigging Euro Interbank Offered Rate

On March 2, 2018, Christian Bittar, reported to have formerly been one of the world's highest-paid traders, pleaded guilty in a London court to conspiracy to defraud in connection with the Serious Fraud Office's investigation into the manipulation of the Euro Interbank Offered Rate from January 2005 to December 2009. He was sentenced in July 2018 to five years and four months in prison and ordered to pay €3.7 million in costs and penalties. Bittar worked in Deutsche Bank's London office as a senior trader in interest rate-based derivatives before moving to Singapore in 2010. His accomplice, Philippe Moryoussef, formerly of Barclays, received an eight-year prison sentence in absentia. Bittar faces a separate case against him by Britain's markets watchdog, the Financial Conduct Authority (FCA), which had been put on hold pending the criminal proceedings.

HSBC to Pay $101.5 Million to Resolve Fraud Charges

On January 18, 2018, HSBC Holdings plc entered into a three-year deferred prosecution agreement with the DOJ and agreed to pay $101.5 million to settle criminal investigations into rigged currency transactions within its Global Markets business. HSBC admitted that on two separate occasions in 2010 and 2011, traders on its foreign exchange desk misused confidential client information through a front-running scheme. The settlement includes a $63.1 million criminal penalty and $38.4 million in restitution to an unnamed corporate client and reflects a 15 percent reduction in the criminal penalty due to HSBC's cooperation during the investigation and its extensive remediation. HSBC has agreed to take additional steps to enhance its Global Markets compliance program and internal controls and agreed to cooperate fully with regulatory and law enforcement authorities.

Brazilian Sentenced to Three Years for TelexFree Ponzi Scheme

On February 8, 2018, a Brazilian national, Cleber Rene Rizerio Rocha, was sentenced to 33 months' imprisonment for his role in laundering $20 million in proceeds from the TelexFree Inc Ponzi scheme. He pleaded guilty in October 2017 to two money laundering charges after allegedly attempting to help the scheme's leaders transfer $2.2 million out of the U.S. The judge imposed a supervised release term of one year. Federal agents caught Rocha at a restaurant outside Boston handing $2.2 million in cash to a witness who was cooperating with the government. It is alleged that he intended to smuggle to Brazil millions of dollars that TelexFree executives allegedly scammed from investors in their sham phone service. After Rocha left the restaurant, federal agents followed him to his apartment and found $20 million hidden in a mattress box spring.

DOJ and SEC Charge London Executives for $50 Million Fraud Scheme

On March 2, 2018, the DOJ charged U.K. broker Beaufort Securities and several of its staff for orchestrating securities fraud and money laundering schemes totaling $50 million. The alleged schemes included manipulating trading in small-cap U.S. stocks using "pump-and-dump schemes" and then laundering the fraudulent proceeds through off-shore bank accounts and the purchase and sale of art. It is alleged that Beaufort Securities facilitated 10 such schemes between 2014 and 2018. The U.S. Securities and Exchange Commission (SEC) also charged Beaufort Securities and its staff with manipulating trading in HD View 360 Inc., a U.S.-based microcap issuer. The U.K.'s FCA has declared Beaufort Securities insolvent and is assisting the DOJ with its investigation. In August 2018, one of the individuals named in the indictment — Arvinsingh "Vinesh" Canaye, a Mauritian citizen and the former general manager of Beaufort Management — withdrew his plea of not guilty and pleaded guilty to money laundering conspiracy.

FCPA and Bribery

Second Circuit Limits Scope of Liability for Foreign Nationals Under the FCPA

On August 24, 2018, in U.S. v. Hoskins, the U.S. Court of Appeals for the Second Circuit held that conspiracy and aiding and abetting charges do not extend FCPA liability beyond the categories of persons directly covered by the statute.

The U.S. government charged U.K. citizen Lawrence Hoskins with FCPA violations as part of a larger scheme involving the U.S. subsidiary of Alstom S.A., a French company. Hoskins was employed by Alstom's U.K. subsidiary but was assigned to work for another Alstom subsidiary based in France. The government alleged that Alstom U.S. and individuals associated with the parent company, including Hoskins, retained two consultants to bribe officials to secure a $118 million contract from the Indonesian government. Hoskins repeatedly contacted certain U.S.-based conspirators regarding the scheme but never traveled to the U.S.

The U.S. government charged Hoskins with conspiring to violate the FCPA, among other offenses. In district court, Hoskins sought to dismiss the charge on the ground that he was not covered by the statute, which applies to: (i) American companies and citizens, and their agents; (ii) employees, officers, directors and shareholders of companies listed on a U.S. national securities exchange; and (iii) foreign persons acting in the U.S. In August 2015, the district court granted Hoskins' motion in part, holding that the government cannot charge a nonresident foreign national who does not fall into one of the above three categories with conspiracy to violate the FCPA.

The Second Circuit affirmed that aspect of the district court's ruling. It held that based on the text and legislative history of the FCPA, Congress intended to limit the extraterritorial reach of the statute and did not intend persons outside the above three narrow categories to be subject to FCPA liability on a conspiracy charge or aiding and abetting theory. Accordingly, the Second Circuit held that Hoskins can be charged under the FCPA only if he falls within the categories of persons directly covered by the statute. The DOJ is reviewing the ruling and considering next steps in the pending case.

Credit Suisse Settles With DOJ and SEC Over Asia Hiring Practices

On July 5, 2018, Credit Suisse announced that it had resolved DOJ and SEC FCPA investigations of the bank's hiring practices. The bank allegedly hired friends and family of foreign government officials in Asia in order to win investment banking business there. Credit Suisse Hong Kong Ltd. received a nonprosecution agreement and agreed to pay a $47 million civil penalty to the DOJ; parent Credit Suisse Group AG will pay approximately $30 million to the SEC. The SEC said it did not impose a civil penalty on Credit Suisse Hong Kong Ltd. based on the imposition of the DOJ fine.

German Prosecutors Fine Airbus €81.25 Million in Bribery Investigation

On February 9, 2018, German prosecutors fined Airbus SE €81.25 million ($99 million) for the "negligent breach of supervisory duties" surrounding the sale of Eurofighter Typhoon jets to Austria in 2003. While the prosecutors did not pursue bribery charges, the penalty reflects that Airbus lacked sufficient internal controls over documentation, including to establish that payments were made legitimately and in exchange for services. Airbus has since established a "serious compliance program," and its efforts to create a new compliance culture within the company were recognized by the German prosecutors.

More Charged in PDVSA Bribe Scheme

On August 1, 2018, a Venezuelan American business executive was arrested in the U.S. on foreign bribery charges, based on allegations that he made corrupt payments to an official of Venezuela's state-owned energy company, Petroleos de Venezuela S.A. (PDVSA), in order to secure contracts with PDVSA. With this arrest, DOJ now has unsealed charges against 17 individuals, 12 of whom have pleaded guilty, as part of a larger, ongoing investigation by the U.S. government into bribery at PDVSA.

On July 16, 2018, a former PDVSA official pleaded guilty to conspiring to violate the FCPA and conspiring to commit money laundering, admitting that he helped funnel bribes from U.S.-based companies to PDVSA officials. The DOJ also recently announced charges against eight men for their alleged participation in a billion-dollar international scheme to launder funds embezzled from PDVSA using Miami real estate and false-investment schemes. Two of these men — a German national and Panamanian resident, and a Colombian national and naturalized U.S. citizen — have been arrested. According to the complaint, the alleged conspiracy began in December 2014 with a currency exchange scheme that was designed to embezzle around $600 million from PDVSA that was allegedly obtained through bribery and fraud; by May 2015, the conspiracy had allegedly doubled in amount to $1.2 billion.

Former Army Corps of Engineers Contracting Officer Sentenced to Eight Years' Imprisonment for Bribery Scheme

On March 8, 2018, a former employee of the U.S. Army Corps of Engineers, Mark E. Miller, was sentenced to 100 months in prison for soliciting approximately $320,000 in bribes from contractors in Afghanistan in exchange for his assistance in securing U.S. government contracts. He was also ordered to serve three years of supervised release and to forfeit $180,000 and a Harley-Davidson motorcycle. Miller admitted that in overseeing a $2.9 million contract granted to an Afghan construction company, he solicited from the owners approximately $280,000 in exchange for ensuring the continuation of the contract. After the contract was no longer active, he solicited an additional $40,000 in bribes in return for the possibility of future contract work and other benefits.

Maryland-Based Transport Logistics International Inc. Agrees to Pay $2 Million for Bribing a Russian Official in Connection With Uranium Contracts

On March 13, 2018, Maryland-based Transport Logistics International Inc. (TLI) entered into a deferred prosecution agreement with the DOJ and agreed to pay a $2 million penalty to resolve an investigation of bribery of an official at a subsidiary of Russia's State Atomic Energy Corporation. Three individuals were charged for their alleged roles in the bribery scheme, in violation of the FCPA. The alleged conduct took place from 2004 until 2014 and involved TLI conspiring to pay over $1.7 million to offshore bank accounts associated with shell companies, at the direction of and for the benefit of a Russian official at the subsidiary of Russia's State Atomic Energy Corporation. TLI received full credit for its substantial cooperation with the DOJ's investigation and for engaging in remedial measures, including terminating the employment of all those engaged in the misconduct.

Former Siemens Executive Pleads Guilty to $100 Million Argentine Bribery Scheme

On March 15, 2018, the former technical manager of Major Projects at Siemens, Eberhard Reichert, pleaded guilty to conspiring to (i) violate the anti-bribery, internal controls, and books and records provisions of the FCPA and (ii) commit wire fraud. Reichert admitted to engaging in a decade-long scheme to pay tens of millions of dollars in bribes to Argentinian government officials to secure a $1 billion contract to create national identity cards. He further admitted that the payments were concealed through various means, including the use of shell companies to disguise and launder the proceeds.

Kinross Gold Charged With FCPA Violations

On March 26, 2018, the SEC announced a settlement with Kinross Gold Corporation for FCPA violations stemming from the company's repeated failure to implement adequate accounting controls of two African subsidiaries. Kinross Gold acquired these subsidiaries but failed to implement controls for a period of three years, and then failed to maintain these controls. Without admitting or denying the findings, Kinross Gold agreed to a cease-and-desist order, a penalty of $950,000 and undertakings to report on its remedial steps for a period of one year.

Anti-Money Laundering

Latvian Bank Failure Highlights Limits to ECB's Supervisory and Enforcement Authority

In 2014, the European Central Bank (ECB) became responsible for the prudential supervision of all credit institutions in the eurozone. In August and September 2017, the ECB published its first-ever fines against an Irish bank and an Italian bank for non-compliance with prudential regulations.

On February 13, 2018, the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) designated Latvia's third-largest bank, ABLV, as an "institution of primary money laundering concern" and proposed Section 311 special measures. On February 18, 2018, the ECB instructed the Latvian banking authority (FCMC) to issue a moratorium and place a temporary freeze on payments, including client deposits. Despite the ECB's move, ABLV's position deteriorated sharply and on February 24, 2018, the ECB made a determination that ABLV was failing or likely to fail. The bank is currently in the process of liquidation.

The ECB's decision sheds light on two shortcomings in the banking union's current supervisory framework. First, although ABLV was under the ECB's direct supervision, the ECB did not have the power to issue a moratorium against the bank. The ECB had to instruct the FCMC, pursuant to Article 22 of the Single Supervisory Mechanism regulation (No 468/2014), to use its moratorium power against ABLV. Such moratorium power, however, is not a harmonized tool across members states and the ECB's move may not have had the same effect in another member state. Second, FinCEN's designation of ABLV — and ABLV's subsequent failure — highlights the ECB's lack of supervisory and enforcement authority vis-a-vis the prevention of money laundering and terrorist financing, which remain the province of the national authorities and do not reside at the EU level. To address these shortcomings and prevent cases similar to ABLV, which can have significant disruptive effects on the EU market, Brussels is currently working on creating a harmonized moratorium power across member states and toughening cross-border enforcement of anti-money laundering (AML) rules.

Substantial Penalties Imposed on Three Banks for AML Deficiencies

Three banks have faced substantial penalties in the United States in 2018 for anti-money laundering deficiencies and related violations. In February 2018, U.S. Bancorp entered into a deferred prosecution agreement with the U.S. Attorney's Office for the Southern District of New York for two felony violations of the Bank Secrecy Act by its subsidiary, U.S. Bank, for willfully failing to have an adequate AML program and willfully failing to file a suspicious activity report. Under the DPA, U.S. Bancorp agreed to pay a $528 million penalty and to continue to implement changes to its AML compliance program. FinCEN, the OCC and the Board of Governors of the Federal Reserve System each assessed additional penalties. U.S. Bancorp and U.S. Bank paid a total of $613 million in penalties to resolve the case.

Also in February 2018, Rabobank entered a guilty plea to a felony charge of conspiracy to defraud the United States and to corruptly obstruct examination of a financial institution. Under the terms of the guilty plea, Rabobank agreed to forfeit over $368 million for obstructing regulators and hiding deficiencies in its AML program. The forfeiture amount was satisfied in part by payment of a $50 million penalty to the OCC.

Earlier, in January 2018, the Federal Reserve imposed a $29 million penalty on Mega International Commercial Bank Co., Ltd., for AML violations. The bank was also required to improve its AML oversight and controls. The Federal Reserve fine came about five months after the DFS, upon finding that Mega Bank had violated New York's AML laws, imposed a $180 million fine on Mega Bank and required it to install an independent monitor.

Singapore's Bank Regulator Fines Standard Chartered $4.9 Million for Anti-Money Laundering Failures

On March 19, 2018, the Monetary Authority of Singapore (MAS) imposed a $4.9 million fine against Standard Chartered PLC for violations of Singapore's anti-money laundering/combatting the financing of terrorism requirements. The fine comprised separate monetary penalties for shortcomings in the risk management systems and controls of two of SC's Singapore-based entities — Standard Chartered Bank's Singapore branch (SCBS) and Standard Chartered Trust (Singapore) Ltd. (SCTS).

MAS alleged that the violations occurred when certain SCBS customers transferred their trust accounts from Standard Chartered Trust (Guernsey) to SCTS prior to the effective date in January 2016 of Guernsey's regulations implementing the Common Reporting Standard (CRS). The CRS requires that participating jurisdictions collect tax and financial information from financial institutions and automatically share that information with other jurisdictions as part of a global anti-tax avoidance program. MAS posited that the timing of the account transfers suggests SCBS customers may have been trying to avoid their CRS reporting obligations, and SCBS and SCTS failed to appreciate this as a money laundering risk. MAS also alleged that SCBS and SCTS failed to file timely suspicious transaction reports as required by Singapore law.

Economic Sanctions and Import/Export Controls

Turkish Banker Sentenced in Sanctions Case

On May 16, 2018, Mehmet Hakan Atilla, a Turkish banker, was sentenced to 32 months in prison for participating in a billion-dollar conspiracy to violate U.S. economic sanctions on Iran. The government had sought approximately 20 years' imprisonment. Atilla was convicted in January 2018, after a five-week jury trial, of conspiracy to defraud the United States, conspiracy to violate the International Emergency Economic Powers Act (IEEPA), conspiracy to commit bank fraud, substantive bank fraud and conspiracy to commit money laundering. The government alleged at trial that Atilla had been involved in transactions to supply the government of Iran, Iranian entities and specially designated nationals with currency and gold. The government further alleged that Atilla had been involved in concealing these transactions, including by falsifying documents to make the transactions appear to involve food and thus fall within the humanitarian exemption to the Iran sanctions regime. In sentencing Atilla to a far shorter term than prosecutors had sought, Judge Richard M. Berman of the U.S. District Court for the Southern District of New York said that although Atilla had "unquestionably furthered" the scheme, he "was a reluctant participant ... who was following orders," not "a mastermind."

Electrical Engineer Sentenced to 25 Years for Attempting to Send Military Equipment to the Government of Iran

On March 15, 2018, Reza Olangian, a dual citizen of Iran and the United States, was sentenced to 25 years in prison for conspiring and attempting to send surface-to-air missiles and military aircraft parts to the government of Iran. Olangian, an electrical engineer, had been arrested in Estonia in 2012 and was extradited to the United States in 2013. He was convicted in 2016.

Singapore's Bank Regulator Fines Standard Chartered $4.9 Million for Anti-Money Laundering Failures

On March 19, 2018, the Monetary Authority of Singapore (MAS) imposed a $4.9 million fine against Standard Chartered PLC for violations of Singapore's anti-money laundering/combatting the financing of terrorism requirements. The fine comprised separate monetary penalties for shortcomings in the risk management systems and controls of two of SC's Singapore-based entities — Standard Chartered Bank's Singapore branch (SCBS) and Standard Chartered Trust (Singapore) Ltd. (SCTS).

MAS alleged that the violations occurred when certain SCBS customers transferred their trust accounts from Standard Chartered Trust (Guernsey) to SCTS prior to the effective date in January 2016 of Guernsey's regulations implementing the Common Reporting Standard (CRS). The CRS requires that participating jurisdictions collect tax and financial information from financial institutions and automatically share that information with other jurisdictions as part of a global anti-tax avoidance program. MAS posited that the timing of the account transfers suggests SCBS customers may have been trying to avoid their CRS reporting obligations, and SCBS and SCTS failed to appreciate this as a money laundering risk. MAS also alleged that SCBS and SCTS failed to file timely suspicious transaction reports as required by Singapore law.

Economic Sanctions and Import/Export Controls

Turkish Banker Sentenced in Sanctions Case

On May 16, 2018, Mehmet Hakan Atilla, a Turkish banker, was sentenced to 32 months in prison for participating in a billion-dollar conspiracy to violate U.S. economic sanctions on Iran. The government had sought approximately 20 years' imprisonment. Atilla was convicted in January 2018, after a five-week jury trial, of conspiracy to defraud the United States, conspiracy to violate the International Emergency Economic Powers Act (IEEPA), conspiracy to commit bank fraud, substantive bank fraud and conspiracy to commit money laundering. The government alleged at trial that Atilla had been involved in transactions to supply the government of Iran, Iranian entities and specially designated nationals with currency and gold. The government further alleged that Atilla had been involved in concealing these transactions, including by falsifying documents to make the transactions appear to involve food and thus fall within the humanitarian exemption to the Iran sanctions regime. In sentencing Atilla to a far shorter term than prosecutors had sought, Judge Richard M. Berman of the U.S. District Court for the Southern District of New York said that although Atilla had "unquestionably furthered" the scheme, he "was a reluctant participant ... who was following orders," not "a mastermind."

Electrical Engineer Sentenced to 25 Years for Attempting to Send Military Equipment to the Government of Iran

On March 15, 2018, Reza Olangian, a dual citizen of Iran and the United States, was sentenced to 25 years in prison for conspiring and attempting to send surface-to-air missiles and military aircraft parts to the government of Iran. Olangian, an electrical engineer, had been arrested in Estonia in 2012 and was extradited to the United States in 2013. He was convicted in 2016.

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Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions