The past month has seen FIFA feature heavily in the media. Unfortunately, it has been for the wrong reasons. The ruling body for football across the world has been implicated in suspected breaches of anti-money laundering and bribery rules. If the news was not already damning enough, several UK banks including Barclays and HSBC, have now been implicated in the unlawful processing of allegedly corrupt payments made out to FIFA officials. With HSBC already reported to having settled an investigation into its banking practices by the Swiss authorities for £28 million (available here), more and more questions are now being asked about whether or not there is any truth to the allegations against the banks.
The speculation around the practices of banks and their suspected processing of corrupt payments to FIFA officials throws into light a very important question: what are the rules governing money laundering and bribery? As experts in financial crime, we at Lewis Nedas set out here what these rules are, and how they apply.
Precisely what is it that banks need to be concerned with?
The main concern for banks in relation to the situation involving FIFA, is whether they have processed payments to/from corrupt officials and in so doing, breached anti-money laundering rules. Furthermore, if there is any evidence that the banks were aware of the questionable nature of any payments, and had taken payment without question, they could also have violated bribery laws.
How are these areas regulated?
Banks operate on a plane governed by a variety of complex rules and regulations, and the anti-money laundering regulations and bribery legislation are among the most complicated to understand.
Money Laundering
Money laundering involves the exchange of either money or some other kind of asset that was obtained as a result of criminal activity, which is then exchanged for legitimate money or assets. In the UK, this is regulated by a variety of agencies including Her Majesty’s Revenue & Customs (HMRC) and the Financial Conduct Authority (FCA), who monitor the observation of the Money Laundering Regulations 2007 by the relevant businesses.
It is true that the Money Laundering Regulations only apply to certain organisations, but in reality, this applies to a lot of different businesses. This includes, amongst others:
- Banks;
- Accountants;
- Lawyers; and
- Tax Advisors.
If your organisation is governed by the Money Laundering Regulations, it is obliged to implement a series of processes and procedures that will actively detect potential instances of individuals attempting to launder money. This includes a requirement to:
- Confirm that an individual is who they say they are by checking official documents e.g. passport;
- Establish what the nature of the relationship between your organisation and an individual will be, and where money will be coming from/going to;
- When dealing with individuals that are politically exposed, ensure that senior management approve the organisation engaging with this individual; and
- Keeping up-to-date with an individual’s business and developing your risk assessment accordingly.
If you are suspicious that finances are the result of criminal activity, you must report this to the National Crime Agency (NCA) at the earliest opportunity. You should only continue with a proposed transaction after the NCA has given you its permission to do so.
Bribery
Bribery, like money laundering, is illegal in the UK. The Bribery Act 2010 is the most important piece of legislation in this area and it outlaws the giving (and taking) of some kind of advantage (financial or otherwise), to require someone not to fulfil their duties as would be expected. Bribery also covers the giving (and taking) of finances or some other kind of reward, to reward improper conduct. It does not matter whether dealings concern an individual or an organisation, both are governed by the Act.
The legislation obliges organisations to take active steps to avoid being implicated in bribery. While it is not unlikely that bribery may be permitted in other countries, if a UK business is caught as having acquiesced in any such activities, it will be vulnerable to a legal charge under the legislation. Organisations must train their staff, and implement systems that are designed to identify the risk of bribery. Furthermore, they must instigate safeguards to prevent any such activity occurring.
Is there are defence to a claim that the rules have been violated?
If it is suspected that your organisation has breached the rules against money laundering or bribery, there will be a detailed investigation into your affairs. However it is possible, where legal proceedings are brought against you, to mount a defence in each case:
Money Laundering
It may sound simple but in order to credibly defend a claim for breaching the Money Laundering Regulations, you must be able to refute this by proving that you did follow them.
This is why it is incredibly important that you understand your obligations under the 2007 Regulations, and implement sophisticated procedures that allow you to satisfy your obligations. Record keeping is of particular importance in this respect.
Bribery
There is a defence to an allegation of having been involved in bribery. You must be able to demonstrate that you and your organisation took the necessary steps expected of you to prevent bribery from occurring. In practice, this involves your training staff to spot bribery, and discouraging them from being involved in, and implication the business in bribery.
What is the penalty for failing to follow the rules?
Depending on the type of regime in question, the implications for an organisation of being found guilty of not honouring their responsibilities can be severe.
Money laundering
There are in fact a variety of penalties available to regulators, if you are found to have violated the Money Laundering Regulations. Depending on the severity of your non-compliance, there could be a significant fine issued against you and your organisation. Alternatively, in severe cases, a criminal prosecution can be launched.
Bribery
If you are deemed to have personally been involved in Bribery, you could be imprisoned for up to 10 years and be given an unlimited fine. For organisations, the penalty for involvement in Bribery will also be an unlimited fine.
Contact our Financial and Regulatory Law Solicitors in London
If you have questions regarding the rules on Money Laundering or Bribery, contact us today. Lewis Nedas are experienced solicitors with particular expertise in financial and regulatory law. Our team is often engaged to assist clients facing investigations into alleged illegal conduct. We take a comprehensive approach to legal services, handling every aspect of your case and dealing with regulators on your behalf. Contact us today and see how we can help you.
