2017 Compliance Trends

From 2008 to 2016, Foreign Corrupt Practices Act (FCPA) fines have increased tremendously from $890 million to $2.48 billion in 2016.  Although 2017 showed a slight decrease with the total in fines only reaching $1.92 billion to resolve FCPA cases, this persistent increasing trend is not a coincidence but rather a clear indication that, despite huge monetary penalties, companies are still showing negligence of compliance with anti-money laundering (AML) laws.

In just the first four months of 2017, six corporate FCPA enforcement actions totaling $256.5 million were settled and one individual resolution took place.  Rolls-Royce plc, Mondelēz International, Inc., and Las Vegas Sands Corp. are just a few of the companies mentioned.  Further, two individuals pleaded guilty to the FCPA violations and four individuals were sentenced.

In the second quarter of the year, violations continued with the Securities and Exchange Commission (SEC) resolving actions with two individuals, five companies reporting declination, and one individual, Samuel Mebiame, a consultant to a mining company, sentenced to prison.  Later in the last four months of the year, a blockbuster resolution of $965 million was imposed to resolve FCPA violations in Uzbekistan by Sweden’s telephone company Telia, with the DOJ and SEC, ultimately placing the company on the FCPA’s Top Ten list.  Additionally, two corporate enforcement actions were placed, and the SEC fined another company for anti-bribery offenses and accounting fraud.

With more criminal penalties incurred, the FCPA Top Ten list for resolutions is shifting to higher numbers.  Not only are these violations taking place internationally, but are happening domestically in the United States as well.  Currently, two US-based companies, KBR/Halliburton, and Och-Ziff, are on the Top Ten list taking fifth and eighth place.  Alone, the United States has reached $991 million in total penalties.

It is clear that the increasing fines are not enough to prevent violations and more must be done to combat this issue in a precautionary direction.  There are many ways to battle money laundering, bribery, and negligence, but the most effective is with an efficient due diligence solution and adequate compliance tools such as Know-Your-Customer (KYC) technology or identification systems that perform regular checks.  Institutions can also hire specialized consultants to review past errors in compliance and find the weakest aspects in their compliance programs so that they can be resolved.

Hopefully, fines and penalties continue to decrease in the new year of 2018, and institutions and individuals continue to take proper steps to comply with AML laws and regulations.


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