Rafael Serrano

Rafael Serrano 

Posted Wednesday February 18, 2015
 

US regulators keeping the heat on financial crimes in 2015

US regulators keeping the heat on financial crimes in 2015

Unlike in Europe, there is no major new anti-corruption legislation in the pipeline for 2015 but there are indications of an expansion in existing legislation as well as a continuation of aggressive and far-reaching enforcement. US regulatory agencies have already begun expanding their relationships with counterparts in most developed markets and international investigative cooperation between government regulators is set to increase in 2015 in an effort to reduce financial crime. For example, senior members of the Department of Justice’s Criminal Division have already highlighted the expansion of existing investigative cooperation agreements with countries like the UK.

Regulatory Enforcement

The Wall Street Journal reported that Foreign Corrupt Practices Act (FCPA) enforcement would continue to be a priority with US regulatory agencies in 2015. Despite a number of legal challenges, including United States v. Newman which overturned two hedge-fund trader convictions in December, the regulators have defended their record of prosecutions.

  • Financial regulatory enforcement in 2014 was bookended with major cases involving Alcoa and Alstom which netted a combined $995 million in fines.


Department of Justice (DOJ)

- Collected a record $24.7 billion in civil and criminal penalties in 2014; more than triple the amount from 2013

- Criminal Division experiencing increased staffing and funding for 2015; currently 37 open criminal attorney positions posted

- Pursuing more individual FCPA charges in 2015 while using the Travel Act to go after commercial bribery



Securities & Exchange Commission (SEC)

- Logged a record 755 enforcement actions in 2014; a 10% increase from 2013 and a 3% increase over their previous record

- Penalties surpassed $4.16 billion in 2014; a 22% increase from 2013

- Will continue to pursue charges using a number of new types of enforcement actions like the “pay-to-play” investment rule



114th United States Congress

- FCPA unaffected by heightened political partisanship

- Similar FCPA support under successive administrations; little support for reform

- Challenges to Dodd-Frank and Volker Rule probable but success uncertain

Information Sharing & Data Transparency

The map below shows the status of FATCA Intergovernmental Agreement (IGA) Countries

Trade-based Money Laundering

Greater controls have pushed financial criminals into less supervised areas, like trade and commerce, which have not been subject to the same levels of ethics and compliance regulation or enforcement.

Sanctions compliance

Despite the potential contraction of total OFAC sanctions, compliance will likely not get any easier in 2015 and could actually get more complex as a patchwork of older sanctions rules get interwoven with new more wide-ranging threads like sectoral sanctions and other jumbled legal definitions become slowly untangled

 



Office of Foreign Assets Control
- 23 enforcement factions in 2014 for a record $1.2 billion in penalties; an almost 800% increase from 2013 and a 6% increase over their previous record
- Sanctions expanding in Russia and North Korea while potentially reducing in Cuba and Iran
- 2014 saw the introduction of sectoral sanctions identifications (SSI) For a complete list of current sanctions please click here.

Conclusion

The emergence of new financial reporting requirements in addition to the existing sanctions and regulatory legislation continues to cast a widening net across global financial markets. 2015 will see a continuation of such efforts as well as a push into previously less regulated areas of international commerce in order to keep up with the continually changing tactics of financial criminals.

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