FCPA enforcement is a high priority for the Securities Exchange Commission (SEC)

Despite having robust compliance programs in place, Financial Institutions may still encounter legal problems involving FCPA violations.  Here are some  SEC examples: 

• Credit Suisse Group AG – Agreed to pay more than $30 million to the SEC and a $47 million criminal penalty to resolve charges that the firm obtained investment banking business in the Asia-Pacific region by corruptly influencing foreign officials in violation of the FCPA. (7/5/18).
• JPMorgan – Agreed to pay $264 million to the SEC, Justice Department, and Federal Reserve to settle charges that it corruptly influenced government officials and won business in the Asia-Pacific region by giving jobs and internships to their relatives and friends. (11/17/16).
• BNY Mellon – The SEC charged the global investment company with violating the FCPA by providing valuable student internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund. BNY Mellon agreed to pay $14.8 million to settle charges. (8/18/15).

A Financial Institution’s Customers and Internal Staff could be the biggest challenge for its FCPA compliance

As employers, Financial Institutions ought to screen employees to determine if an employee could pose a FCPA threat to the Financial Institution.  The screening process may be performed via background checks to determine if an employee has a criminal record and or is a former foreign official. Financial Institutions are also required to follow additional background checks in the hiring processes under federal regulations imposed under the FDIC insurance Act, the Secure and Fair Enforcement for Mortgage Licensing Act (“SAFE Act”), the Truth in Lending Act (TILA) FINRA rules and provisions of the Securities Exchange Act of 1934 (SEA).    

With respect to customers, Financial Institutions are required to have processes in place for identifying Politically Exposed Persons – known as “PEPs”.  The PEPS are individuals more vulnerable to corruption and bribery involvement due to a current or past governmental position of influence.  Financial Institutions include the PEP’s immediate family and close associates in the PEP definition; and, require additional background checks covering those individuals. 

Senior Level Executives ought to recognize that a Financial Institution’s employment choices may be scrutinized by an FCPA regulator.  The FCPA regulator would be looking at “merit-less” hiring such as hiring  relatives or friends of foreign officials for jobs or internships, jobs created specifically for an applicant, hiring an applicant outside of regular hiring procedures, hiring an applicant without the experience necessary for the job description, and offering a salary that is not consistent with the position or with an applicant’s education and or experience.

Financial Institutions ought to set the right tone at the top of the house and be proactively selective with regard to client onboarding and employee hiring processes.  In addition, maintaining books and records, communicating policies to employees and appointing responsible compliance personnel will help “alert” employees to an FCPA issue should one occur.  Employers ought to ask themselves:  Can I connect an employee to an FCPA issue if one arises?

Don’t be a Victim of your own making

Financial Institutions Senior Level Executives have a responsibility for ensuring that they implement FCPAs policies and procedures, hire experienced compliance professionals, provide effective training for relevant employees (including human resources) and appropriately screen consultants or third-party representatives and or vendors.    

Consult your AML/BSA professional for FCPA compliance strategies.