e have previously written about the impact of the pause in enforcement of the FCPA implemented by the Trump Administration on non-American companies.[1] Although the 180-day review period the Executive Order provided to the Department of Justice (“DOJ”) to develop new guidance for FCPA enforcement has not yet elapsed, several recent developments in the global anti-bribery and anti-corruption (“ABAC”) enforcement space warrant an update.

Updates from the United States

U.S. enforcement agencies have given mixed signals about their intentions for future FCPA enforcement.

Several recent decisions by the DOJ suggest that it does not intend to continue pursuing FCPA enforcement in the same way or to the same extent as it has historically. In addition to dropping the long-running bribery case against two former Cognizant executives in New Jersey,[2] the DOJ has closed its corruption investigation into Norwegian oil and gas company PetroNor,[3] dropped its inquiry into American medical device company Stryker relating to potential FCPA violations,[4] and moved to dismiss FCPA charges against American waste management company Stericycle several months before the expiration of its deferred prosecution agreement.[5] The DOJ has also terminated the two monitorships it imposed on Swiss commodity trading and mining company Glencore (one of which relates to Glencore’s conspiracy to violate the FCPA) in May 2022, [6] and ended a FCPA-related non-prosecution agreement with American chemicals manufacturing company Albermarle,[7] all more than a year earlier than they were set to conclude. Although the Executive Order pausing enforcement of the FCPA discussed “eliminating excessive barriers to American commerce abroad,” and stated a desire to reduce “overexpansive and unpredictable FCPA enforcement against American citizens and businesses,”[8] PetroNor and Glencore are not American companies. Closing the PetroNor investigation and ending Glencore’s FCPA monitorship early could suggest a more general intention to limit FCPA enforcement instead of focusing on enforcement against non-American companies as the wording of the Executive Order suggested may be possible.

In addition to dropping existing cases and monitorships, the DOJ is also considering budget cuts that could affect investigations involving foreign defendants, witnesses, and evidence – as many FCPA cases do. In a recent memo, Deputy Attorney General Todd Blanche suggested that there would be personnel cuts at the Office of International Affairs (“OIA”).[9] OIA is responsible for international extraditions and mutual legal assistance, services relied upon by the FCPA Unit to build and prosecute its cases.

While these moves tend to suggest that the DOJ’s focus on foreign bribery will be more limited moving forward, the DOJ has also indicated that it intends to proceed with several other, already-filed cases. As a result, it is premature to conclude that the DOJ is retreating from FCPA enforcement entirely. Relatedly, it is also difficult to discern any definitive common threads that distinguish the cases the DOJ is continuing to pursue from those it has dropped, making it difficult to predict the strategy for FCPA enforcement going forward. The cases moving forward are against both American and non-American individuals and they include:

• A case against two executives of UK-based voting machine company Smartmatic and a Philippines election official. The DOJ alleges that the Smartmatic executives conspired to pay more than $1 million in bribes to the election official in exchange for contracts for Smartmatic to supply voting machines and services for the Philippines’ 2016 elections.[10]
• A case against a former Corsa Coal executive, who the DOJ accuses of participating in a scheme to bribe Egyptian officials to win coal contracts worth $143 million between 2016 and 2020.[11]
• A case against three individuals for allegedly bribing government officials in exchange for contracts to provide uniforms and other goods to the Honduran National Police.[12]

On May 12, 2025, the DOJ’s Criminal Division published a memorandum setting out its white-collar enforcement priorities and announcing changes to its approach to investigations and prosecutions (the “Galeotti Memo”).[13]  The Galeotti Memo provides further clues about the future of potential FCPA investigations and enforcement in the Trump Administration. Specifically, the Galeotti Memo states that the DOJ will prioritize investigating and prosecuting bribery and related money laundering that “impact U.S. national interests, undermine U.S. national security, harm the competitiveness of U.S. businesses, and enrich foreign corrupt officials.” Though it acknowledges that conducting cross-border investigations (as most bribery investigations are) is time-intensive, the Galeotti Memo emphasizes the need for “efficient” investigations, with the DOJ now requiring prosecutors to investigate and make charging decisions expeditiously. Additionally, moving forward, independent compliance monitors – often imposed in the past in resolutions of FCPA enforcement – will be imposed only when truly necessary for a company to implement a compliance program or prevent a recurrence of misconduct. To the extent monitors are imposed going forward, their scope will be narrowly tailored.[14]

On the Securities and Exchange Commission (“SEC”) side, the Chief and Deputy Chief of the SEC’s FCPA Unit have recently retired,[15] and the SEC has informed multiple defense counsel that it has paused FCPA investigations until further guidance is issued by the Trump Administration pursuant to the Executive Order. These developments come on the heels of then-Acting Deputy Director of the SEC’s Enforcement Division Antonia Apps’s comment at a recent speaking engagement that the SEC was “obviously going to follow the lead of the DOJ” with respect to FCPA enforcement.[16] At the same time, Apps noted that the SEC intends to decline to bring cases more frequently where companies have self-reported, cooperated, and/or remediated their compliance programs.

While these updates and statements seem to suggest a reduction in FCPA enforcement by the SEC going forward, it has not entirely backed away from the FCPA. On April 10, 2025, the SEC filed a motion to reopen a civil FCPA case against two former Cognizant executives (despite the DOJ having earlier decided to drop criminal charges) and issue a stay to allow the parties to “explore a potential resolution.”[17]

The Trump Administration’s approach to FCPA enforcement therefore remains unclear. DOJ’s review of FCPA enforcement is ongoing, and its outcome, which is presently unknown, will determine whether and how the statute will be enforced during the Trump Administration. However, absent an actual repeal of the law, future administrations could reverse enforcement policy decisions the Trump Administration makes and aggressively investigate FCPA violations, including conduct occurring that occurred during the Trump Administration that falls within the five-year statute of limitations. Notably, enforcement at the state level also remains a risk for parties engaged in foreign bribery: California’s Attorney General has announced his intention to prosecute bribery under state law and Manhattan’s District Attorney has indicated that he is considering how his office can step into the void created by the DOJ’s retreat from certain enforcement areas, including FCPA.[18]

Updates in the United Kingdom and Europe

Outside the U.S., the wind is blowing in a clearer direction. On 20 March 2025, enforcement authorities in the UK, France, and Switzerland announced the creation of a new International Anti-Corruption Prosecutorial Taskforce (the “Taskforce”) to strengthen collaboration between these countries.[19] The Taskforce consists of the UK’s Serious Fraud Office (“SFO”), France’s National Financial Prosecutor’s Office (“PNF”), and the Office of the Attorney General of Switzerland (“OAG”). These agencies are no strangers to collaboration, both amongst themselves and with the U.S. For example, as noted by PNF director Jean-François Bohnert, the PNF has assisted the OAG with 89 requests for mutual legal assistance in criminal matters since the agency was created in 2014.[20] Further, both the SFO and OAG were credited with assisting the U.S. with its bribery investigation into Glencore.[21] The Taskforce’s creation represents the SFO’s, PNF’s, and OAG’s intention to continue coordinating, with or without the U.S.

The Taskforce’s Founding Statement acknowledges “the significant threat of bribery and corruption and the severe harm that it causes” and promises that the members will “stand firm in our commitment to tackle this threat within the national and international legal frameworks.”[22] The Taskforce will deliver a “Leaders’ Group focused on the regular exchange of insight and strategy,” a “Working Group, for the purpose of devising proposals for co-operation on cases,” and increased “best practice” intelligence sharing between the three agencies to fully utilize the expertise of each. The Taskforce also intends to invite “other like-minded agencies” to join it,[23] with Bohnert recently stating that the DOJ, as well as other agencies in Europe, Latin America and the Western hemisphere more generally, would be welcome to join.[24] Despite the timing of the announcement and the somewhat pointed language in its Founding Statement, the Taskforce’s creation was, according to SFO Director Nick Ephgrave, “in no way a reaction to” the Trump Administration’s FCPA enforcement pause.[25] Nevertheless, the enforcement vacuum caused by the abrupt cessation of DOJ investigations undeniably creates an opportunity for jurisdictions like the UK, France, and Switzerland to drive global ABAC enforcement going forward. Indeed, Ephgrave has noted that the SFO is currently evaluating the long-term impact of the enforcement pause on the agency, and “actively seeing if there are opportunities where we can pick up investigations in this country,”[26] while the PNF recently added to its credentials a successful prosecution against two SPIE Group companies and two senior managers for bribing an Indonesian public official.[27]

Speaking ahead of the Taskforce’s public announcement, Ephgrave reiterated that the potential use of financial payments to reward whistleblowers (first stated as an SFO policy aim in February 2024) would continue to be on the UK’s agenda, and the recently published SFO Annual Business Plan for 2025-26 (the “ABP”) explicitly references “whistleblower incentive reform.”[28] Ephgrave once again credited the U.S.’s “really well-established system of [whistleblower] incentivisation” as one of the reasons for the U.S.’s historic success in international bribery and corruption intelligence gathering, asserting that 700 UK whistleblowers have gone to the U.S. with tip-offs in the last decade.[29] Speaking at a recent event in London, Ephgrave highlighted whistleblower incentivization as the key reform he wants to implement during his tenure, calling it a “game changer for [UK] intelligence.”[30] This reform looks increasingly likely, with the UK Home Office commissioning an independent report which will consider “incentives for criminal fraud networks informants and whistleblowers”.[31] By introducing financial incentives and stronger channels for whistleblower reports, the UK could generate significantly more leads regarding potential breaches of the UK Bribery Act to investigate. The U.S. has a number of whistleblower incentive programs which have yielded success in recent years. For example, the SEC’s Whistleblower Program received 557 FCPA-related reports during the 2024 financial year, up from 237 in the previous year.[32] The Swiss Attorney General Stefan Blättler has also expressed an appetite for increasing whistleblowing, announcing that he would discuss whistleblower incentivization with both the Swiss parliament and public.[33]

As foreshadowed in the ABP, the SFO has also launched new corporate cooperation guidance (the “Guidance”),[34] to reverse what Ephgrave characterizes as a “slight drop off” in the number of companies self-reporting wrongdoing.[35] The Guidance emphasizes that the SFO will seek to negotiate deferred prosecution agreements with (and not prosecute) companies which promptly self-report wrongdoing to, and cooperate fully with, the SFO “unless exceptional circumstances apply”.[36] Ephgrave hopes that the Guidance, along with strengthened covert surveillance capabilities (another priority set out in the ABP), will give the SFO more control over its referral pipeline and “invigorate or provoke” more self-reports from companies.[37] The SFO also recently announced that it had signed a memorandum of understanding with Indonesia’s Corruption Eradication Commission in an attempt to “refresh [its] relationship” with the country’s main anti-corruption enforcer.[38]

In addition to these moves by the SFO, the UK’s National Crime Agency (“NCA”) intends to increase its foreign bribery caseload, according to NCA senior manager David Liebscher.[39] The NCA currently has seven foreign bribery cases before the UK courts,[40] and has had success in this space in recent years, having achieved the conviction of the former chief of staff to the president of Madagascar for bribery in February 2024.[41] In remarks that chimed with Ephgrave’s commentary and efforts around increasing reports to law enforcement, Liebscher also suggested that the UK’s current corruption reporting framework, with 39 possible channels, is overly complex and a “barrier” to reporting misconduct.[42] Liebscher’s statements, taken together with the developments at the SFO,  indicate a renewed interest in proactive Bribery Act enforcement in the UK.

In the EU, trilogue negotiations between the European Commission, the European Council, and the European Parliament commenced in February 2025 to finalize the EU’s proposed Directive on combatting corruption (the “Directive,” initially unveiled in May 2023). The Directive aims to harmonize corruption offences and sanctions across the EU. Currently, all 27 EU Member States are signatories to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which requires acceding states to implement “such measures as may be necessary” to establish the various offenses it sets out (i.e., in relation to the bribery of foreign public officials).[43] However, each Member State has typically adopted its own set of laws to combat corruption, creating a series of fragmented standards that can be easily exploited, with it being reported that the EU loses approximately EUR 990 billion to corruption each year.[44] If adopted in its current form,[45] the Directive will require Member States to introduce a number of specified corruption offences (including domestic and foreign bribery, misappropriation, trading in influence, abuse of functions and obstruction of justice) into their national laws. The Directive will also introduce corporate criminal liability, which will apply where a lack of supervision by a person in a leadership position results in the commission of an offence set out in the Directive.[46] Ultimately, the Directive will allow for greater cross-border cooperation between Member States in investigating and prosecuting corruption.

Looking Ahead

Though the future of U.S. FCPA enforcement, at least for the remainder of the Trump Administration, remains uncertain, the consensus on the other side of the Atlantic is clear: ABAC enforcement remains a priority, and European and British enforcement agencies see the opportunity to lead the charge as the U.S. deprioritizes FCPA enforcement.  

Authored by several attorneys from the law firm King & Spalding in the United States and Europe.

FOOTNOTES:

[1] Brandt Leibe, Aaron Stephens, Grant Nichols, and Margaret Nettesheim, “How does the Trump FCPA pause change the landscape for non-American companies?”, Global Investigations Review (Feb. 28, 2025), https://globalinvestigationsreview.com/just-anti-corruption/article/how-does-the-trump-fcpa-pause-change-the-landscape-non-american-companies.

[2] Motion to Dismiss, United States v. Gordon Cobum and Steven Schwartz Case No. 2:19-cr-00120 (MEF) (Apr. 1, 2025), https://files.lbr.cloud/public/202504/1034%20Cognizant%20motion%20to%20dismiss.pdf?VersionId=9oS.IXOYr7X69W5FEHrNOOYdNmxUZMRb.

[3] Press Release, PetroNor E&P ASA, The U.S. Department of Justice closes its investigation (Apr. 1, 2025), https://petronorep.com/media/jcwltjui/20250402-pnor-investigation-update.pdf.

[4] Stryker Corporation, Form 10-Q (May 2, 2025), https://files.lbr.cloud/public/2025-05/20250502%20-%2010Q%20-%20SYK%20-%20Quarterly%20Report%20-%2028%20pages.pdf?VersionId=cdAGcFWYekWHgT.5u9US2elj0XQcCoM6.

[5] Motion to Dismiss, United States v. Stericycle, Inc. Case No. 22-CR-20156-MOORE (Apr. 21, 2025), https://files.lbr.cloud/public/202504/21%20%20DOJ%20motion%20to%20dismiss%20Stericycle%20DPA%2021%20April%202025.pdf?VersionId=AqQp5fCVxd6Kw7MHh1EnfwQVQaR.G3BP.

[6] Consent Motion to Modify Conditions of Probation, United States v. Glencore International A.G. Case No. 1:22-cr-00297 (LGS) (Mar. 20, 2025), https://assets.law360news.com/2314000/2314349/new%20york%20memo.pdf;  Government’s Notice Concerning Defendant’s Monitor, United States v. Glencore Ltd. Case No. 3:22-cr-00071 (SVN), https://assets.law360news.com/2314000/2314349/connecticut%20notice.pdf.

[7] Albemarle Corporation Form 10-Q (Apr. 30, 2025), https://d6jxgaftxvagq.cloudfront.net/Uploads/u/y/z/albemarle10q_166543.pdf.

[8] Exec. Order, Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security (Feb. 10, 2025), https://www.whitehouse.gov/presidential-actions/2025/02/pausing-foreign-corrupt-practices-act-enforcement-to-further-american-economic-and-national-security/.

[9] See Gaspard Le Dem, “Cuts to DOJ’s international affairs office would slow cases ‘across the board’”, Global Investigations Review (Mar. 31, 2025), https://globalinvestigationsreview.com/just-anti-corruption/article/cuts-dojs-international-affairs-office-would-slow-cases-across-the-board.

[10] Notice of Authorization to Proceed, Untied States v. Juan Andres Donato Bautista, Roger Alejandro Pinate Martinez, Jorge Miguel Vasquez and Ellie Moreno Case No. 24-CR-20343-WILLIAMS (Apr. 9, 2025), https://files.lbr.cloud/public/2025-04/S.D.%20Fla.%2024-cr-20343%20dckt%20000135_000%20filed%202025-04-09.pdf?VersionId=1MOPwxhmwNPB2rcfDa_Fm3S.xmAhq4eV.

[11] Government’s Notice of Authorization to Proceed, United States v. Charles Hunter Hobson Case No. 2:22-CR-86 (Apr. 11, 2025), https://files.lbr.cloud/public/2025-04/US%20v%20Charles%20Hunter%20Hobson%20Govt%20motion%20to%20proceed%2011%20April%202025.pdf?VersionId=HswogHlEFABzL56Wp2sAsFHJYIzRPpxE.

[12] Government’s Notice of Authorization to Proceed, United States v. Carl Alan Zaglin, Aldo Nestor Marchena and Francisco Roberto Cosenza Centeno Case No. 23-20454-CR-BECERRA (Apr. 11, 2025), https://files.lbr.cloud/public/2025-04/US%20v%20Zaglin%20et%20al%20Govt%20motion%20to%20proceed%2011%20April%202025.pdf?VersionId=TaFwJajV1LUAvSBPqmkBMx7SSOSIqWEf.

[13] DOJ Criminal Division, “Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime” (May 12, 2025), https://www.justice.gov/criminal/media/1400046/dl?inline.

[14] The DOJ has separately issued a new monitor selection memorandum clarifying the factors that prosecutors must consider when determining whether a monitor is appropriate. DOJ Criminal Division, “Memorandum on Selection of Monitors in Criminal Division Matters” (May 12, 2025), https://www.justice.gov/criminal/media/1400036/dl?inline.

[15] See Gaspard Le Dem, “SEC’s FCPA chief, top deputy retire”, Global Investigations Review (Apr. 1, 2025), https://globalinvestigationsreview.com/just-anti-corruption/article/secs-fcpa-chief-top-deputy-retire.

[16] See Gaspard Le Dem, “SEC will ‘follow the lead’ of DOJ on FCPA enforcement, official says”, Global Investigations Review (Mar. 5, 2025), https://globalinvestigationsreview.com/just-anti-corruption/article/sec-will-follow-the-lead-of-doj-fcpa-enforcement-official-says.

[17] Motion to Restore Case, S.E.C. v. Coburn, et al., Civil No. 2:19-cv-05820-MCA-MAH (Apr. 10, 2025), https://files.lbr.cloud/public/2025-04/76%20-%20SEC%20asks%20to%20reopen%20Cognizant%20docket.pdf?VersionId=8A..7PjQ88Akv2tvAEarIVkJvt5n8CEO.

[18] Press Release, California Attorney General Rob Bonta, Attorney General Bonta Alerts Businesses: It Remains Illegal to Bribe Foreign-Government Officials (Apr. 2, 2025), https://oag.ca.gov/news/press-releases/attorney-general-bonta-alerts-businesses-it-remains-illegal-bribe-foreign; Estelle Atkinson, “Manhattan state prosecutor looking to fill enforcement void left by DOJ”, Global Investigations Review (Apr. 15, 2025), https://globalinvestigationsreview.com/just-anti-corruption/article/manhattan-state-prosecutor-looking-fill-enforcement-void-left-doj.

[19] International Anti-Corruption Prosecutorial Taskforce Founding Statement (Mar. 20, 2025), https://assets.publishing.service.gov.uk/media/67dc0bb3931ea30d1b7ee33d/International_Anti-Corruption_Prosecutorial_Taskforce.pdf.

[20] See Ana de Liz, “UK, French, Swiss agencies set up new anti-corruption task force”, Global Investigations Review (Mar. 20, 2025), https://globalinvestigationsreview.com/article/uk-french-swiss-white-collar-agencies-set-new-anti-corruption-task-force.

[21] Press Release, U.S. Department of Justice, Glencore Entered Guilty Pleas to Foreign Bribery and Market Manipulation Schemes (May 24, 2022), https://www.justice.gov/archives/opa/pr/glencore-entered-guilty-pleas-foreign-bribery-and-market-manipulation-schemes.

[22] International Anti-Corruption Prosecutorial Taskforce Founding Statement (Mar. 20, 2025), https://assets.publishing.service.gov.uk/media/67dc0bb3931ea30d1b7ee33d/International_Anti-Corruption_Prosecutorial_Taskforce.pdf.

[23] Id.

[24] See Austin Cope, “PNF director: international anti-corruption task force will treat companies equally”, Global Investigations Review (May 7, 2025), https://globalinvestigationsreview.com/just-anti-corruption/article/pnf-director-international-anti-corruption-task-force-will-treat-companies-equally.

[25] See Ana de Liz, “UK, French, Swiss agencies set up new anti-corruption task force”, Global Investigations Review (Mar. 20, 2025), https://globalinvestigationsreview.com/article/uk-french-swiss-white-collar-agencies-set-new-anti-corruption-task-force.

[26] See Malavika Devaya, “’Look at me as the Mikhail Gorbachev of the SFO’: Nick Ephgrave”, Global Investigations Review (Apr. 24, 2025), https://globalinvestigationsreview.com/article/look-me-the-mikhail-gorbachev-of-the-sfo-nick-ephgrave.

[27] See Grace Propheta, “SPIE fined, executives handed prison time over Indonesia police bribes”, Global Investigations Review (May 13, 2025), https://globalinvestigationsreview.com/article/spie-fined-executives-handed-prison-time-over-indonesia-police-bribes?utm_source=SPIE%2Bfined%252C%2Bexecutives%2Bhanded%2Bprison%2Btime%2Bover%2BIndonesia%2Bpolice%2Bbribes&utm_medium=email&utm_campaign=GIR%2BAlerts.

[28] SFO Business Plan 2025-26, https://assets.publishing.service.gov.uk/media/67ee4e86199d1cd55b48c6e8/SFO_2025-26__Business_Plan.pdf.

[29] See Ana de Liz, “UK, French, Swiss agencies set up new anti-corruption task force”, Global Investigations Review (Mar. 20, 2025), https://globalinvestigationsreview.com/article/uk-french-swiss-white-collar-agencies-set-new-anti-corruption-task-force.

[30] Daisy Eastlake, “Whistleblowers could reap rewards for exposing fraud”, The Times (Apr. 25, 2025).

[31] Id.

[32] SEC Annual Report to Congress for Fiscal Year 2024, https://www.sec.gov/files/fy24-annual-whistleblower-report.pdf.

[33] See Ana de Liz, “UK, French, Swiss agencies set up new anti-corruption task force”, Global Investigations Review (Mar. 20, 2025), https://globalinvestigationsreview.com/article/uk-french-swiss-white-collar-agencies-set-new-anti-corruption-task-force.

[34] SFO Corporate Guidance (Apr. 24, 2025), https://www.gov.uk/government/publications/sfo-corporate-guidance/sfo-corporate-guidance.

[35] See Ana de Liz, “SFO announces new five-year plan”, Global Investigations Review (Apr. 18, 2025) https://globalinvestigationsreview.com/article/sfo-aims-revive-corporate-cooperation?utm_source=SFO%2Baims%2Bto%2Brevive%2Bcorporate%2Bcooperation&utm_medium=email&utm_campaign=GIR%2BAlerts.

[36] SFO Corporate Guidance (Apr. 24, 2025), https://www.gov.uk/government/publications/sfo-corporate-guidance/sfo-corporate-guidance.

[37] Id.

[38] Id.

[39] See Ana de Liz, “NCA wants to bulk up foreign bribery caseload”, Global Investigations Review (Apr. 24, 2025), https://globalinvestigationsreview.com/article/nca-wants-bulk-foreign-bribery-caseload?utm_source=%25E2%2580%259CLook%2Bat%2Bme%2Bas%2Bthe%2BMikhail%2BGorbachev%2Bof%2Bthe%2BSFO%25E2%2580%259D%253A%2BNick%2BEphgrave&utm_medium=email&utm_campaign=GIR%2BAlerts.

[40] Id.

[41] See Ana de Liz, “Former Madagascar chief of staff found guilty of bribery”, Global Investigations Review (Feb. 20, 2024), https://globalinvestigationsreview.com/article/former-madagascar-chief-of-staff-found-guilty-of-bribery.

[42] See Ana de Liz, “NCA wants to bulk up foreign bribery caseload”, Global Investigations Review (Apr. 24, 2025), https://globalinvestigationsreview.com/article/nca-wants-bulk-foreign-bribery-caseload?utm_source=%25E2%2580%259CLook%2Bat%2Bme%2Bas%2Bthe%2BMikhail%2BGorbachev%2Bof%2Bthe%2BSFO%25E2%2580%259D%253A%2BNick%2BEphgrave&utm_medium=email&utm_campaign=GIR%2BAlerts.

[43] OECD, Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, OECD/LEGAL/0293, https://legalinstruments.oecd.org/public/doc/205/205.en.pdf.

[44] European Commission, High-risk areas of corruption in the EU: A mapping and in-depth analysis (Nov. 4, 2024) at page 9, https://op.europa.eu/fr/publication-detail/-/publication/5c0730b2-9769-11ef-a130-01aa75ed71a1/language-en.

[45] Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on combating corruption, replacing Council Framework Decision 2003/568/JHA and the Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union and amending Directive (EU) 2017/1371 of the European Parliament and of the Council (May 3, 2023), https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2023:234:FIN.

[46] Id.

The post Anti-Bribery and Anti-Corruption Enforcement post-FCPA Pause appeared first on Compliance Chief 360.

he Securities and Exchange Commission announced that it filed 583 total enforcement actions in fiscal year 2024, while obtaining orders for $8.2 billion in financial remedies, the highest amount in SEC history.

That record amount consisted of $6.1 billion in disgorgement and prejudgment interest, also the highest amount on record, and $2.1 billion in civil penalties, the second-highest amount on record. Approximately 56 percent of the $8.2 billion financial remedies ordered is attributable to a monetary judgment obtained following the SEC’s jury trial win against Terraform Labs and Do Kwon, who were charged with one of the largest securities frauds in U.S. history.

The 583 enforcement actions represent a 26 percent decline in total enforcement actions compared to fiscal year 2023. Of those cases, the Commission filed 431 “stand-alone” actions, 93 “follow-on” administrative proceedings, and 59 actions against issuers who were allegedly delinquent in making required filings with the SEC.

“The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable,” said outgoing SEC Chair Gary Gensler. “As demonstrated by this year’s results, the Division helps promote the integrity of our capital markets to benefit investors and issuers alike.”

Last month Gensler announced that he would step down as chair of the SEC. President elect Donald Trump has announced that he intends to nominate former SEC Commissioner Paul Atkins, a longtime advocate of deregulation, as the next chairman of the Commission. Market watchers have said that they expect the SEC under Atkins to be far less enforcement minded.

“He has been a strong supporter of the asset management industry and sympathizes with the challenges faced by the industry trying to comply with often-ambiguous SEC rules,” said Brad Bondi, global co-chair of the investigations and white-collar defense practice at Paul Hastings, who served as counsel to Atkins during his time at the SEC.

Protecting Investors

“In fiscal year 2024, the Division continued to vigorously enforce the federal securities laws by recommending to the Commission high-impact enforcement actions addressing noncompliance throughout the securities industry and resulting in robust financial remedies,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “What our numbers do not reflect, however, are countless investigations that may not have resulted in an enforcement action for evidentiary or other reasons, or where we declined to pursue an enforcement action, but that shined a spotlight on potentially problematic conduct. All of this adds up to protecting innumerable investors and promoting trust in our capital markets.”

In addition, in fiscal year 2024, the SEC obtained orders barring 124 individuals from serving as officers and directors of public companies, the second-highest number of such bars obtained in a decade.

In fiscal year 2024, the SEC distributed $345 million to harmed investors, marking more than $2.7 billion returned to investors since the start of fiscal year 2021. The SEC also received 45,130 tips, complaints, and referrals in fiscal year 2024, the most ever received in one year, including more than 24,000 whistleblower tips. The SEC issued whistleblower awards totaling $255 million.

Securing Credit for Self Reporting and Cooperation

In fiscal year 2024, public companies, investment advisers, and broker-dealers self-reported or remediated securities law violations or otherwise cooperated meaningfully with the Division’s investigations, answering the Division’s call to practice a culture of proactive compliance. In response, the Division recommended, and the Commission approved, resolutions imposing reduced civil penalties or even no civil penalties, including in cases involving very large firms.

To help promote investor trust in the securities market, the Division continued and commenced a number of proactive initiatives to address issues of widespread noncompliance, including the following:

Off-Channel Communications

The Division continued its initiative to ensure that regulated entities, including broker-dealers, investment advisers, and credit ratings agencies, comply with the recordkeeping requirements of the federal securities laws. Compliance with those requirements is essential to investor protection and well-functioning markets. In fiscal year 2024, the Commission brought recordkeeping cases resulting in more than $600 million in civil penalties against more than 70 firms, including the Commission’s first cases charging recordkeeping violations against municipal advisors. Since December 2021, the initiative has resulted in charges against more than 100 firms and more than $2 billion in penalties.

Marketing Rule

The Enforcement Division’s ongoing initiative investigating non-compliance with the Marketing Rule resulted in settled charges against more than a dozen investment advisers. The firms were charged for advertising hypothetical performance to the general public without adopting and implementing policies and procedures reasonably designed to ensure that the hypothetical performance was relevant to the likely financial situation and investment objectives of the advertisement’s intended audience; using untrue or unsubstantiated statements of material fact and/or testimonials, endorsements, or third-party ratings that lacked required disclosures; and advertising misleading performance that was not fair and balanced.

Whistleblower Protection Cases

In fiscal year 2024, the Division recommended, and the Commission authorized, a series of settled enforcement actions to address violations of the Dodd-Frank whistleblower protection rule, which prohibits market participants from taking any action to impede would-be whistleblowers from contacting the SEC, including where firms purported to limit customers’ ability to voluntarily contact the SEC or required employees to waive the right to a possible whistleblower monetary award. The actions included an $18 million civil penalty against J.P. Morgan, the largest penalty on record for a standalone violation of the whistleblower protection rule.

Disclosures of Holdings and Transactions by Insiders and Investment Managers

The federal securities laws require certain insiders and market participants to disclose their securities holdings and transactions. Compliance with those laws is essential for investors to make informed investment decisions.

In fiscal year 2024, the SEC announced settled charges against more than two dozen entities and individuals for failures to timely report information about their holdings and transactions in public company stock or for contributing to filing failures by their officers and directors. The SEC also settled charges against 11 institutional investment managers for failing to disclose certain securities holdings in reports they were required to file because they have discretion over more than $100 million in certain securities.

Robust Financial Remedies

In fiscal year 2024, the Division’s investigations led to orders imposing robust financial remedies in litigated and settled matters.

For example, after a jury verdict finding Terraform Labs and founder Do Kwon liable for fraud, defendants agreed to a final judgment ordering them to pay more than $4.5 billion in disgorgement, prejudgment interest, and civil penalties, the highest remedies ever obtained by the SEC following a trial.

In addition, the Commission filed settled charges with strong financial remedies against:

• Morgan Stanley for a multi-year fraud involving the disclosure of confidential information about the sale of large quantities of stock known as “block trades.”  The firm agreed to pay approximately $166 million in disgorgement and prejudgment interest and an $83 million civil penalty to resolve the SEC’s charges;
• FirstEnergy Corp. for a multi-year political corruption scheme in which FirstEnergy and affiliates made payments to an entity controlled by a state legislator in exchange for official action benefitting FirstEnergy. FirstEnergy agreed to a pay a $100 million civil penalty to resolve the SEC’s charges;
• SAP for violations of the Foreign Corrupt Practices Act arising out of bribery schemes in South Africa, Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan. The company agreed to pay disgorgement and prejudgment interest of more than $98 million to resolve the SEC’s charges. Up to $59 million will be offset by payments from SAP to the South African government in connection with its parallel investigations into the same conduct; and
• Advisory firm Macquarie for overvaluing approximately 4,900 largely illiquid collateralized mortgage obligations held in 20 advisory accounts and for executing hundreds of cross trades between advisory clients that favored certain clients over others. The firm agreed to pay disgorgement and prejudgment interest of $9.8 million and a $70 million civil penalty to resolve the SEC’s charges.

Major Fraud

In fiscal year 2024, the Division continued to focus on holding individuals and entities accountable for preying on investors.

• The Division’s investigations led to charges alleging frauds ranging from Ponzi schemes targeting specific communities to billion dollar frauds with thousands of victims;
• The SEC charged Xue Lee (aka Sam Lee) and Brenda Chunga (aka Bitcoin Beautee) for their involvement in an allegedly fraudulent crypto asset pyramid scheme known as HyperFund that raised more than $1.7 billion from investors worldwide;
• The SEC charged Cynthia and Eddy Petion and their company, NovaTech Ltd., for allegedly operating a fraudulent scheme that raised more than $650 million in crypto assets from more than 200,000 investors worldwide;
• The SEC charged five unregistered brokers and their companies in connection with an alleged pre-IPO fraud scheme that raised at least $528 million from more than 4,000 investors around the world; and
• The SEC charged Abraham Shafi, the founder and former CEO of Get Together Inc., a privately held social media startup known as “IRL,” for raising approximately $170 million from investors by allegedly fraudulently portraying IRL as a viral social media platform that organically attracted the vast majority of its purported 12 million users.

Emerging Technologies and Emerging Risks

Fiscal year 2024 saw heightened investor risk from emerging technologies and cybersecurity incidents and from market participants using social media to exploit elevated investor interest in emerging investment products and strategies. The Division kept pace, investigating noncompliance and false or misleading disclosures involving artificial intelligence, social media, cybersecurity, crypto, and more.

Artificial Intelligence

• The SEC charged QZ Asset Management for allegedly falsely claiming that it would use its proprietary AI-based technology to help generate extraordinary weekly returns while promising “100%” protection for client funds; and
• The SEC settled charges against investment advisers Delphia and Global Predictions with making false and misleading statements about their purported use of AI in their investment process.

Relationship Investment Scams

• The SEC charged multiple entities and individuals in connection with two relationship investment scams involving fake crypto asset trading platforms NanoBit and CoinW6. The SEC’s two complaints allege that the defendants solicited investors via social media apps, lied to them to gain their trust and confidence, and then stole their money. These charges are the SEC’s first enforcement actions alleging these types of scams.

Cybersecurity

• The SEC settled charges against The Intercontinental Exchange, Inc. and nine wholly owned subsidiaries, including the New York Stock Exchange, for failing to timely inform the SEC of a cyber intrusion as required by Regulation Systems Compliance and Integrity;
• The SEC settled charges against transfer agent Equiniti Trust Company LLC, formerly known as American Stock Transfer & Trust Company LLC, for failures to ensure that client securities and funds were protected against theft or misuse, which led to losses of millions of dollars in client funds; and
• The SEC settled charges against R.R. Donnelley & Sons for disclosure and internal control failures relating to cybersecurity incidents.

Crypto

• The SEC settled charges against Silvergate Capital for false and misleading disclosures to investors about the strength of the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program and the monitoring of crypto customers, including FTX, by its wholly owned subsidiary, Silvergate Bank; and
• The SEC settled charges against Barnbridge DAO, a purportedly decentralized autonomous organization, for failing to register its offer and sale of structured crypto assets offered and sold as securities.

Individual Accountability

Charging individuals for securities law violations, where appropriate, is essential for accountability and deterrence and for enhancing public trust in the markets. Fiscal year 2024 enforcement actions against individuals included the following:

• Following a jury verdict finding Terraform Labs and founder Do Kwon liable for fraud, Do Kwon agreed to a final judgment ordering him to pay financial remedies of more than $200 million and imposing an officer and director bar.
• The former CEO and former Chief Risk Officer of Silvergate Capital settled charges for misleading investors about the strength of the compliance program and the monitoring of crypto customers by Silvergate’s wholly owned subsidiary. The individuals agreed to five-year officer-and-director bars and civil penalties of $1 million and $250,000 respectively, as part of the resolution. In addition, the SEC charged the former CFO with misleading investors about the company’s losses from expected securities sales.
• The CEO of formerly registered investment adviser Mass Ave settled charges arising out of false and misleading statements about Mass Ave’s flagship fund. To settle the SEC’s charges, the CEO, who is also the chief investment officer and portfolio manager at MassAve, agreed to pay a $250,000 civil penalty and was suspended for 12 months from industry-related work.
• The former head of Morgan Stanley’s equity syndicate desk settled charges connected to a multi-year fraud involving the disclosure of confidential information about the sale of large quantities of stock known as “block trades.” As part of the resolution, the former head agreed to an order requiring him to pay a $250,000 civil penalty and imposing associational, penny stock, and supervisory bars.
• The SEC permanently suspended Benjamin Borgers, the managing partner of audit firm BF Borgers from appearing and practicing as an accountant before the Commission as part of a resolution of an alleged fraud affecting hundreds of SEC filings. Borgers also agreed to pay a $2 million civil penalty as part of the resolution;
• The former CEO and former Senior Vice President of Cassava Sciences agreed to be subject to officer-and-director bars of three and five years, respectively, to settle charges related to misleading statements about the results of a clinical trial for the company’s purported therapeutic for the treatment of Alzheimer’s disease. They also agreed to pay civil penalties of $175,000 and $85,000, respectively; and
• The SEC charged now-defunct digital pharmacy startup Medly Health’s former CEO, former CFO, and former head of RX Operations with fraudulently overstating Medly’s revenue in connection with capital raising efforts that netted the company more than $170 million.

Public Company Misstatements

It is foundational to the proper operation of the securities markets that public companies provide materially accurate information to investors. In fiscal year 2024, the Division investigated misstatements by public companies leading to a number of enforcement actions, including:

• Settled charges against Cassava Sciences for misleading statements about the results of a Phase 2 clinical trial for its purported therapeutic for the treatment of Alzheimer’s disease;
• Settled charges against Ideanomics for misleading statements about the company’s financial performance; and
• Charges against former executives of Kubient for their alleged roles in a scheme in which the company allegedly overstated and misrepresented its revenue in connection with public stock offerings.

Safeguarding Material Nonpublic Information

The Division investigated market abuse and potential abuse of material nonpublic information (MNPI) in fiscal year 2024, including by using advanced data analytics and technology. The Division’s investigations resulted in enforcement actions addressing a range of violations, including:

• Settled charges against Morgan Stanley and the former head of its equity syndicate desk with a multi-year fraud involving the disclosure of confidential information about the sale of large quantities of stock known as “block trades;”
• Settled charges against several investment advisers for failing to establish, maintain, or enforce written policies and procedures reasonably designed to prevent the misuse of MNPI;
• Charges against former investment adviser representatives for conducting multi-year cherry-picking schemes that allegedly defrauded their clients out of millions of dollars;
• Charges against a U.K. citizen for allegedly hacking into the computer systems of public companies to obtain material nonpublic information and using that information to make millions of dollars in illicit profits;
• Charges against three individuals for allegedly perpetrating a multi-year $2 million “free-riding” scheme, which is when a brokerage customer buys and sells securities without having the funds to pay for the trading; and Settled insider trading charges against a founder and former chair of a public company

The SEC’s 2024 fiscal year includes the period from October 1, 2023 to September 30, 2024.  

Joseph McCafferty is editor & publisher of Compliance Chief 360°

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new report predicts that compliance and assurance functions could double the amount they spend on new technology by 2027. According to the research, issued by Gartner Inc., generative AI, machine learning, and large language models will fuel a surge in spending by compliance, risk management, and assurance functions.

The news isn’t all good. The report also predicts a wave of disillusionment with advanced technologies as expectations are exceeding capabilities in many cases. Accordingly, Gartner experts have placed AI at the “peak of inflated expectations” in the 2024 “Hype Cycle” for legal, risk, compliance and audit technologies.

“Some assurance leaders are prematurely expecting AI technology to greatly enhance productivity,” said Weston Wicks, senior director analyst in the Gartner Legal & Compliance Practice. “While these technologies show promise, in the near-term Gartner recommends assurance leaders identify where they can pilot and experiment with them while maintaining healthy skepticism as they are implemented.”

Gartner experts believe that GenAI will have a foreseeable impact on adjacent innovations in the analytics space, and therefore certain innovations, such as data and analytics governance, audit analytics, legal analytics, and advanced contract analytics, have moved further toward the trough as the te to plateau for these innovations becomes nearer-term — two-to-five years.

“Certain notable movements on the 2024 Hype Cycle are driven by assurance leaders convinced that incorporating new technology and generative AI (GenAI) tools is necessary to manage the growing burden of new rules and regulations imposed on executives and enterprises globally,” said Wicks. “Select emerging innovations, such as compliance monitoring solutions, have been directly impacted by GenAI and have seen substantial movement along the Hype Cycle as a result.”

Proceed with Caution

While there are some expectations that the advancements in GenAI will be transformative in assurance, Gartner experts caution that early adopters must acknowledge the risks of these new advancements and their impact on teams’ ability to manage them.

“Early lessons learned by assurance leaders include understanding the importance of information management and data governance, and the importance of intentionally including humans in the loop to mitigate bias and other risks,” said Wicks. “For these reasons, Gartner estimates the innovations will achieve high benefit ratings across the next five years.” 

The post Report: Compliance Functions Could Double Tech Spend by 2027 appeared first on Compliance Chief 360.

igital disruption and climate change have emerged as the two fasting-growing risk areas for organizations across industries, according to a new report.

Based on feedback from more than 3,500 internal audit leaders around the world, global risk levels for digital disruption and climate change are projected to increase 20 percent and 16 percent, respectively, over the next three years, outpacing other risk areas. The research was conducted by the Institute of Internal Auditor’s Internal Audit Foundation for its latest Risk in Focus report.

Despite the growing intensity of these risks, most audit plans do not currently prioritize them, the study found. In fact, neither digital disruption nor climate change were named among the top five areas where internal audit functions allocate the most time and effort, with both ranked in the lower half of audit priorities. Globally, internal audit functions focus predominantly on cybersecurity, governance and corporate reporting, and business continuity, indicating a gap between evolving threats and current areas of attention.

“Our latest research tells us cybersecurity, business continuity, and human capital continue to hold the top three spots in risk ratings. However, respondents anticipate significant changes as risks related to climate change and digital disruption accelerate in the coming years,” said Anthony Pugliese, president and CEO of the IIA. “To ensure both short-term success and long-term sustainability, organizations and their internal audit functions must adapt risk management practices to keep pace with the changing risk landscape.”

Risk in Focus offers a comprehensive view of the current global risk landscape and how it is expected to evolve in the coming years. Because threats are expected to rise steeply for technological advancements and climate change, the 2025 reports focus on leading practices for mitigation of these risks.

Keeping Pace with Digital Disruption

Approximately 39 percent of survey respondents worldwide ranked digital disruption as a top five risk, with that number expected to jump to 59 percent in three years. For North America, these figures are even higher at 48 percent and 70 percent, respectively. Furthermore, respondents worldwide expect digital disruption to rise from the fourth to the second highest ranked risk area in three years.

Artificial intelligence (AI) has introduced new risks to track, especially related to cybersecurity, according to 75 percent of respondents. AI has also impacted many other risk areas, including human capital, fraud, communications, reputation, and more.

AI is a particular focus for internal audit leaders concerning technology-related risks. Specifically, challenges include upskilling and adopting new tools, as well as global disparities in access to and knowledge of emerging technology.

Climate Regulations Driving New Risks

Climate-related risks are currently ranked relatively low, but they are expected to rise substantially soon. About one in four (23 percent) of global respondents view climate change as a top five risk today. However, nearly 40 percent of respondents anticipate it will reach the top five in the next three years, climbing from 13^th place to 5^th.

Globally, roundtable participants agree that sustainability reporting and compliance requirements are the primary drivers for boards, management, and internal audit functions to allocate resources to climate change. The report revealed significant regional differences in climate-related risk perceptions. For instance, 33 percent of European audit leaders and 30 percent of Canadian audit leaders rate climate change as a top five risk, compared to 9 percent for U.S. audit leaders. Despite the U.S. position, North American respondents expect ratings for climate change as a top 5 risk will double from 13 percent to 27 percent in three years.

“While climate change has long been recognized as a growing risk for organizations, these findings reveal the extent to which climate-related risks are expected to surge in the near term,” said Pugliese. “It is imperative for organizations, stakeholders, and internal audit leaders to objectively assess the short-term and longer-term risks to their organizations beyond basic compliance with regulations.”

Extreme weather can cause supply chain disruptions, higher operational costs, flooding, famine, and more. Some consumers and investors are calling on organizations to implement more sustainability initiatives. These sustainability initiatives, however, must be reported accurately to avoid greenwashing and reputational damage.

Regional Risk Differences

The study also explored regional differences in the risk landscape through roundtables and separate Risk in Focus reports for Africa, Asia Pacific, Europe, Latin America, the Middle East, and North America. These regional reports outline proactive steps that organizations and audit leaders across industries can take today to mitigate threats and embrace opportunities.

Embracing artificial intelligence and emerging technologies will be critical, as well as prioritizing upskilling, technology-oriented training, and recruitment to manage these risks effectively.

“The IIA has strongly advocated for internal audit functions to take a more strategic advisory role to better serve organizations and stakeholders,” said Pugliese. “The Risk in Focus findings underscore the importance of agile collaboration and partnership among internal audit functions, boards, and management to stay ahead of emerging threats and improve understanding of potential risk exposures.”  

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ells Fargo’s recent disclosure of regulatory investigations related to its anti-money laundering (AML) and sanctions programs and agreement to “work with U.S. bank regulators to shore up its financial crimes risk management” serves as a timely reminder of the ongoing importance of robust compliance measures in the financial sector.

These events underscore the need for vigilance at all levels of the industry, from major institutions to smaller financial companies, and further highlight the critical role of due diligence in selecting and monitoring payment solution providers for compliance officers, risk practitioners, and internal audit executives.

To that end, here are four essential questions to ask when evaluating potential partners, informed by the latest industry developments:

1. How comprehensive is the BSA/AML compliance program?

A robust Bank Secrecy Act and Anti-Money Laundering (BSA/AML) compliance program is vital to any financial institution’s risk management strategy. When evaluating a provider’s program, look for well-defined internal policies and controls. These should include a documented BSA/AML policy that outlines the organization’s approach to identifying, assessing, and managing money laundering and terrorist financing risks.

The policy should encompass clear customer identification procedures, risk-based customer due diligence processes, and transaction monitoring systems. Additionally, it should detail suspicious activity reporting procedures and record-keeping practices that meet or exceed regulatory requirements. Equally important is a defined process for staying current with regulatory changes and implementing updates promptly.

A dedicated compliance officer should oversee these efforts. This individual should possess relevant experience in BSA/AML compliance, appropriate certifications, and have direct access to senior management and the board of directors. They should be empowered to implement necessary changes across the organization.

Another crucial element is ongoing, comprehensive training. Look for providers that offer role-specific training tailored to different departments, annual refresher courses for all staff, and ad-hoc training to address new regulations or emerging risks. The training program should include testing to ensure comprehension and retention of key concepts, with all activities documented for audit purposes.

Finally, the provider should conduct rigorous auditing and monitoring. This includes regular internal audits of all BSA/AML processes, periodic independent third-party audits, and continuous monitoring of transactions and customer activity. There should be a straightforward process for addressing and remediating audit findings, with regular reporting to senior management and the board on audit results and program effectiveness.

2. Who comprises the compliance team?

The expertise of the compliance team is crucial in navigating complex regulatory landscapes. Look for a diverse team with a mix of legal, financial, and technological expertise.

A well-rounded team might include a chief legal & compliance officer, corporate counsel, senior compliance analysts, a finance settlement manager, information security leaders, and an operations director. This diversity helps ensure a comprehensive approach to compliance and security, reducing the risk of oversight that could lead to regulatory issues.

3. How does the organization embed compliance responsibilities across all departments?

Compliance should not be confined to a single department but should be integrated throughout the organization. A company-wide commitment to compliance should be evident through clear statements from leadership emphasizing its importance, inclusion of compliance objectives in departmental and individual performance metrics, and regular compliance updates in company-wide communications.

Training should extend beyond the compliance department. Look for providers that offer role-specific training illustrating how compliance impacts different job functions. Scenario-based learning can help employees identify and respond to potential compliance issues. The use of multiple training formats can cater to different learning styles, ensuring comprehensive understanding across the organization.

Clear communication channels for reporting potential issues are essential. This includes an anonymous whistleblowing hotline or reporting system, a defined escalation process for compliance concerns, and protection for employees who report potential violations. Regular reminders about these reporting channels reinforce the importance of speaking up.

A culture of compliance is characterized by the incorporation of compliance considerations into all business decisions and processes. This might include recognition for employees who demonstrate strong compliance behavior, zero tolerance for willful non-compliance regardless of an employee’s position, and regular compliance “town halls” or Q&A sessions to foster open dialogue about compliance matters.

4. What is the approach to regular internal audits and regulatory examinations?

In light of increased regulatory scrutiny, regular, independent audits are crucial. Inquire about the frequency and scope of their audits, including how often internal audits are conducted, what areas they cover, and how findings are categorized and addressed.

The provider’s relationship with regulatory bodies and sponsor banks is also important. Ask about their interaction with regulators outside of formal examinations, participation in regulatory outreach events or industry working groups, and their track record with past regulatory examinations.

A strong provider will have a formal process for reviewing and acting on audit and examination findings. This should include tracking and validating corrective actions, measuring the effectiveness of implemented changes, and sharing learnings across the organization.

Staying updated on regulatory changes and industry best practices is crucial. Look for providers that subscribe to regulatory update services, have relationships with outside counsel or consultants for complex regulatory matters, and participate in industry associations or forums.

Finally, inquire about their approach to continuous improvement. This might include using data analytics to enhance compliance programs, conducting regular risk assessments to identify potential gaps or emerging risks, and benchmarking their practices against industry peers.

Proactive Compliance in a Complex Regulatory Environment

The recent Wells Fargo disclosure reminds us that compliance is an ongoing process requiring constant attention and proactive measures. For compliance officers, risk practitioners, and internal audit executives, this underscores the importance of thorough due diligence when selecting and monitoring payment solution providers.

By asking these four key questions and critically evaluating the responses, you can significantly mitigate risks and ensure a more secure financial ecosystem for your organization. Remember, in today’s regulatory environment, compliance isn’t just about meeting minimum requirements—it’s about fostering a culture of integrity and security that permeates every aspect of your operations.

As you evaluate potential payment solution providers, look for partners who share this philosophy and demonstrate a commitment to excellence in compliance and security. In doing so, you’ll not only meet regulatory requirements but also build a foundation of trust with your customers, stakeholders, and regulators—a crucial asset in navigating today’s financial landscape.  

Anna Fron is Chief Legal and Compliance Officer at Dash Solutions, a platform that provides digital payments and engagement program management to thousands of customers.

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According to new research by Atlas VPN, a virtual private network provider, 87 million patients in the United States had their personal information improperly exposed so far in 2023. That is more than twice as much as last year when 37 million people had their data breached, making data privacy a top concern among health care compliance officers.

In 2022, over 37 million patients in the U.S. had their personal information exposed by healthcare organizations. However, breaches have skyrocketed this year. Just in the first half of 2023, hackers stole the data of over 41 million people. The third quarter marked an even greater cause for alarm, with 45 million more patients impacted.

Overall, there have already been 480 reported patient data breaches across the healthcare sector in the first three quarters of 2023 alone. This compares to only 373 total breaches during the entirety of 2022, highlighting the alarming acceleration in attacks.

The largest patient data incident so far was the HCA Healthcare breach, which impacted 11 million people. The second most significant breach happened at Managed Care of North America. The company found that an unauthorized third party accessed certain systems and stole the data of 8.9 million individuals.

This exponential growth highlights the ease with which hackers can access sensitive data. Medical records contain many personal details, making them a prime target. Yet healthcare organizations have not prioritized modern cybersecurity defenses to match the sophistication of criminal efforts.

“The sensitive nature of medical records makes them highly desirable targets for criminals, thus demanding the strongest security standards,” says Vilius Kardelis, a Cybersecurity writer at Atlas VPN. “Patients deserve to know their most personal information is safe, and providers must ensure that confidence. Healthcare has to view data protection as being just as critical as patient care.”

Most Vulnerable States

While healthcare data breaches impact patients nationwide, analysis shows certain states have been affected more than others.

California tops the list with 43 healthcare organizations afflicted by patient data breaches so far this year. The state’s massive population and concentration of healthcare providers likely make California a prime target.

New York comes in second, with 42 healthcare data breaches reported. Texas is third, with 38 healthcare entities experiencing breaches. Other states near the top include Massachusetts and Pennsylvania, with 31 and 30 breaches, respectively.

Vermont remains the only state with no reported healthcare breaches in 2023. Vermont’s small population and lack of major cities may allow it to fly under the radar of sophisticated hackers looking for maximum reward.

The data is based on the U.S. Department of Health and Human Services Office for Civil Rights database. Health organizations must report any health data breaches that impact 500 or more people to the secretary, which makes them public.  

Joseph McCafferty is editor & publisher of Compliance Chief 360°

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“Confronted with economic volatility, a tight labor market, and rising geopolitical tensions, compliance departments are adapting their workflows to an increasingly complex landscape,” said Chris Audet, Chief of Research at  Gartner’s Legal, Risk, and Compliance Leaders practice. “To successfully manage these challenges, compliance leaders should focus on optimizing their spending and staffing decisions, adjusting existing budgets, optimizing department productivity, and making technology investments where necessary.”

Tighter Compliance Budgets

High inflation rates and ongoing fears of an impending recession have put some companies under a strain in resources, and some compliance departments are being asked to do more with less. “Compliance leaders are now tasked to operate in a more cost-conscious environment,” said Gartner in a statement announcing the study. “At the same time, workloads have increased due to the effects of the pandemic and there is greater regulatory scrutiny and complexity.”

“The majority of a typical compliance budget is spent on personnel,” said Audet. “Given that budgets are flat and wage demands are increasing with inflation, retention becomes doubly important.”

Recent years have also driven an accelerating interest in technology solutions that is now getting tailwinds from organization wide pushes towards automation to boost business productivity during an economic downturn.

Smaller or Frozen Compliance Headcounts

Compliance departments have seen a decrease in full-time employee headcounts since 2020, says Gartner, and for 2023 most compliance departments did not forecast a change to the full-time employee headcounts.

“Increased regulatory scrutiny and rising geopolitical tensions have burdened compliance staff in recent years. Coupled with a more competitive talent market, it has been difficult for many compliance leaders to hold on to their existing staff, let alone increase the size of their departments,” said Audet.

Increased Investments in Compliance Technology

Even while compliance budgets are decreasing and compliance headcounts are remaining constant or going down, there is one place companies are willing to spend more: technology. Compliance leaders anticipate technology will be one of the areas of highest spend increases this year with systems to manage hotlines, compliance and ethics training, and risk management systems high on the list.

“This projected increase is likely a response to growing inflation rates and a highly competitive labor market,” said Audet. “Rather than rely solely on capital to execute on these increased workloads, many compliance leaders are turning to technology tools to support their work.”  

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Sometimes the violations are fairly technical in nature and sometimes they are brazen frauds. Regardless, the fines and penalties can run into the billions of dollars. These examples remind us that compliance failures can be massively expensive, and its worth investing in the lines of defense that can help keep them from occuring, such as the compliance department, risk management, legal, and, of course, internal audit.

In just the last ten years alone, the number of fines has reached some staggering levels. From time to time, some banks get a little too zealous about padding their accounting sheets. When this happens, it can fall under the category of a bank scheme. From outright fraud to behaviors that are far from transparent or ethical, these are some of the biggest compliance fines in recent history that have been levied against financial institutions domestic and foreign. Let’s dive into the biggest compliance violations and penalties in the past decade.

14) HSBC — The AML Program that Wasn’t — $1.256 Billion

AML is short for anti-money laundering program. In short, banks are expected to uphold business practices and regulations that don’t support financial crimes. However, in 2012, the U.S. Department of Justice (DoJ) found that HSBC Bank USA had an AML program that wasn’t much more than for show.

Instead, the bank tended to look the other way regarding its foreign account holders and associated activities. HSBC was found in violation of the Banking Secrecy Act, Trading with the Enemy Act (TWEA), and the International Emergency Economic Powers Act (IEEPA) after evidence was uncovered of questionable transactions for clients in sanctioned nations like Iran, Cuba, Libya, Sudan, and Burma.

HSBC was found liable for aiding in the laundering of at least $881 million in drug-related finances over several years, leading to the $1.256 billion fine.

13) The MAN Group — Poor Trading Oversight — $1.312 Billion

Hedge funds aren’t immune to oversight from financial regulators either. The MAN Group is a storied hedge fund with a history that began in 1783 and is one of the largest publicly traded funds in the world. The brokerage division emerged as a separate entity known as MF Global in 2007, and that’s when the problems began.

To summarize, the firm was constantly found in violation of trading regulations, poor debt provisions, and even difficulty with maintaining liquidity to cover bad calls. While the company went bankrupt in 2011, the investigations continued into the company and its core directors — including the CEO John Corzine.

The Commodity Futures Trading Commission (CFTC) was the investigating party. While the company was ordered to pay $1.212 billion to customers from the Federal Court in New York, and a $100 million penalty with the CFTC, individual directors also paid heavy fines. Corzine himself settled with the CFTC for $5 million and agreed to a lifetime ban from CFTC markets.

12) JPMorgan Chase — The Worst Banking Client Ever — $1.7 Billion

You can’t have a “best of the worst” financial fines list without including Bernie Madoff. He’s known for having pulled off the largest Ponzi scheme in history — defrauding his customers while grossing an estimated $65 billion over several decades. In 2009, when the markets were still reeling from the bursting housing bubble, Madoff was found guilty of fraud and sentenced to 150 years in prison.

Meanwhile, contributing banking institutions like JPMorgan Chase were also found liable because of poor oversight that allowed Madoff to swindle his victims with impunity. To avoid prosecution, the multinational bank agreed to pay $1.7 billion in restitution to Madoff’s victims.

11) SAC Capital Advisors — An Inside Job — $1.8 Billion

Yet another hedge fund makes the list with one of the more considerable fines levied for insider trading. Insider trading is when an individual or institution gets advanced non-public information about a publicly traded stock, thereby giving them an unfair advantage over other consumer or commercial traders. SAC Capital Advisors had been under investigation by the Securities and Exchange Commission (SEC) for years but things came to a head in 2013.

The New York firm was found guilty of not just insider trading, but wire fraud and securities fraud. Along with a hefty $1.8 billion fine, several individual traders found themselves headed to jail. To date, this is the largest fine for insider trading in U.S. history. Of that amount, half was set aside for criminal fines and the other half for civil fines related to money laundering and forfeiture actions. Another result was the company and its subsidiaries being barred from ever taking any future outside investor funds.

10) Credit Suisse — Facilitating the Tax Dodge — $2.5 Billion

The desire to reduce your tax liability is normal. Engaging in deceit to do so is a great way to either see the inside of a jail cell or pay hefty fines. Credit Suisse was under investigation for years because of allegations regarding unscrupulous accounting to aid U.S. customers in falsifying income tax returns and accompanying documents that were submitted to the IRS.

However, the bank’s questionable arithmetic wasn’t just limited to the U.S. customers. Taxation agencies in other countries including Brazil and Germany also had their eyes on Credit Suisse. In the U.S., the bank was ordered to pay $1.8 billion. However, along with additional fines, the total amounts to $2.5 billion.

9) ‘The Cartel’ — The LIBOR Price-Fixing Scandal — $2.5 Billion

Price fixing is never a good idea, but sometimes even banks need to be reminded that monopolies are illegal. The LIBOR scandal involves criminal charges regarding a foreign currency exchange that involves several major multinational banks between 2007 and 2013. Citicorp, Barclays PLC, JPMorgan Chase & Co, The Royal Bank of Scotland plc, and UBS AG all pled guilty to felony charges for each member’s involvement in the scheme.

Simply put, forex (foreign exchange) traders at the banks worked in tandem to manipulate currency values between the U.S. dollar and the European euro for financial gain. As if this isn’t enough, the traders called themselves “The Cartel” and even initiated private chat rooms and codes to influence exchange rates.

Typically, the exchange rates were edited twice daily, at 1:15 PM for the European Central Bank fix, and at 4:00 PM for the World Markets/Reuters fix. The traders would agree to only buy and sell at specific times, ensuring minimal losses for participating member banks. As with many other entries on this list, that $2.5 billion fine isn’t the final word for the exposed institutions.

8) Wells Fargo — The Phony Accounts Scandal — $3 Billion

One of the most recent offenders hits close to home with the American banking giant, Wells Fargo. Unlike many of the other entries on this list, Wells Fargo gets a mention because the firm repeatedly engaged in illegal activity that’s alleged to have harmed over 16 million consumer accounts.

Highlights from the financial company’s misdeeds include opening up phantom banking and credit accounts and banking services under real customer names without consent. The reason for such misdeeds? The bank demanded high sales quotas from its employees. As a mea culpa, the bank agreed to a $3 billion settlement to the DoJ. However, the Consumer Financial Protection Bureau (CFPB) is still investigating other allegations against Wells Fargo so that figure could still increase.

7) Wells Fargo (Again) — Rampant Mismanagement — $3.7 Billion

As you can see, several banks on this list don’t ever seem to learn a lesson, becoming repeat offenders. This time, Wells Fargo returns over additional claims of mismanagement and consumer abuses. The CFPB settled with the bank for $3.7 billion dollars. Allegations included that customer payments were misapplied for mortgages and auto loans.

Meanwhile, other consumers were hit with incorrect interest charges. In severe cases, people lost their homes or cars as a result of the banks errors. Note that this settlement includes a $1.7 billion civil penalty and over $2 billion that will be given directly to customers affected by the bank’s misdeeds.

6) Credit Suisse (Again) — Front-Running the Financial Crisis — $5.3 Billion

Balancing your books is one thing. But knowing that your business practices are going to contribute to a massive economic crisis — and using underhanded tactics to stave off the damage before it happens by selling assets you know are worth far less — is criminal. Several banks found themselves on the wrong side of the law after the subprime mortgage crisis, including Credit Suisse.

Institutions determined to significantly influence activities that ushered in the Financial Crisis—what some call the “Great Recession”—later learned in the following decade that those behaviors wouldn’t go unpunished. Credit Suisse was ordered to settle in the amount of $5.3 billion for selling toxic debts before the financial crisis took hold. Roughly $2.48 billion of this figure was paid as a civil penalty with $2.1 billion used for consumer relief.

However, this is just one part of the fallout from the subprime mortgage crisis as almost every major bank across the U.S. and many multinationals also faced steep fines for poor oversight and intentionally providing loans to unsuitable customers.

5) Goldman Sachs —Banking the Malaysian Thieves — $5.4 Billion

No one likes a thief. But if you steal from government funds, don’t be surprised when the long arm of the law finds you. Goldman Sachs found itself in hot water in 2020 for participating in the Malaysian 1MDB scandal. The event refers to millions that were stolen from the state investment fund.

While the masterminds behind the scandal were local Malaysian government officials and accomplices, Goldman Sachs was accused of facilitating money laundering to divert money from the state fund. To avoid further investigation and legal action, the bank agreed to pay a total of $5.4 billion to multiple global regulators including the DoJ in the United States. Additionally, the bank paid another $1.4 billion to Malaysia as part of a restitution settlement.

4) Deutsche Bank — Front-Running the Financial Crisis, Part II — $7.2 Billion 

Shoddy business practices that prioritize profit over sound actions will always catch up with you in the end. Deutsche Bank, a massive multinational bank headquartered in Germany, can attest to this as the financial institution was slapped with a $7.2 billion fine in 2016 for attempting to offload toxic assets ahead of the housing crash. Of that figure, roughly $4.1 billion is being set aside for consumer relief and loan modifications that will be spread out over the next five years.

3) BNP Paribas — Banking the Bad Guys — $8.973 Billion

Smart individuals and businesses know that trying to scheme around anti-terrorism laws is a bad idea. However, BNP Paribas, a French-based bank, apparently failed to get the memo. The bank was found in violation of both the IEEPA and TWEA in 2015 for processing billions of transactions through the U.S. financial system on behalf of sanctioned nations.

BNP Paribas was accused of “deliberately disregarding the law” according to the DoJ, working to cover its tracks in the process, while helping to support terrorism in countries such as Sudan, Iran, and Cuba. The bank was required to fork over $8.833 billion to the U.S. government as well as pay $140 million in fines, which gets you the $8.973 billion total.

2) JPMorgan Chase (Again) — Contributing to a Global Financial Meltdown ­— $13 Billion

The subprime mortgage crisis had a lot of dirty banking hands in the cookie jar. So, while many banks faced big fines, some were slapped with significantly higher ones. JPMorgan Chase found itself in the hot seat both for federal and civil claims because it participated in passing out poorly vetted mortgages to consumers. The bank agreed to settle for $13 billion in 2013 with the DoJ.

However, this bank wasn’t alone. You may remember that JPMorgan faced its day of reckoning along with the investment bank Bear Stearns and Washington Mutual. However, the two latter firms no longer exist. Both went defunct in 2008, with JPMorgan Chase opting to purchase them — which raised several red flags. Washington Mutual was absorbed into the Chase Bank brand while Bear Stearns was acquired under the investments division.

1) Bank of America — Contributing to a Global Financial Meltdown, Part II — $30.6 Billion

If there’s a biggest loser for “most fines paid” from the SMC scandal, it’s Bank of America. Yes, several banks paid a lot of money for their involvement in activities that destabilized the global economy. But, BofA has faced the most fines during this period. The big bank found itself agreeing to multiple settlements over the past decade to atone for its questionable practices.

The bank paid $11 billion as part of the $25 billion agreement with the five largest mortgage servicers in the United States. This was meant to address previous foreclosure and loan servicing abuses. But then, the bank paid $10.3 billion to Fannie Mae as part of a settlement in 2013. Again, in 2014, BofA paid $9.3 billion in a settlement with the Federal Housing Finance Agency.

Compliance is Crucial

This “best of the worst” list of compliance failures highlights a critical reality: non-compliance can cost you bigtime. Likewise, just because you get away with questionable behavior initially, doesn’t mean that regulators or government agencies won’t eventually come knocking on your door. In most of the cases we highlighted above, financial institutions were engaged in clearly criminal or at least unethical activities that they knew were problematic.

A program of solid internal controls and good oversight by compliance, risk management, and internal audit can go a long way to avoiding such massive fines and penalties.   

Osman Husain is the content lead at Enzuzo. He has a background in data privacy management via a two-year role at ExpressVPN and extensive freelance work with cybersecurity and blockchain companies. Osman also holds an MBA from the Toronto Metropolitan University.

Editor’s Note: This article was originally posted at Enzuzo and has been republished with permission.

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The 2022 Corruption Perceptions Index (CPI), released this month by bribery watchdog Transparency International, shows that most of the world continues to fail to fight corruption. It finds that 95 percent of countries have made little to no progress on fighting corruption since 2017.

Indeed, several have declined on TI’s corruption scale. Since 2017, ten countries significantly declined on their CPI scores. The significant decliners are: Luxembourg (77), Canada (74), the United Kingdom (73), Austria (71), Malaysia (47), Mongolia (33), Pakistan (27), Honduras (23), Nicaragua (19) and Haiti (17). Canada has declined eight points on the index since 2017, while the United Kingdom has fallen nine points. Both are among the biggest decliners during the last five years.

Governments hampered by corruption lack the capacity to protect the people, while public discontent is more likely to turn into violence, said TI in its report. This vicious cycle is impacting countries everywhere from South Sudan (13) to Brazil (38).

“Corruption has made our world a more dangerous place, says Delia Ferreira Rubio, Chair of Transparency International. “As governments have collectively failed to make progress against it, they fuel the current rise in violence and conflict—and endanger people everywhere. The only way out is for states to do the hard work, rooting out corruption at all levels to ensure governments work for all people, not just an elite few.”

Not Much Rotten in Denmark

The CPI ranks 180 countries and territories by their perceived levels of public sector corruption on a scale of zero (highly corrupt) to 100 (very clean). The United States was ranked as the 24th least corrupt country with a 69 on the scale, up 2 clicks from its score in 2021.

The CPI global average remains unchanged at 43 for the eleventh year in a row, and more than two-thirds of countries have a serious problem with corruption, scoring below 50.

• Denmark (90) tops the index this year, with Finland and New Zealand following closely, both at 87. Strong democratic institutions and regard for human rights also make these countries some of the most peaceful in the world according to the Global Peace Index.
• South Sudan (13), Syria (13) and Somalia (12), all of which are embroiled in protracted conflict, remain at the bottom of the CPI.
• 26 countries—among them the United Kingdom (73), Qatar (58) and Guatemala (24)—are all at historic lows this year.
• Eight countries improved on the CPI during that same period: Ireland (77), South Korea (63), Armenia (46), Vietnam (42), the Maldives (40), Moldova (39), Angola (33) and Uzbekistan (31).

Russian Corruption

Corruption, conflict, and security are profoundly intertwined, says Transparency International.  The misuse, embezzlement or theft of public funds can deprive the very institutions in charge of protecting citizens, enforcing the rule of law and guarding the peace of the resources they need to fulfill that mandate, it says. Criminal and terrorist groups are often aided by the complicity of corrupt public officials, law enforcement authorities, judges and politicians, which allows them to thrive and operate with impunity.

The Russian invasion of Ukraine in February 2022 was a stark reminder of the threat that corruption and the absence of government accountability pose for global peace and security: kleptocrats in Russia (28) have amassed great fortunes by pledging loyalty to President Vladimir Putin in exchange for profitable government contracts and protection of their economic interests. The absence of any checks on Putin’s power allowed him to pursue his geopolitical ambitions with impunity. According to TI, this attack destabilized the European continent, threatening democracy and killing tens of thousands.

After decades of conflict, South Sudan (13) is in a major humanitarian crisis with more than half of the population facing acute food insecurity—and corruption is exacerbating the situation, notes the bribery watchdog. A Sentry report from last year revealed that a massive fraud scheme by a network of corrupt politicians with ties to the president’s family siphoned off aid for food, fuel and medicine.

“The good news is that leaders can fight corruption and promote peace all at once,” says Daniel Eriksson, Chief Executive Officer of Transparency International. “Governments must open up space to include the public in decision-making – from activists and business owners to marginalized communities and young people. In democratic societies, the people can raise their voices to help root out corruption and demand a safer world for us all.” 

Joseph McCafferty is editor & publisher of Compliance Chief 360°

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In Transparency International’s report, “Exporting Corruption 2022,” 43 signatories to the OECD Anti-Bribery Convention were assessed, along with China, India, Hong Kong SAR, and Singapore. Together, the countries analyzed account for almost 85 percent of all global exports, with OECD member countries accounting for almost two-thirds.

The report is meant to complement the OECD Working Group on Bribery’s (WGB) monitoring of country implementation of the OECD Anti-Bribery Convention in successive phases.

According to Transparency International, just two of the 47 largest exporting countries in the world—the United States and Switzerland—are “active enforcers,” meaning they investigate, charge, and impose sanctions commensurate with their share of global exports (11.8 percent in combination). However, even the United States pursued “significantly fewer cases in 2021,” Transparency International said in a blog post.

“From the inception of our categories in 2009, the percentage of global exports coming from ‘active enforcers’ had remained above 20 percent— nearly twice this year’s percentage—until it began to drop in 2020,” Transparency International said.

Two former “active” enforcers—the United Kingdom and Israel—dropped this year into “moderate” enforcement. Seven other countries whose enforcement levels declined were Italy, Brazil, Spain, Sweden, Portugal, Denmark, and Lithuania.

Most of the 47 countries analyzed have limited or no enforcement at all, while representing 40 percent of global exports. These countries include China, the world’s top exporter, as well as Japan, South Korea, Hong Kong, Russia and more.

Only two countries—Latvia and Peru—stepped up their foreign bribery enforcement efforts. That now puts Latvia in the “moderate” enforcement category, while Peru has inched up into the “limited” enforcement category.

Inadequacies persist
Transparency International’s report further highlighted inadequacies in legal frameworks and enforcement systems. “Serious inadequacies persist in laws and justice systems in every country. In many, investigative bodies have inadequate resourcing and independence,” Transparency International said.

It continued, “Whistleblowers lack key protections. Few governments publish sufficient information on pending or concluded foreign bribery cases stymying accountability to citizens, partner countries and the people harmed.”

“Even in countries that do enforce, foreign bribery continues to be treated as a victimless crime,” said Gillian Dell, head of Conventions at Transparency International and co-author of the report. “This means states whose companies commit crimes abroad fill their treasuries with multimillion dollar penalties while victims are left to bear the cost.”

“It is time to recognize victims’ rights by developing transparent and accountable mechanisms to compensate those harmed, including foreign states, business competitors and whole populations suffering from foreign bribery,” Dell added. “This is essential to achieve justice and deter future violations.” 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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