Libra’s struggling to find its balance, there’s more sporting controversy around financial crimes and the SEC cries foul play.

We share our financial crime highlights from the week of 9 September 2019.

Balancing Act

Facebook has attracted the attention of FATF thanks to Libra. FATF President Xiangmin Liu stated: “We know we need to take the time to get this right… Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.”

Strong words for the cryptocurrency that’s faced nothing but scrutiny since it was announced. And the coin hasn’t even launched yet.

The FATF president made several references to the anonymity of cryptocurrency as a useful element for those engaged in financial crime and reiterated criticisms from the recent FATF guidance on VASPs.

The opposition to Libra from antitrust regulators across the US and EU has put the cryptocurrency on hold. Facebook’s vision for money has faced intense scrutiny as Libra is now accused of anti-competitive behavior.

It raises questions as to whether or not cryptocurrencies with a high chance of widespread adoption will ever be seen as viable or compliant. Especially if those cryptocurrencies come from technology companies. It’s worth noting that JPM Coin, created by JP Morgan, is not facing such scrutiny despite planning to run trials with customers before the end of 2019.

Money Laundering Own Goals

In yet another brush between football and financial crime, a football agent has been arrested in Monaco on charges of fraud, corruption and money laundering. The charges originated in Belgium and related to player transfers.

The agent’s clients have included several Belgian players and clubs including Yannick Carrasco, Kevin Mirallas and Thibaut Courtois.

The arrest came after raids across London, Monaco and Liege resulted in the seizure of €7 million, two apartments, a boat and three luxury cars.

In the wake of Rabobank’s decision to sever all ties with football clubs, it raises the question of whether we’ll see more banks end relationships with sporting institutions across Europe. And if we’ll see even more arrests for money laundering in the sporting world.

Playing on an Uneven Field

This Monday, the U.S. Securities and Exchange Commission (SEC) chairman, Jay Clayton, highlighted actions taken by his agency and the Department of Justice to fight offshore corruption.

Speaking at The Economic Club of New York, he cited SEC attempts to enforce the Foreign Corrupt Practices Act (FCPA), the 1977 law that makes it illegal for U.S. companies to bribe foreign officials.

Clayton also leveled harsh criticism against other nations, asserting that they have done little to curb bribery within their jurisdictions.

A survey by the Organization for Economic Cooperation and Development (OECD) supports his argument. Conducted last December, the survey states that of 44 countries participating in the Anti-Bribery Convention, nearly half have not carried out even one enforcement action. That’s since the convention was signed in 1997. In contrast, the SEC has presented just under 80 cases in a span of five years.

The chairman asserted that the lack of law enforcement from other countries has a negative effect on US businesses. The cost of compliance is considered too high a barrier to executing deals although he made it clear that the SEC has no intentions to ease up on bribery.

It’s further proof of how legacy compliance solutions are not fit for purpose. Treating compliance as a tickbox exercise undermines the business itself as without embracing it, compliance functions have a drag effect on the speed of doing business.

However, that’s only where legacy technology is involved, modern technology can reduce the impact compliance has on business capability.

Perhaps the wider adoption of new technologies will see a significant change in the US market. Although foreign businesses may be currently benefiting more than US ones in international deals, today it’s possible to perform just as well while maintaining a strong reputation for compliance.

You just need the right technology.

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