Denmark has warned banks to improve their AML compliance, the FCPA is imprisoning those who aren’t on US soil and Hong Kong could get some US support.

We share our financial regulatory highlights from the week of 11 November 2019.

Handling AML in Denmark

The Danish FSA has found that the Danish business unit of Handelsbanken is lacking in its AML efforts and ordered the Swedish bank to strengthen its efforts.

Handelsbanken was deemed to have too high a risk profile to money laundering and terrorism funding efforts compared to the average financial institution in Denmark. The chief reason for the finding is the Swedish bank’s failure to sufficiently assess customer types and the risks that coincide with the products it has on offer.

The review from the FSA has highlighted a close escape for Handelsbanken. By focusing on Western markets it’s managed to avoid the scandals that have plagued Swedbank and Danske (both of which are covered extensively in our previous weekly updates).

Handelsbanken has also avoided the scandals across the EU in 2019 that have seen millions in illicit cash laundered through the European financial system, prompting calls for a new strategy on European AML enforcement.

The FCPA Reaches Further Than Ever

A jury in the USA has found a former Alstom executive guilty for multiple financial crimes. Lawrence Hoskins received the verdict on Friday. Hoskins was accused of facilitating the crime on behalf of Alstom Power, a US subsidiary. The two-week-long trial concluded after just one day of deliberation, with jurors convicting Hoskins of 11 counts of money laundering, conspiracy, and violating the Foreign Corrupt Practices Act (FCPA). Sentencing is scheduled for January 31, 2020.

Hoskins, a UK citizen, worked as a senior executive for the French power and rail company until 2004. He was accused of helping orchestrate a bribery scheme so that Alstom Power. could secure a $118 million contract to build a power plant in Indonesia. The bribes were funneled through two outside consultants, which Hoskins approved, and were paid out between 2005 and 2009. Although Hoskins was based in Paris, had not set foot in the US, and was not a direct employee of the US subsidiary, prosecutors argued that he was effectively acting as Alstom Power’s agent — making him liable under the FCPA.

The former Alstom executive asserted that he had not been an agent of the US subsidiary and has been made a scapegoat. While the bribes and the extent of Hoskins’ involvement were explored, the question of how to define an agent of a company became the focal point for the trial. Whether Hoskins could be convicted when the scheme was carried out after he left the company was a secondary question before the jury.

The guilty verdict has significant implications for the FCPA’s legal reach — especially as it pertains to foreign nationals. It provides parameters for determining an agency-principal relationship and sets a precedent that the US government can use to pursue legal action under the FCPA against those with similar relationships to US companies. That the scheme was carried out after Hoskins had left his post was irrelevant, the jury ruled, further widening the FCPA’s scope.

Hoskins is considering appealing the jury’s decision and has maintained his innocence throughout the trial.

US Hong Kong Democracy Bill Speeds Up

The US Senate is now poised to expedite a bill on Hong Kong, The Hong Kong Human Rights and Democracy Act. Last month BC Tan, our Head of AML Research, wrote an article detailing the impact of this proposed legislation.

The bill could pass into law as early as next week if there are no objections. Senator Marco Rubio, the lead sponsor of the bill, commented: “Now more than ever, the United States must send a clear message to Beijing that the free world stands with Hong Kongers in their struggle.”

China has warned of retaliation if the bill passes, as it would effectively force Hong Kong to apply OFAC sanctions.

 

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