Welcome to This Week In Compliance: GAN’s weekly news roundup, where we curate the latest stories on compliance and anti-corruption to keep you informed. This week we cover HSBC's fine over tax evasion violations. Keep reading for this breaking story and find more news below:
HSBC Swiss unit to pay $192 million in US tax fine
HSBC’s Swiss branch has been fined USD 192 million for having helped American customers engage in tax evasion over a timespan of ten years. The bank admitted to having presented fake documents to US tax authorities when holding USD 1.26 billion worth of undeclared assets from wealthy American clients. HSBC emphasized their commitment to work with the DOJ to resolve the case as they have reportedly ramped up their compliance functions and internal controls, and increased measures on tax transparency for clients. In addition, the bank also agreed to disclose specific information concerning accounts.
Ericsson to Pay Over USD 1 Billion to Settle U.S. Bribery Charges
After a long-running bribery investigation by the U.S Securities and Exchange Commission (SEC), the Swedish telecommunications firm Ericsson, has agreed to pay more than USD 1 billion to settle FCPA corruption charges. Ericsson admitted to having engaged in bribery conspiracy from 2000 to 2015. During that time, the company failed to implement appropriate internal controls as books and records were reportedly falsified in the bribery scheme. The bribes, which were given to government officials in order to secure and keep business, were made through intermediary consultants who funneled the proceeds through slush funds. Ericsson has stated that it has taken measures to improve ethics and compliance procedures within the company.
Indonesia’s KPK concludes probe into Garuda Indonesia bribery case
The Indonesian Corruption Eradication Commission (KPK) finished its investigation into Emirsyah Satar, the former president of national airline Garuda Indonesia for corruption suspicions. The anti-corruption body suspects that the former president received bribes exceeding EUR 1.2 million in value in relation to the procurement of Rolls’s Royce engine parts for Airbus airplanes. The KPK also found illicit money flows to several public officials at Garuda totaling more than USD 7.1 million.
Japan’s market watchdog recommends USD 22 million fine for Nissan over Ghosn pay
Nissan Motor Co Ltd was recommended a USD 22 million fine by Japan’s market watchdog, SESC, over underreporting the company’s former chairman Carlos Ghosn’s compensation. The former executive was arrested in November last year over claims that he had understated his salary by millions of JPY over a period of ten years. While Ghosn has denied all allegations, the potential JPY 2.4 billion fine would be one of the largest recorded fines over financial misconduct in Japanese justice. As a response, Nissan stated that it was taking the SESC recommendations seriously and that they are continuing their efforts to strengthen its compliance program, information disclosure, and governance.
Away Travel CEO steps down amid “toxic culture” scandal
Shortly after an investigation into tech startup Away Travel’s “toxic company culture” was made public by The Verge, Away announced it had hired a new CEO. According to leaked Slack logs and interviews conducted with 14 former employees, employees were regularly asked to work long hours with no compensation. Public criticism on Slack channels by top leaders was commonplace creating which created “a culture that coerced employees into silence”. Former Away CEO Steph Korey issued an apology letter in response to the backlash. The company stated that the CEO swap plan was already underway since the spring of 2019 and multiple sources stated it was expected to occur in 2020. However, it was reported that pressure from Away investors amidst the scandal accelerated the latest change.
Top U.S. Anti-Money-Laundering official calls for Beneficial Ownership Registry
Kenneth Blanco, head of the U.S. Treasury’s Financial Crimes Enforcement Network, called this week for the creation of a beneficial ownership registry. Mr. Blanco expressed concerns that the lack of information available on who owns and controls businesses incorporated in the U.S. is allowing criminals to thrive since they have a place to hide. A beneficial ownership registry would give insight to law-enforcement agencies and banks about who ultimately owns the legal entities. A bill to create such a registry passed the House of Representatives in October and similar legislation has been introduced in the Senate. The White House has indicated it supports the legislation.
European Council sets strategic priorities for further AML reforms
The EU Council has adopted a set of strategic priorities to guide the agenda of anti-money laundering and countering the financing of terrorism (AML) in the EU. The resolution was adopted in response to the new EU 2019-2024 strategic plan which includes a call to strengthen the EU’s fight against terrorism and cross-border crime. The resolution builds upon an earlier conclusion by the Commission which identified a range of shortcomings from banks and AML authorities in enforcing the current AML legal framework as well as issues with cross-border cooperation across authorities. The Council urged the commission to consider ways to facilitate means of more effective cross-country cooperation on AML enforcement, and on the possible advantages and disadvantages of delegating certain overseeing powers and responsibilities to an EU body.
Federal appeals court upholds 5.6B USD Visa and Mastercard settlement
The DOJ updates its guidance on corporate compliance programs
Founder and former FTX CEO arrested, indicted on eight fraud charges