FinCEN proposes ban on Latvian bank

Laundering MoneyOn February 13, 2018, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued a finding and notice of proposed rulemaking (“NPRM”), pursuant to the USA Patriot Act, seeking to prohibit the opening or maintaining of a correspondent account in the United States for, or on behalf of, ABLV Bank, AS (“ABLV”).

Details of Allegations

ABLV is Latvia’s third biggest bank with assets of around 3.6 billion euros in September 2017. It has subsidiaries in Luxembourg and the United States, and offices in Russia, Ukraine, and Hong Kong.

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SEC’s 2018 Exam Priorities Reflect Continued Focus on Cybersecurity

Annually, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (“OCIE”) publishes its examination priorities for the new year.  Recently, OCIE announced five priorities that will inform its examinations moving in to 2018.

OCIE is committed to “promoting compliance, preventing fraud, identifying and monitoring risk, and informing policy.” In support of these “pillars,” OCIE intends to focus on:

  1. Issues of importance to retail investors, such as fee disclosures, mutual funds, and exchange-traded funds;
  2. Entities that are critical to the proper functioning of capital markets, such as clearing agencies and national securities exchanges;
  3. Oversight of the Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB);
  4. Cybersecurity; and
  5. Anti-money laundering programs.

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DOJ Reveals Data Team – Future of Enforcement

The 2017 Year in Review of the Department of Justice reveals a Data Analytics Team (the “Team”) for tracking healthcare fraud. The Healthcare Fraud Unit launched the Team in order to provide data mining expertise that efficiently detects healthcare fraud. This development demonstrates that data analytics is the future of enforcement. A fuller description of the Team and data mining is found on the Triage blog here.

Court’s Detailed Rejection of Plea Leads to New Bargain

Judge pronouncing sentence to manA recent blog post summarized an opinion in which a district court catalogued his reasons for rejecting a corporate “C” plea involving a pharmaceutical company.  Several developments have occurred since the court’s opinion including a plea and sentencing hearing scheduled for January 30, 2018. 

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DOJ Announces Revised FCPA Corporate Enforcement Policy

In late 2017, Deputy Attorney General Rosenstein announced a revised FCPA Corporate Enforcement Policy to be incorporated into the United States Attorneys’ Manual. With this revised policy, the Department of Justice (DOJ) aims to provide a level of certainty to companies in order to encourage voluntary disclosures of potential violations of the FCPA.

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Help Proposed for Anti-Money Laundering Deadline

Hanging $100 BillsAs the two-year deadline approaches, help is proposed to meet upcoming anti-money laundering compliance requirements. A recent draft bill aims to assist banks and other regulated entities in complying with one of the most significant anti-money laundering requirements of the Final Rules on Customer Due Diligence Requirements (the “Rules”). The proposal will assist banks, brokers or dealers in securities, mutual funds, and futures commission merchants and introducing brokers in commodities in implementing greater customer due diligence measures.

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The SEC’s New Year’s Resolutions: Retail Investors and Cybersecurity

An abstract design of a terminal display, warning about a cyber attack.

2018 arrived in the wake of big changes at the U.S. Securities and Exchange Commission (“the SEC”).  Jay Clayton was sworn in as Chairman of the Commission in May, naming Steve Peikin and Stephanie Avakian as Co-Directors of the Enforcement Division (the “Division”) in June.  As many do for the start of a new year, they have evaluated the Division’s priorities and promised a new focus.  According to a speech by Ms. Avakian late last year, we can expect the Division to direct its resources and attention to two priorities going forward:  the protection of retail investors and cybersecurity.

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DOJ Recovers $32.3 Million For Drug Pricing Despite Limited Role in FCA Case

The Department of Justice (DOJ) recently announced a False Claims Act (FCA) settlement with Kmart Corporation for $32.3 million.  The settlement is part of a global $59 million settlement; the relator will receive $9.3 million.

Former Kmart Employee Filed the Qui Tam

James Garbe, the relator, was employed by Kmart as a pharmacist from 2007 until 2010. The complaint originally filed in California was transferred to the Southern District of Illinois upon Kmart’s motion.  In his third amended complaint, the relator alleged that Kmart, which operates pharmacies in many of its stores, was “maintaining a dual and opportunistic pricing scheme for generic drugs, which allowed Kmart to claim and receive reimbursement from governmental prescription drug programs in excess of its ‘usual and customary’ prices.”

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CFTC Rewards for Cooperation Should Continue in 2018

2017 saw big changes regarding the way the Commodities Futures Trading Commission (“CFTC”) considers and rewards cooperation. In January, 2017, the CFTC issued two Enforcement Advisories (one for companies and one for individuals) outlining the new factors the Enforcement Division of the Commission will consider in evaluating cooperation by those under investigation.

In late September, the CFTC updated those guidelines to “provide greater transparency about what the Division requires from companies and individuals seeking mitigation credit.” Distinguishing its new policy from the original advisories, the update clarified that “the Division will reserve its recommendations for the most substantial reductions in civil monetary penalty for those instances where a company or individual has self-reported the misconduct and fully cooperated with the Division’s investigation and remediated.”

Prerequisites to Earning Cooperation Credit

Voluntary Disclosure: To qualify for cooperation credit under the update, a respondent must promptly and voluntarily disclose the violations prior to any imminent threat of exposure. The disclosure must include “all relevant facts known.”

Cooperation: Throughout the course of the CFTC’s investigation, a party seeking cooperation credit must meet the criteria outlined in the original Advisories, including, but not limited to:

  • Providing material assistance to the Commission;
  • Reporting and assisting in a timely manner;
  • Providing truthful, specific, complete, and reliable information;
  • Encouraging high-quality cooperation of all involved; and
  • Preserving information, explaining corporate documents, and quickly responding to subpoenas.

Additionally, the provision of credit must serve as an example and encourage others to self-report and cooperate as well.

Remediation: Upon discovery of misconduct, a respondent must timely and appropriately remediate flaws in compliance and control problems.

“Cooperation Credit”

Under the Updated Advisory, the Commission will recommend a substantial reduction in the civil monetary penalties if the above described requirements are met. Additionally, in “exceptional circumstances” the Division may decline to prosecute. However, a cooperating company or individual still must disgorge profit or, where applicable, pay restitution.

CFTC Enforcement in 2018

James McDonald, the Director of the Division of Enforcement, remarked in a speech on the Advisories that companies and individuals are “entitled not to self-report, to hope they don’t get caught, and then to defend themselves if they do. Those are their rights.”

However, McDonald also said the CFTC hopes to “shift the incentive structure” moving forward. He foresees greater cooperation among the Commission and those it regulates. Commission enforcements (or non-enforcements) in 2018 will demonstrate the practical effect of the new policies.



US Departments of Justice and State Launch Intellectual Property Law Enforcement Coordinator Network

The US Departments of Justice and State recently launched the “IP Law Enforcement Coordinator Network” to focus on international trademark counterfeiting, copyright piracy and other forms of intellectual property rights infringement across the world, spanning all industry sectors. And while the components of the Network are not new, there is now renewed focus on these issues which could impact US and international corporations.

For more on the Network, visit our Global IP and Privacy Law Blog here.