Allocating Attorney Fees in a False Claims Act Settlement with Multiple Relators

The United States Court of Appeals for the Sixth Circuit recently issued a published opinion regarding entitlement to attorney fees in a False Claims Act settlement that involved multiple relators, each of whom had filed a case in which the government intervened. Addressing arguments based on 31 U.S.C. s. 3730(d)(1), the first-to-file rule, and the public-disclosure bar, the court held that every relator could seek fees. The Sixth Circuit’s decision in United States ex rel. Bryant v. Community Health Systems, Inc. was the first circuit-level decision on this subject, and it reached a conclusion that differed from that of the handful of district courts to have addressed the question. Therefore, the opinion should be front of mind for any False Claims Act defendant facing similar circumstances. Our colleagues Shams Hirji and Alon Farahan have provided a detailed discussion of the decision at the Sixth Circuit Appellate Blog here.

Proposed FinCEN Pilot Program on Sharing of Suspicious Activity Reports with Foreign Affiliates

On January 25, 2022, the Financial Crimes Enforcement Network (“FinCEN”) issued its anticipated Notice of Proposed Rulemaking seeking public comment on a proposed pilot program that would permit certain financial institutions to share suspicious activity reports (“SARs”) and information related to SARs with the institutions’ foreign branches, subsidiaries, and affiliates (the “NPRM”). The proposed rule is part of a broader reevaluation and recalibration of the federal anti-money laundering regulatory structure directed by the Anti-Money Laundering Act of 2020 (“AMLA”). The NPRM sets out a highly restrictive program, designed to keep FinCEN informed of any sharing of SAR information with entities outside the United States. Participation in the program may be an important first step in creating an enterprise-wide anti-money laundering compliance function that is able to communicate robustly in support of the core function of an effective compliance program—providing highly useful information to law enforcement. However, financial institutions should carefully assess the value to their organization of participating in the program before enrolling.

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Central Bank Guidance to UAE Financial Institutions Banking Cash-Intensive Businesses

The Central Bank of the UAE (“CBUAE”) has issued new guidance (the “Guidance”) to UAE financial institutions providing services to cash-intensive businesses.

The specific characteristics of cash—anonymity, interchangeability, and transportability—make it an attractive medium for illicit actors seeking to obfuscate the proceeds of crime or the funding of terrorism.  Unlike other monetary instruments, such as wire transfers or credit cards, cash holds no record of its source or owner, it can be easily concealed in large quantities, it is widely accepted around the world, and it can be spent instantaneously, after which it is difficult to trace.  For this reason, the Guidance, which aims to help UAE financial institutions understand and effectively mitigate the money laundering and terror financing risks associated with cash-intensive businesses, is yet another important step for the UAE in its commitment to combat money launderers and terror financiers.

We have reported on many of the prior steps that the UAE has taken to enhance the efficiency and robustness of its banking and financial system, including but not limited to passing new laws (see here), disseminating guidance on suspicious activity/transaction reporting (see here), and establishing a specialized court to hear money laundering cases (see here).

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Anti-Money Laundering Act Update: One Year In

The National Defense Authorization Act for Fiscal Year 2021 became law early in 2021, after a congressional override of then-President Trump’s veto.  Division F of the NDAA consists of the Anti-Money Laundering Act of 2020 (“AMLA”).  The AMLA expands numerous Bank Secrecy Act (“BSA”) requirements, and FinCEN has continued to issue guidance, reports, and proposed regulations since our prior blog post summarizing developments during the first sixth months following AMLA’s passage.  The following is a summary of additional AMLA developments that occurred during the second half of 2021.

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The Biden Administration Announces Strategy to Combat Global Corruption

White HouseOn December 6, 2021, the White House (the “WH”) released the first United States Strategy on Countering Corruption (the “Strategy”) that sets the Biden-Harris Administration’s goals to tackle international corruption. Much of the Strategy remains currently aspirational and requires additional legislative and regulatory action to implement. Still, it signals the direction the Administration is looking to steer the resources of the federal government with respect to combating global corruption and implicates the whole of the financial industry. Here, we briefly summarize the background and some of the Strategy’s key points and initiatives.

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OFAC Releases Sanctions Compliance Guidance for the Virtual Currency Industry

Finance BrainThe Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury recently published sanctions compliance guidance for the virtual currency industry (the Guidance).  The move was long anticipated, given the rapid industry growth and limited regulator guidance in this space.  The Guidance provides an overview of OFAC sanctions requirements and procedures, including licensing and enforcement processes, and highlights sanctions compliance best practices tailored for the virtual currency industry, which includes technology companies, exchangers, administrators, miners, wallet providers, and users.

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The Treasury 2021 Sanctions Review is Complete: What Next?

US TreasuryOn October 18, 2021, the U.S. Department of the Treasury (“Treasury”) released the findings from its review of the economic sanctions administered and enforced by its Office of Foreign Assets Control (“OFAC”). During the review, Treasury met with individuals representing hundreds of sanctions stakeholders, including Members of Congress and their staffs, the private sector, foreign governments, and Treasury’s sanctions workforce. The review—headed by Deputy Secretary of the Treasury Wally Adeyemo—focused on two primary issues: (1) the framework guiding the imposition of U.S. sanctions; and (2) potential operational, structural, and procedural changes to improve Treasury’s ability to use sanctions now and in the future. The report and its recommendations aim to preserve the efficacy of U.S. sanctions in confronting perceived foreign policy and national security threats to the U.S. by “modernizing” their implementation through:

  1. Adoption of a structured policy framework that links sanctions to a clear policy objective;
  2. Multilateral coordination wherever possible;
  3. Calibration of sanctions to mitigate unintended economic, political, and humanitarian impact;
  4. Ensuring sanctions are easily understood, enforceable, and, where possible, reversible; and
  5. Investment in modernizing Treasury’s sanctions technology, workforce, and infrastructure.

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UAE’s New Executive Office of AML/CFT and Dubai’s New Specialized Money Laundering Court

United Arab Emirates Currency notes spread on tableOn August 22, 2021, at the directive of His Highness Sheikh Mohammed bin Rashid al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, Dubai Courts announced the establishment of a specialized new court that will focus on combating money laundering.  The announcement comes just months after the UAE Cabinet approved the establishment of the Executive Office of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT).

These two developments together further demonstrate the UAE’s ongoing efforts to implement and maintain a sophisticated financial crime compliance framework that is in line with FATF’s expectations and recommendations.

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OFAC Issues Updated Ransomware Advisory and Designates Virtual Currency Exchange

On September 21, 2021, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued an Updated Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments (the “Updated Advisory”) superseding its earlier October 1, 2020 guidance on ransomware attacks and, for the first time, added a virtual currency exchange to the Specially Designated Nationals and Blocked Persons List (“SDN List”).[1]  In response to the increase in ransomware demands and payments during the COVID-19 pandemic, the U.S. Government has embarked on a “whole of government effort to counter ransomware.”[2]  The Updated Advisory and SDN designation of SUEX OTC, S.R.O. (“SUEX”) are the Treasury Department’s most recent actions on this front.  They are intended to highlight the sanctions risks associated with ransomware payments and the proactive steps companies can take to mitigate such risks.[3]

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New Central Bank Guidance for UAE Financial Institutions on Suspicious Activity/Transaction Reporting

Dubai Financial LandscapeOn June 7, 2021, the UAE Central Bank issued new guidance requiring all UAE financial institutions to file suspicious activity reports (SARs) or suspicious transaction reports (STRs) with the UAE’s Financial Intelligence Unit (FIU) using the goAML portal within 35 calendar days of detection of any conduct that they reasonably suspect may be linked to money laundering, terror financing, or other criminal activity.  By the end of the first 20 calendar days, a case investigator must have analyzed the alert or other indicator of suspicion, conducted any further investigation that may be necessary, and made an internal recommendation to the MLRO as to whether an SAR/STR filing is warranted.  Also within those first 20 calendar days, the MLRO must have reviewed the case report, considered the recommendation, and finally dispositioned the alert or activity one way or the other.  By the end of a further 15 calendar days, the MLRO must have filed an SAR/STR with the FIU in respect of anything determined to be suspicious.  Note that these are maximum timeframes and UAE financial institutions are ultimately responsible under the local AML/CFT Law to report suspicious activity “without delay.”

Our new client alert summarizes the Central Bank’s new expectations around timely alert dispositioning and SAR/STR filings.  Importantly, we also examine important guidance from the Central Bank regarding best practices for drafting SARs/STRs and recommended post-SAR/STR filing processes.  Additionally, we cover the Central Bank’s warning to UAE financial institutions not to engage in defensive filings and, finally, we examine common typologies and red flag indicators of money laundering or terror financing in the UAE, as identified by the FIU.