Five steps to avoid a FIFA-like final whistle

January 01, 1970 by Mark Dunn

Financial services scrutiny

HSBC, Barclays and Standard Chartered are said to be investigating payments worth hundreds of thousands of pounds which allegedly passed through accounts held by them and may be linked to senior FIFA officials accused of corruption.  One payment in particular – £326,000 which was allegedly sent from a sports marketing company's bank in New York to be credited to the account of a luxury yacht maker held by HSBC in London – is under particular scrutiny.

Deferred prosecution

While none of the banks have been accused of doing anything wrong, their internal reviews are focused on ensuring that that they have complied with regulations on money laundering and bribery.  The investigation is particularly sensitive for HSBC which entered into a so-called "deferred prosecution" arrangement with US federal authorities last year.

The developing scandal at FIFA and potential unwitting involvement by major financial institutions has once again brought the issue of international due diligence and compliance to the fore.

As Mark Dunn, LexisNexis Due Diligence Segment Leader explains: "As the investigators continue to unpick the alleged offences of those involved in the FIFA scandal, the spotlight again shines on the importance of effective due diligence and compliance to protect businesses against bribery and corruption risk."

What can you do to protect yourself?

While it may never be possible to stamp out international corruption and money laundering completely, there are a number of steps that any business can take to minimise exposure and to ensure that it complies with the regulations:

  1. Your firm should assess what its potential exposure to money laundering, bribery and corruption is in the market or geographical area concerned.
  2. Screen your suppliers and other third parties.  Companies should ensure that they maintain adequate supplier screening and that this is ongoing because, according to the Resource Guide to the Foreign Corrupt Practices Act, 90% of FCPA compliance violations result from third party relationships.
  3. While the FIFA scandal suggests that corruption may have taken place involving the body's representatives from what are traditionally thought of as first world countries, the developing world clearly still presents a higher risk of bad practice.  Basic due diligence should include particular attention to high risk regions to ensure that proper precautions are taken
  4. The action by the FBI and the US Justice Department has shown that international borders are no protection against compliance investigations.  Even where a business is not based in America, if it enters into a joint venture or acquisition with a foreign business it can still be at risk of FCPA violations, even for the past events of the acquired organisation.  Enhanced due diligence can help you identify potential red flags before a merger to help eliminate that risk
  5. A company must make sure that all staff are fully aware of the organisation's compliance and due diligence procedures and that ongoing training and support are provided to ensure that staff are kept abreast of changes in the regulatory environment.

Related Blogs

ps 3 ways you can apply this information right now to..

  1. To protect your business and reputation you need to better understand your customers, employees and vendors. Lexis Diligence brings together all the intelligence you need in one place to conduct consistent due diligence and comply with anti-money laundering and anti-bribery regulatory requirements.
  2. Keep up to speed on developing news and expert opinion with our regular posts on Anti-Bribery & Corruption; subscribe to our blog to have updates delivered directly to your inbox.
  3. Leave a comment below. Let's start a conversation!