The Banks and the truth behind the FIFA allegations

January 01, 1970 by Mark Dunn

Blatter resigns

Less than 96 hours after being re-elected to the position of FIFA President, Sepp Blatter has resigned from the position.  Despite resigning on Tuesday, Blatter will spend considerably longer in office than the four days since the election, having set a timetable for the election of his successor of between six to nine months.

Why Blatter chose to resign so soon after successfully standing for election is a matter of speculation.  Certainly it was widely reported over the weekend that, as a resident of Switzerland, Mr Blatter could be questioned at any time by Swiss officials, negating the need to issue a warrant specifically for him.

Whatever the reasons for Mr Blatter's resignation, it cannot have been helped by the continual drip feed of new and lurid allegations – the latest being the accusation, rapidly denied, that South Africa made questionable payments in order to secure the World Cup 2010.

The role of banking

One perhaps overlooked, but very important part of putting together the jigsaw is the banks.  According to the BBC dozens of banks were referenced in the FBI indictment of seven FIFA officials last week.  This is not to suggest that the banks have done anything wrong but that banks were used to funnel money from one place to another.  The information held by the banks could well prove decisive in unravelling who paid what to whom in a seemingly more and more complex saga.

The development of the global economy, fuelled by the ability to transfer money instantly and the reduction in the cash economy has actually helped to fuel more transparency in terms of where money is going and for what purpose.

Banking regulation may help unravel the FIFA mess

As we know banks are now some of the most regulated businesses on earth. In the USA banks are subject to the Bank Secrecy Act whereby they need to assist government agencies to detect and prevent money laundering.  Specifically the act requires banks to keep records of cash transactions over $10,000.  In the UK the Financial Conduct Authority is responsible for ensuring that all regulated bodies (including banks) have policies and procedures to detect and prevent money laundering.

The banks therefore, have a critical role to play in highlighting if, where and when suspicious payments have been made to and from FIFA officials or other organisations.  The days of hiding a bribe under the mattress have truly disappeared and the regulatory transaction recording and reporting requirements of the banks could well help to dissect exactly what has been happening at FIFA.

The banks will also have good reason to co-operate.  Over the past three years several banking groups have paid huge fines having been accused of flouting anti money laundering or sanctions regulation.

As Mark Dunn, LexisNexis' Due Diligence Segment Leader explains: "The ongoing focus globally to tackle bribery and corruption and wider financial crime means it is critical that companies have in place effective due diligence systems and controls to ensure their hard-earned reputations are not tarnished by allegations of misconduct and the associated losses that can ensue."

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