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 the SEC’s fine on private-equity firm Ares over compliance failures. Read the full story and more news below:
SEC Fines Ares Management USD 1 Million for Compliance Failures:
The U.S. Securities and Exchange Commission (SEC) reached a settlement with private-equity firm Ares Management LLC for compliance failures. The company was charged for buying stock in one of its portfolio firms where an employee held a board position, which constituted a conflict of interest. The purchases were flagged to be in non-compliance with Ares’ private-equity compliance policies. The SEC stated that Ares collaborated fully with their investigation, however, they also stated that Ares’ compliance personnel did not sufficiently inquire and document the purchase of the stocks in question. Ares has significantly ramped up compliance efforts since the investigation began.
Ex-Coutts Banker on Trial Over $700 Million Transfer From 1MDB to Jho Low:
Swiss financial watchdog FINMA charged one of Coutts & Co’s former compliance officers for failing to flag a USD 700 million transaction to an account controlled by fugitive financier Jho Low tied to the 1MDB fund. The former compliance officer, reportedly, approved the transaction after it had generated internal inquiries and said due diligence checks confirmed the payments were true and valid. U.S. officials estimate that around USD 4.5 billion was siphoned out of Malaysia’s 1MDB fund between 2009 and 2014 through different jurisdictions including Switzerland, the U.S., and Luxembourg. According to prosecutors, Jho Low, the alleged orchestrator behind the committed fraud, held three accounts at the Swiss bank including one from a Seychelles-based shell company that deposited the USD 700 million payment. In 2017, FINMA fined CouttsUSD 6.7 million for breaching AML laws related to the 1MDB fund.
Canada Presses on with Huawei Corruption Extradition Case:
The Supreme Court of British Columbia ruled this week that the extradition proceedings of Huawei’s CFO Meng Wanzhou will be resumed next week. In January 2019, the U.S. DOJ indicted Wanzhou and the daughter of Huawei’s founder Ren Zhengfei for money laundering, fraud, and sanctions breaches in Iran. The CFO’s lawyers had spent 18 months opposing extradition, arguing the legal test of ‘double criminality’ of Meng’s charges had not been met. The court’s ruling, which established that the case meets the threshold for double criminality, implies that there are going to be criminal charges in both the U.S. and Canada.
U.S. State of Arizona Files Consumer Fraud Lawsuit Against Google:
The U.S. State of Arizona filed a lawsuit against Google accusing the tech giant of collecting information on the location of its users through ‘unfair’ and ‘deceptive’ practices. Attorney General Mark Brnovich alleges that Google obtains user data without gathering consent for collecting the data which is then used for marketing purposes. While the lawsuit seeks no specified damages, Google has publicly stated that the lawsuit appears to have mischaracterized their services, which have ‘built-in privacy features’.
Policy & Guidance Updates
COSO Releases New Risk Guidance:
COSO (The Committee of Sponsoring Organizations of the Treadway Commission) released a new 40-page booklet on how to define your organization’s risk appetite and how to incorporate it into your corporate strategy. Among other things, the guide states that risk appetite is an essential element for successful compliance programs, and gives clear recommendations on how to put it into the context of your business, how to consider a changing environment, and how to communicate risk appetite to support better decision making and more.
Sudan Recovers USD 4 Billion in Assets Looted by Omar Al Bashir:
The Sudanese anti-corruption body just reported the recovery of USD 4 billion worth of assets from former president Omar Al Bashir. After Sudan’s leader was removed from power last year amid nationwide mass protests, the country is said to be preparing itself for a democratic transition. As part of its plans to transition to democracy, the country’s current interim government confiscated different companies and buildings owned by the former president who was put in jail for being found guilty of illicitly possessing millions of dollars of foreign currency.
Israeli Court Begins Corruption Trial Against Netanyahu:
After a long-standing discussion on whether or not Israeli PM Benjamin Netanyahu would stand trial on corruption charges, the first trial took place this week. Netanyahu is facing bribery, fraud, and breach of trust charges based on allegations that he exchanged state favors for favorable press coverage by Israeli media. After his corruption trial was delayed for three months due to the COVID-19 pandemic, and after having asked for legal immunity, Netanyahu dismissed the charges against him as politically motivated. His now-political ally Benny Gantz with whom Netanyahu has formed a coalition government during the past month voiced his support by saying Benjamin is ‘innocent until proven guilty’.