This article was republished with permission from FCPAméricas Blog, for which Matteson Ellis is founder, editor and regular contributor.
More than any other FCPA enforcement office in the United States, Miami’s DOJ and SEC teams have developed a specialization in Latin America. They work cases like Alcatel, Stryker, Ralph Lauren and Direct Access Partners, each with an important Latin American component. They benefit from language capabilities in Spanish, Portuguese and French, allowing them to work seamlessly throughout the region. They are essential to almost every enforcement action that touches Latin American countries.
Recently, at ACI’s 2014 Anti-Corruption Boot Camp in Miami, they opened up to the public.
The Assistant Director of the SEC’s Miami Regional Office, Thierry Olivier Desmet, and the DOJ’s Miami-based Assistant U.S. Attorney, Jerrob Duffy (sharing their own views and not the official views of their respective agencies) each offered firsthand perspectives on FCPA issues in the region. They said there is a “good inventory” of cases to come involving Latin America, representing “about every type of industry that one could imagine.” Mr. Desmet specifically mentioned that four of the SEC’s 30 nationwide full-time FCPA investigators are based in Miami – three attorneys and one accountant. They shared the following important insights as well:
Most Common Cases in South Florida. Mr. Duffy outlined the three most prominent activities under review by officials in South Florida.
Investment services for Latin Americans by bankers, broker-dealers and other finance professionals. Mr. Duffy said that this activity has the potential to involve criminal conduct, citing tax fraud, avoidance of U.S. reporting requirements and use of shell companies as examples. He stressed that those with banking clients in South Florida should be particularly focused on due diligence on their counterparties.
Miami-based operations of international companies. Since multinational corporations often base their Latin American operations in Miami, they face unique risks. U.S. authorities can more easily establish jurisdiction over their Latin American units and partners, since transactions and meetings often take place in Miami, wealthy business owners often have their second homes in Miami and large inflows of money move from Latin American businesses to financial institutions in Miami.
Money laundering. Mr. Duffy said that he has been surprised to see such frequent lack of AML controls at South Florida companies. He says this has the effect of allowing for “motive and opportunity.” (FCPAméricas has discussed the crossover between AML and FCPA here.)
Collaboration with Other Authorities. Mr. Desmet said that his office is working closely with regulators and prosecutors in other countries. He said that, in the past, U.S. officials would not always get the collaboration they hoped for from foreign regulators, but the amount of collaboration has grown significantly. The SEC periodically hosts training conferences with the FBI. Counterparties share tips with one another. Collaboration, he said, is particularly important since witnesses and documents related to schemes are often located outside of the United States: “Having more sophisticated partners is making an impact … it is here to stay.” He credited the OECD Anti-Bribery Convention as facilitating this cooperation.
Commercial Bribery. Mr. Desmet stressed that the SEC plans to continue charging commercial bribery related to FCPA violations. This includes bribes to commercial agents who are not foreign government officials. Depending on how the payment is booked by a publicly listed company, he said, “It is important to emphasize that in some cases this will trigger a violation of the accounting provisions of the FCPA.”
Alignment with National Enforcement. The officials made it clear that they follow the broader priorities of the DOJ and SEC. Mr. Duffy said that his office is especially focused on prosecuting individuals for FCPA violations. He echoed recent statements by Marshall Miller, Deputy Assistant Attorney General, who said that, to give credit for cooperation, authorities expect companies to produce the names of employees responsible for misconduct. He stressed that, although the FCPA does not apply to the foreign official receiving the bribe, the government will continue to pursue actions against the receiver using other sections of the criminal code, like anti-money laundering provisions.
It was refreshing to hear from local authorities with true expertise in Latin America. They take great pride in the cases they investigate. Enforcement perspectives usually come from those who head up FCPA matters in Washington, D.C. (see, for example, here, here, and here). We are reminded that FCPA enforcement is much broader than that.
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