Cross-Border Investigations
Update
2 / Recent Developments
10 / United States v. Allen: A Che ck on Compell ed
Testimony in Cross-Border Investigations
The Second Circuit’s recent decision to vacate the
convictions of two former traders found to have
manipulated the LIBOR may impact how the U.S. and
foreign governments approach cross-border investigations.
14 / Second Cir cuit Upholds Pr osecutorial
Discretion i n Deferred Prosecution Agree ment
The court’s ruling widened the divide between the
U.S. and European approaches to judicial supervision
of criminal settlements.
18 / China’s ‘One Belt, One Roa d’ Initiative Creates
Opportunities and Regulatory Challenges
Hong Kong appears to be poised to continue pursuing
enforcement actions for alleged market misconduct,
especially as China’s infrastructure initiative ramps up and
more companies tap Hong Kong’s capital markets.
21 / The Momentum Continues: New UK Repo rting
Obligations for Sanctions Violations
The reporting regulations are the latest signs of a changing
landscape for nancial sanctions enforcement in the U.K.
24 / AML Enforcement Trends in the United S tates
and the European Union
Increased enforcement on both sides of the
Atlantic underlines the importance of robust
AML compliance programs.
30 / ICOs and Cryptocurre ncies: How Regula tion
and Enforceme nt Activit y Are Reshaping
These Markets
Recent developments have highlighted the impact of
regulators and the potential for enforcement activity in
these areas.
35 / United States Imposes N ew Sanctions on
Russia, Iran, Venezuel a and North Korea
The new measures indicate that economic sanctions
remain a key instrument of U.S. foreign policy.
37 / European Central Bank Impos es Its First F ines
for Noncompliance With Prudential Regulations
The ECB’s decision to ne two banks is groundbreaking
in that it introduces a new EU-level enforcement agency.
39 / FCPA Investigations by the Numbers
Updated gures on bribery-, corruption- and
FCPA-related investigations to date in 2017
by U.S. and non-U.S. authorities.
40 / Contacts
Skadden, A rps, Slate, Meag her & Flom LLP and Af liates skadden.com
November 2017
2 Skadden, A rps, Slate, Meag her & Flom LLP and Af liates
Cross-Border Investiga tions Update
Sanctions and Anti-Money Laundering
FinCEN and DOJ Target Foreign
Cryptocurrency for Money Laundering
As discussed further below, on July 26, 2017, the Financial
Crimes Enforcement Network (FinCEN), in coordination with
federal prosecutors in California, assessed a penalty of $110
million against BTC-e, a foreign cryptocurrency exchange
allegedly involved in facilitating ransomware payments and dark
net drug sales. The cryptocurrency exchange allegedly did not
collect sucient know-your-customer information and was said
to have embraced criminal activity taking place on the platform.
FinCEN noted, for example, that users openly discussed crim-
inal activity on the exchange’s chat function and that customer
services representatives provided advice on processing funds
obtained from drug tracking. The U.S. Department of Justice
(DOJ) also indicted one of the exchange operators, a Russian
citizen, who was arrested in Greece in cooperation with Euro-
pean authorities.
OFAC Imposes $12 Million Fine on
Singapore-Based Telecommunications Group
On July 27, 2017, the Oce of Foreign Assets Control (OFAC)
announced that it had entered into a settlement agreement
with Singapore-based CSE Global Limited and its subsidiary,
CSE TransTel Pte. Ltd., for apparent violations of the Iranian
Transactions and Sanctions Regulations. The apparent viola-
tions stemmed from deals in which CSE TransTel provided
telecommunications-related goods and services to several Iranian
energy-related companies, at least two of which were contem-
poraneously listed as Specially Designated Nationals. Although
CSE Global and CSE TransTel had entered into a memorandum
of understanding with their bank in Singapore in which they
agreed not to process any Iran-related transactions through
the bank, CSE TransTel nonetheless originated 104 payments
from the bank totaling approximately $11.1 million that were
processed through the United States. OFAC determined that the
conduct was egregious and was not voluntarily self-disclosed,
and imposed a $12 million fine under the settlement agreement.
Habib Bank Agrees to Pay $225 Million
to Banking Regulator and Cease
New York Operations
On September 7, 2017, Pakistan’s largest bank, Habib Bank Ltd.,
reached a settlement with the New York State Department of
Financial Services (DFS), agreeing to pay a $225 million fine,
surrender its license to operate the New York branch and wind
down its New York operations entirely. The New York branch
had been licensed by DFS since 1978. The settlement resolved
an August 28, 2017, notice whereby DFS sought to impose a
$629.6 million fine on the bank. DFS said that a 2016 examina-
tion identified weaknesses in the bank’s risk management and
compliance functions, as well as inadequate compliance with a
2015 consent order and a 2006 settlement regarding the bank’s
compliance with economic sanctions and anti-money laundering
laws. As part of the settlement, a new consent order further
requires an expanded look-back and continued engagement of an
independent consultant, even after the license surrender process
is completed.
Richemont Agrees to Pay $334,800
in Sanctions Settlement
On September 26, 2017, Richemont North America Inc., a
subsidiary of Compagnie Financière Richemont SA — the
Switzerland-based luxury goods holding company whose luxury
brands include Cartier, Montblanc and Piaget — agreed to pay
OFAC $334,800 to resolve apparent violations of the Foreign
Narcotics Kingpin Sanctions Regulations. OFAC said that on
four occasions between October 2010 and April 2011, Riche-
mont shipped jewelry to Shuen Wai Holding Limited, a Hong
Kong-based entity that has been on OFAC’s Specifically Desig-
nated Nationals and Blocked Persons List since 2008. OFAC
said the apparent violations constitute a nonegregious case and
discounted the penalty down from $620,000 to $334,800 due in
part to Richemont’s cooperation and remediation eorts.
Since the publication of our July 2017 issue,
the following signicant cross-border prosecutions,
settlements and developments have occurred.
3 Skadden, A rps, Slate, Meag her & Flom LLP and Af liates
Cross-Border Investiga tions Update
Bribery and Corruption
DOJ Declines to Prosecute Linde
for FCPA Violations
Linde North America Inc. and Linde Gas North America LLC
(together, “Linde”), companies involved in the industrial gas
business, received a public letter from the DOJ announcing that
the DOJ has declined to bring Foreign Corrupt Practices Act
(FCPA) charges against Linde. The letter was issued in connec-
tion with the DOJ’s pilot program, announced in April 2016, that
encouraged companies to self-report FCPA-related misconduct,
cooperate with the DOJ’s Fraud Section, and remediate flaws
in their controls and compliance programs. The DOJ said that a
Linde subsidiary made payments via a profit-sharing arrange-
ment to high-level ocials in the Republic of Georgia in connec-
tion with Linde’s bidding for the purchase of certain income-pro-
ducing assets. According to the DOJ, Linde discovered the
scheme after it acquired the subsidiary. When Linde discovered
the misconduct, it withheld the money purportedly due to the
subsidiary executives pursuant to the scheme and deposited those
funds into a segregated account. The DOJ stated that its decision
to close its investigation was based on a number of factors set
forth in the pilot program, including Linde’s timely, voluntary
self-disclosure of the matter and the thorough, proactive internal
investigation it undertook. In connection with the declination,
Linde has agreed to forfeit the $3.4 million in proceeds that it
withheld upon discovery of the conduct and to disgorge the
$7.8 million that it profited from the scheme.1
1 See DOJ declination letter issued to L inde North America I nc. (June 16, 2017).
CDM Smith Pays $4 Million in Connection
With DOJ Declination
On June 21, 2017, CDM Smith, a Boston-based engineering
and construction firm, received a DOJ declination as part of the
firm’s agreement to pay $4 million in disgorgement to resolve
FCPA-related allegations. Between 2011 and 2015, CDM Smith
and its agents allegedly paid approximately $1.2 million in
bribes to Indian government ocials in order to secure a water
project contract and highway construction supervision and
design contracts that generated over $4 million in profits for
CDM Smith. The DOJ said that these bribes were made with
the knowledge and approval of the senior management in CDM
Smith’s India division.
The DOJ said it decided to close its investigation based on
several factors, including that CDM Smith: (1) made a timely,
voluntary self-disclosure of the conduct; (2) conducted a thor-
ough and comprehensive internal investigation; (3) fully coop-
erated with the DOJ, including by providing all relevant infor-
mation about the individuals involved; (4) agreed to disgorge
all profits generated from the conduct at issue; (5) enhanced its
compliance program and internal controls; and (6) conducted
a full remediation, including terminating all the executives and
employees who were involved in the conduct at issue. CDM
Smith is the seventh company to receive a declination in connec-
tion with the DOJ’s pilot program.
DOJ and SEC Close FCPA Investigations
of Newmont Mining Corporation
Newmont Mining Corporation, a Colorado-based gold mining
company with several active gold mines worldwide, announced
in a Securities and Exchange Commission (SEC) filing on July
25, 2017, that the DOJ and SEC have each issued declination
letters and closed FCPA-related investigations without bringing
any charges against the company. Unlike other letters the DOJ
has issued related to its pilot program — in which the DOJ
publicly disclosed the declination, the disgorgement amount and
the conduct at issue in the investigation — neither Newmont nor
the DOJ disclosed this declination letter or any additional details
regarding the location at issue or the conduct under review.2
2 See Newmont Mining Corporation, Quarterly Report (Form 10-Q)
(July 25, 2017).
Recent Developments
