Dennis Lawrence, CFE
Lawrence is a former U.S. Army Counterintelligence Special Agent, Investigations Manager at a publicly traded software company and member of a Big Four forensic investigations team. He currently works as a Denver-based risk consultant.
A lengthy Department of Justice indictment released in late May recounted an orgy of corruption at FIFA. Soccer officials allegedly spent years pocketing an estimated $150 million in dirty money while selling media and marketing rights of major sporting events along with voting on federation issues including the selection of host countries for World Cup tournaments. At one point, former FIFA vice president and executive committee member Jack Warner went so far as to direct a family member to fly to Paris and meet in a hotel room with a high ranking South African World Cup bid committee official to collect a cash-filled briefcase meant for Warner as part of a World Cup vote scheme. When it comes to untraceable transfers of money, however, this example appears to be the exception rather than the rule, as most illicit payments purportedly involved bank transactions. Although the allegations of wrongdoing at an international sports federation may not come as a surprise to some, the extent to which the global banking system was apparently leveraged to transmit an abundance of bribes raises the question: What did banks know, and what were they reporting to authorities?
According to court documents, foreign bank accounts and secretive banking jurisdictions were routinely leveraged by defendants in order to mask corrupt payments. In January 2008, for instance, a FIFA official in Switzerland wired $616,000 in misappropriated funds to an account held in the name of various FIFA affiliate organizations, but controlled by defendant Jack Warner at Republic Bank in Trinidad and Tobago. Warner then instructed Republic Bank to apply $200,000 of the funds from the organizations’ account to a personal loan account held in his name. Such an unusual transfer would have likely caught the attention of anti-money laundering (AML) staff at a U.S. bank, but is likely to have gone unnoticed in the black hole of Caribbean banking culture at the time of occurrence. To create additional layers of obfuscation, defendants and co-conspirators are reported to have also used intermediaries and shell companies to funnel money to bribe recipients, making cross-border money transfers even more difficult to examine for anyone who did happen to be looking.
Not all transactions can be readily explained away by the involvement of bank secrecy havens and intermediaries. In May 2011, a soccer official and member of the FIFA congress received an envelope containing $40,000 in cash as part of a campaign to secure votes for an upcoming FIFA presidential election. Days later, the official deposited the entire cash sum into a bank account in the U.S. Any reputable Know Your Customer (KYC) program would have presumably established that the official was a politically exposed person. As such, the handsome cash deposit would have likely set off an alert requiring a review by AML staff, possibly resulting in a Suspicious Activity Report being sent to FinCEN. Other reports indicate that while soccer officials receiving corrupt payments were advised to refrain from using bank accounts in their own names, they did not always follow this common sense suggestion and would have consequently left a trail of footprints for AML teams.
While it may be too soon to know whether banks were aware of bribes and may have tipped off law enforcement to what was occurring, the FIFA scandal serves as a reminder that financial institutions often hold the power to uncover many small clues to big crimes long before governments become aware that a law has even been broken in the first place.