In their own words: Experts analyze trends tied to corporate transparency, corruption

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By Brian Monroe
August 11, 2016

In this new ACFCS editorial initiative, “In their own words,” we will be asking top experts across the spectrum of financial crime fields to give quick, yet helpful, guidance tied to key news, trends and emerging issues.

In this edition, we asked two experts to give their take on the likelihood of US legislation on corporate transparency, and tips for safeguarding your hiring practices from corruption risks.


Corporate transparency – Has the US reached a tipping point?

Many of the world’s largest banks this week threw their support behind legislation in the US Congress that would require states to collect beneficial ownership information on corporations, adding to calls from law enforcement and advocacy groups for legislative action to bolster corporate transparency.

On Monday, the Clearing House Association – representing the world’s largest commercial banks – sent a letter to Congressional lawmakers supporting strong measures to crack down on the abuse of anonymous companies.  The group, which counts among its owners Bank of America, Citibank, JPMorgan Chase, and Wells Fargo, explicitly endorses the bipartisan Incorporation Transparency and Law Enforcement Assistance Act (H.R.4450S.2489).

In the letter, the association stated, if passed, the legislation would “assist public sector efforts to identify money laundering and terrorist financing through the disclosure of the beneficial owners of corporations. In addition, the legislation would bring the United States further in line with international AML/CFT expectations, such as the recommendations developed by the Financial Action Task Force (FATF). We can see no justification for allowing corporations to shield their ownership.”

On the heels of that news, ACFCS asked a top official at an advocacy group if changes on the U.S. corporate transparency front are afoot.

With such a powerful banking group throwing their support behind the transparency initiative, have we reached a tipping point in the U.S. where Congress will act on corporate transparency?

From Clark Gascoigne, deputy executive director, of the Financial Accountability and Corporate Transparency (FACT) Coalition:

There is no question that momentum is building to end the abuse of anonymous shell companies.  The recent Panama Papers disclosures helped elevate the visibility of the problem: more Americans now understand that it is easier to incorporate anonymous companies in the U.S. to launder money with impunity than it is in almost any other country in the world.

At the same time, policymakers, law enforcement officials, and business leaders understand that these companies are being misused to finance terrorism, human trafficking, and drug dealing—in addition to enabling waste, fraud and abuse of taxpayer dollars.

And business leaders from large and small companies alike are coalescing around commonsense transparency measures to ensure that the real human beings who own and/or control companies are disclosed to authorities at the time of incorporation and kept up-to-date.

Ending the abuse of anonymous companies is pro-business, pro-law enforcement, and pro-taxpayer.  That is why the legislation enjoys bicameral, bipartisan support.  It’s only a matter of time before Congress gets its act together to protect the American people from the harms associated with anonymous shell companies.


Corruption enforcement –  How do I steer clear of corruption risk in my hiring?

The Wall Street Journal reported late last month that J.P. Morgan Chase & Co. is expected to pay around $200 million to settle federal investigations into improperly hiring the children of powerful, politically-connected families in Asia to win certain business deals.

The news of the pending settlement comes on the heels of a recent $15 million SEC enforcement action against BNY Mellon, which charged the bank with violating the FCPA by hiring interns whose families had connections to state-run sovereign wealth funds. In light of this seeming enforcement trend, we reached out to ask a noted FCPA expert how to steer clear of corruption issues when hiring.

What is one best practices or recommendation you’d give for guarding against corruption risks in hiring practices?

From Thomas Fox, founder of the Houston-based boutique law firm, and contributor to the

In addition to laying out an analysis of how to think through hiring in compliance with the FCPA, I would ask three questions to begin any analysis in the hiring of a family member of foreign official or employee of a state owned enterprise.

  1. Does the candidate meet your firm’s hiring criteria?
  2. Did the foreign official whose family member you are considering for hire demand or even suggest your company hire the candidate?
  3. Has the foreign official made or will make a decision that will benefit your company?

If the answer to the first question is No and the second two inquiries YES, you may well be in a high-risk area of violating the FCPA.

You should investigate the matter quite thoroughly and carefully. Finally, whatever you do, Document, Document, and Document your investigation, both the findings and the conclusions.