Banks Under Scrutiny for Money Laundering in FIFA Scandal

Over the past few years, banks and probes into business misconduct have become synonyms.  The recent major scam – FIFA Bribery Scandal – that rocked the soccer world has found its way into major global banks too.

Banks under scrutiny by the U.S. Department of Justice (“DOJ”) include JPMorgan Chase & Co. (JPM - Analyst Report), Bank of America Corporation (BAC - Analyst Report), HSBC Holdings plc (HSBC - Analyst Report), Citigroup Inc. (C - Analyst Report), UBS Group AG (UBS), Standard Chartered and Barclays PLC (BCS - Analyst Report). However, none of the banks have been indicted for any wrongdoing yet.

At the heart of the matter are charges of bribery, worth roughly $150 million over a period of 24 years, against certain FIFA officials, and sports, media and promotion executives. The allegations against these persons include intricate money-laundering schemes, huge amounts of untaxed incomes as well as unaccounted for millions held in offshore accounts of FIFA officials.

But how did banks became a part of this probe? It is common knowledge that no monetary transactions are possible without the involvement of banks. The same thing happened here as well.

Despite not being directly involved in the scandal, the banks might have been negligent in monitoring potential money-laundering activities, which, the DOJ is investigating. Also, as the U.S. and other countries have strict anti-money laundering policies in place, questions are being raised whether the pattern of money transfer should have alerted the banks.

The acting U.S. Attorney in Brooklyn and a leader of the U.S. investigation, Kelly Currie, said, “Part of our investigation will look at the conduct of the financial institutions to see whether they were cognizant of the fact they were helping launder these bribe payments."

Notably, HSBC, Barclays and Standard Chartered have already initiated internal review of transactions, as cited by the DOJ, to check whether they abided by anti-money laundering and bribery rules.

Notably, HSBC and Standard Chartered had been charged and even penalized billions of dollars by the regulators over money-laundering activities in the past. Any further allegations of similar wrongdoing will have significant adverse impact on their financials, as breaking of deferred prosecution agreements would lead to severe fines.

Over the last few years, major global banks have been facing penalties time and again for business misconducts, which have seriously affected their financials. Though at this stage we are not sure where this probe will lead to, it certainly puts the banks’ reputation and financial performance at stake.