A raft of banks could face tough questions in the sweeping U.S. crackdown on alleged corruption in global soccer as prosecutors review how much they knew about millions of dollars in bribes flowing through the U.S. banking system to accounts around the world.
More than a dozen banks are named in the U.S. Department of Justice's indictment of nine officials at FIFA, the game's powerful governing body, and five sports media and promotion executives, over charges involving more than $150 million in bribes.
"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," Kelly T. Currie, acting U.S. Attorney for the Eastern District of New York, said at a news conference.
"It's too early to say if there is any problematic behaviour, but it will be part of our investigation," he said.
On Wednesday, seven of the officials were arrested in an expensive hotel in Zurich, and are facing extradition for their role in the alleged 24-year bribery scheme. Switzerland is conducting a separate probe into FIFA.
"The defendants ... relied heavily on the United States financial system in connection with their activities," the indictment said.
None of the banks named, including JPMorgan Chase (JPM.N), Citigroup (C.N), Bank of America (BAC.N), Barclays (BARC.L), HSBC (HSBA.L), and Republic Bank RBL.TTB, were accused of any wrongdoing. JPMorgan, Bank of America, Barclays and HSBC declined to comment. Republic did not respond to requests for comment. Citi said it had been cooperating with the Department of Justice in the investigation.
Another bank, Delta National Bank & Trust Co, was used by José Hawilla's sports marketing company, the Traffic Group. The company paid millions from its account at Delta in Miami to a FIFA member organization, according to the indictment of Hawilla, one of the individuals who pleaded guilty to the U.S. charges.
Hawilla obfuscated his payments using intermediaries such as banks, financial advisors and currency dealers, according to the indictment.
Linda Chapman, who is in charge of compliance at New York-based Delta, did not have an immediate comment.
Red Flags
Eric Lewis, a partner at Washington-based law firm Lewis Baach PLLC, said that the high profile of FIFA, and the protracted timespan over which the alleged bribery scheme took place should have raised red flags for the banks.
"The officials at FIFA are likely to be what are termed politically exposed persons, and at least at some point should have been on the radar screen of the banks," said Lewis, an expert in money laundering and racketeering cases.
U.S. banks are required to file reports to the Financial Crimes Enforcement Network when they see suspicious activities, and most other countries have similar requirements.
Banks are required to make checks to ensure clients aren't using their accounts for criminal activities. They are responsible for knowing their customers and having an idea of the source of their funds and the legitimacy of their activities, according to former FBI agent Dennis Lormel.
"The most telling thing is whether the banks were complicit with wittingly laundering money for some of these officials," said Lormel, chapter chair of the Association of Anti-Money Laundering Specialists in Washington, D.C. "More likely, you're going to find the banks were unwitting participants."
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