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 Major U.S. and European banks say they are stepping up scrutiny of
FIFA-related accounts, and are wary in particular of ties to two
regional member organizations that feature prominently in the U.S.
Department of Justice's indictment.
U.S. authorities last week charged nine current or former FIFA
officials and five sports industry executives in a $150 million
bribery scheme, accusing them of running a "criminal enterprise"
that lasted for 24 years and relied heavily on the U.S. financial
system. As the scandal continued to worsen, Sepp Blatter, FIFA's
long-serving president, said on Tuesday he was quitting.
Of the nine soccer officials, seven were former or current officials
at either CONCACAF, the North-American, Central American and
Caribbean soccer association, or at CONMEBOL, the South American
regional soccer organization.
A top compliance official at one of the banks named in the court
documents said it would close any accounts of accused parties and
closely review other FIFA-related accounts, especially those
associated with CONCACAF. More scrutiny will now also be given to
other sporting entities, such as the U.S. Olympic Committee, the
official added.
U.S. authorities have not accused FIFA itself of wrongdoing, though
a person familiar with the matter said on Monday that U.S.
prosecutors believe that FIFA Secretary General Jerome Valcke was
involved in a $10 million bank transaction that is under
investigation. FIFA and Valcke have denied this was the case.
And late on Tuesday, a source told Reuters that Blatter himself is
being investigated by U.S. prosecutors and the FBI.
When asked if FIFA is having any trouble getting banking services,
spokeswoman Delia Fischer said no. A spokesman for CONMEBOL, Nestor
Benitez, declined to comment. A CONCACAF spokesman also had no
comment.
CLOSELY SCRUTINIZED
Unless government allegations of bribery and money laundering expand
to include the organization itself, FIFA and its affiliated bodies
should be able to use banking services, executives at several banks
said. Blatter's departure should also give them some comfort.
"They're going to be very closely scrutinized, but they won't lose
their accounts ... absent the government bringing forth evidence
that FIFA was acting as a corrupt organization," said a senior
compliance officer at another large bank named in the court
documents.
None of the more than a dozen banks mentioned in the U.S.
indictment, which include some of the largest global financial
institutions, such as JPMorgan Chase, Bank of America, Citigroup,
HSBC and Barclays, are accused of any wrongdoing.
Still, the senior compliance officer told Reuters that banks "kind
of panicked" after comments by Kelly T. Currie, acting U.S. Attorney
for the Eastern District of New York, who said banks' actions would
be reviewed to determine if they knowingly facilitated bribe
payments.
An HSBC spokesman said: "We are continuing to review the allegations
in the indictments ... to ensure that our services are not being
misused for financial crime."
Citigroup has said it has cooperated with the U.S. probe. JPMorgan
and Bank of America declined to comment. Barclays did not return a
request for comment.
"WE JUST DON'T NEED IT"
FBI agents carrying bags and boxes went into CONCACAF'S offices last
week to execute a search warrant. CONCACAF said it was "deeply
concerned" about the developments and that it was cooperating with
authorities.
CONCACAF conducted business using accounts at the Florida and New
York branches of major U.S. and Swiss financial institutions, the
indictment shows, without being specific about the banks concerned.
FIFA was dogged by corruption allegations for years before the
latest scandal, and at least one major European bank said it has not
been providing banking for FIFA because of that.
"It's not forbidden (to do business with FIFA) but due to
reputational risks, we just don't need it," said a spokesman at the
bank, which asked not to be identified due to the sensitivity of the
topic.
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When asked about FIFA, a spokeswoman for the Financial Action Task
Force on Money Laundering (FATF), which sets international
anti-money laundering standards, said that "at this stage, there are
no plans to issue further guidance on the provision of banking
services to such officials."
The Office of the Comptroller of the Currency, a regulator that
oversees major U.S. banks such as Bank of America and Citigroup,
declined to comment on FIFA.
But the OCC says it leaves it to banks to decide on a case-by-case
whether to terminate relationships with individual clients, just
telling them to keep a close eye on risk.
"We expect banks to ... report suspicious activity, for instance an
unusual and unexplained spike in clearing activity," said Grovetta
Gardineer, deputy comptroller for compliance operations at the OCC.
"That doesn't mean that there's actual money laundering, but it
shows a deviation in the pattern that should be looked into."
TOUGH TASK
But unless payments were destined for government officials, it would
have been difficult for banks to spot suspicious transfers, said
Jonathan Lopez, a former official at the U.S. Justice Department's
money laundering section.
"To ask a bank to decipher between legitimate and illegitimate
payments by a multinational organization who by its nature makes a
lot of payments in different countries is going to be tough," Lopez
said.
The widespread use of the dollar means that banks with a presence in
America may unwittingly play a role in facilitating crime through a
network of so-called correspondent banks, which perform services for
banks outside the country, and have long been considered a loophole
in the U.S. regulatory barriers against money laundering.
The indictment shows that a high-ranking FIFA official - believed by
U.S. authorities to be Valcke - caused $10 million to be wired from
a FIFA account in Switzerland, to a Bank of America correspondent
account in New York. It was for credit to accounts held in the names
of the Caribbean Football Union and CONCACAF at Republic Bank in
Trinidad and Tobago. Those accounts were controlled by former FIFA
vice-president Jack Warner, who is among those charged.
FIFA also wired billions of dollars from its accounts at a major
Swiss financial institution into beneficiary accounts in the U.S.
and throughout the world, via a correspondent account at the U.S.
branch of a major Swiss bank, prosecutors said.
Back in 2001, a U.S. Congressional report found that correspondent
banks had become conduits for dirty money and that many banks
established relationships with shell banks with no physical
presence, offshore banks that only did business outside their
jurisdictions, and banks with weak controls.
Since then, a slew of guidelines have been issued and legal
requirements established on how to manage the risks of these
accounts. Major banks, including Standard Chartered Plc and
JPMorgan, also have cut some ties with other foreign banks,
particularly in risky countries.
JPMorgan, for instance, has a few thousand correspondent banking
relationships and, about two years ago, began terminating some 500
or 600 of them. It also adopted a policy of not taking on new
correspondent banking clients.
(Additional reporting by Karen Freifeld in New York, Anjuli Davies
and Matt Scuffham in London, Thomas Atkins in Frankfurt; Editing by
Soyoung Kim and Martin Howell)
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