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 football officials, seven were former or current officials at either CONCACAF, the North-American, Central American and Caribbean football association, or at CONMEBOL, the South American regional football 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.
Unless government allegations of bribery and money laundering expand to include the organisation 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 organisation,” 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.
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.”
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 organisation 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)