Prosecutors Embrace Criminal AML Charges in Corruption Cases
Federal prosecutors enjoy flipping through the United States Criminal Code, 18 U.S.C. §§ 1 et seq., to pick out tools to charge defendants. Over the last ten years, DOJ’s reliance on criminal charges in FCPA cases has evolved.
The FCPA only punishes the bribe-givers and not the bribe-takers. The Biden Administration is proposing to amend the FCPA to fill in this gap. To fill in this gap, federal prosecutors have applied federal anti-money laundering prohibitions, 18 U.S.C. §§ 1956 and 1957, to charge foreign officials where they conducted financial transactions involving the proceeds of “specified unlawful activities” – violations of the FCPA, in order to conceal and disguise the proceeds.
Over the years, DOJ has expanded use of AML charges in “run-of-the-mill” FCPA cases. To this end, DOJ has added AML counts along with FCPA charges. This has raised the stakes of individual FCPA prosecutions.
The AML criminal statutes prohibit financial transactions involving funds that relate to an unlawful activity, which is broadly defined in the statutes to cover a large list of unlawful activity. This list includes FCPA violations and foreign anti-bribery laws.
AML charges carry a longer maximum sentence than FCPA violations. An AML charge under § 1956 carries a maximum term of incarceration of 20 years, while an AML charge under §1957 carries a maximum term of 10 years imprisonment. FCPA charges, whether conspiracy or substantive, carries a maximum term of 5 years incarceration.
AML charges also provide for broad international jurisdiction. The AML statutes focus on prohibited “financial transactions” that are used to facilitate or conceal proceeds from underlying criminal activity, even where the criminal activity occurs abroad and the only activities involving the United States are financial institution transfers.
Prosecutors in the Southern District of Florida have been employing this strategy to pursue corruption cases against Venezuela’s Petróleos de Venezuela SA (PdVSA) for corruption. Last year, DOJ indicted five defendants, two former Bolivian government officials and three U.S. citizens with money laundering violations for making bribery payments to secure a Bolivian government contract. The indictment includes a charge for AML conspiracy under 18 U.S.C. §1956(h).
In the Bolivian corruption case, between November 2019 and April 2020, the three American defendants allegedly paid over $600k to Bolivian government officials to secure a valuable $5 million contract for the supply of tear gas and other crowd control equipment. The bribery payments were laundered through the U.S. financial system by multiple transfers through bank accounts in Florida and Bolivia. DOJ alleged that the “specified unlawful activities” underlying the AML conspiracy were violations of the FCPA and bribery in violation of Bolivian laws.
DOJ employed similar charging strategies in charging two Ecuadoran citizens with paying bribes of $2.6 million to local police pension fund managers in exchange for fund management contracts, and in another case in which DOJ charged a Canadian citizen who resided in the Bahamas of paying millions of dollars in bribes to Ecuadorian government officials.