Anti-Corruption GLOBAL PRACTICE GUIDE. chambers.com. USA Diaz Reus & Targ LLP

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1 GLOBAL PRACTICE GUIDE Definitive global law guides offering comparative analysis from top ranked lawyers Anti-Corruption USA Diaz Reus & Targ LLP chambers.com

2 USA TRENDS AND DEVELOPMENTS: Contributed by Diaz Reus & Targ LLP p.<?> The Trends & Developments sections give an overview of current trends and developments in local legal markets. Leading lawyers analyse particular trends or provide a broader discussion of key developments in the jurisdiction.

3 Trends and Developments USA Trends and Developments Contributed by Diaz Reus & Targ LLP Diaz Reus & Targ LLP has developed a sterling reputation for its ability to navigate and avoid criminal indictments on behalf of its clients, and to negotiate with US law enforcement agencies on sensitive matters related to national security, public corruption, human rights violations, asset recovery, the Office of Foreign Assets Control (OFAC), homeland security, Specially Designated Nationals and the recovery of visas. Multilingual and multicultural, the firm s litigation team helps clients to traverse presidential executive orders and proclamations, and legislative, legal, trade and regulatory waters worldwide to avoid asset seizures, investigations and prosecutions, and litigation, as well as lobbying before domestic and foreign government bodies and agencies. The firm has its headquarters in Miami, with offices in major global business centres throughout the USA, Latin America, Western and Eastern Europe, Asia and the Middle East. Authors Michael Diaz, Jr, the global managing partner, is a multilingual litigator, trial lawyer and arbitral advocate with 32 years experience of advising clients, trying cases and negotiating resolutions to complex civil, arbitral and criminal disputes. He has extensive experience of handling visa recovery efforts, Foreign Corrupt Practices Act (FCPA) and OFAC violations, and Specially Designated Nationals classifications. Mr Diaz regularly counsels on preventative arbitration and litigation strategies, and conducts parallel investigations in high-stakes regulatory, investigative and compliance matters that involve financial fraud, international asset recovery and white-collar crime. His sophisticated asset-tracing techniques have resulted in millions of dollars in recoveries for US receivers, financial institutions and individual fraud victims. A member of the Association of Certified Anti-Money Laundering Specialists (ACAMS), Mr Diaz has handled numerous well-publicised litigation and arbitration cases, and cases of alleged money-laundering and public corruption in the USA, Latin America and the Middle East. Robert Targ is a founding partner who is a highly experienced international and domestic litigator for individuals and institutions in high-stakes money laundering, fraud, white-collar criminal defence and customs cases, as well as asset seizures and forfeitures, healthcare fraud, mortgage fraud, FCPA and OFAC sanctions, and public corruption. Mr Targ, who is a member of ACAMS, is a widely sought-after seminar and conference speaker on asset seizure and forfeiture, and global money-laundering issues for organisations such as the International Symposium on Economic Crime in Cambridge, England; the Florida International Bankers Association; the Bahamas Association of Compliance Officers; and the Bankers Association of Central and Eastern Europe. Javier Coronado is a dual-qualified (New York and Colombia) associate attorney who counsels and represents individuals and corporations in matters involving domestic and foreign corruption, tax evasion, anti-money laundering laws and financial fraud. He also advises clients in business transactions, corporate governance and entity formation, particularly in securing the client s compliance with international, US and Colombian legal standards, regulations and best practices. A member of ACAMS, Mr Coronado is a noteworthy scholar in the areas of criminal law and procedure, serving as an adjunct professor of criminal procedure at the Pontifical Xavierian University Law School in Bogotá, Colombia, and holding an LLM degree from the University of Pennsylvania Law School in Philadelphia. Richard Wiedis is a partner, experienced in white-collar criminal defence, independent internal investigations, the FCPA, general civil litigation, trial counsel, civil forfeiture, money laundering, the Racketeer Influenced and Corrupt Organizations Act, mediation, arbitration and compliance and risk management counselling. He is a former senior trial attorney in the Criminal Fraud Section of the United States Department of Justice (DOJ) in Washington, DC and has received multiple special achievement and meritorious service awards and letters of commendation from the DOJ and the Federal Bureau of Investigation. 13

4 USA Trends and Developments According to the Corruption Perceptions Index released in 2018 by Transparency International, the perception of corruption worsened in 14 of the 30 countries in Latin America. Critically, Venezuela, Haiti, Nicaragua and Guatemala were the countries with the highest levels of perception of corruption. Further, in 2018, the Odebrecht case resulted in new prosecutions against businessmen and political figures at the highest levels in Brazil, Colombia, Ecuador and Peru. Further investigations in other countries are pending. Similarly, in Argentina, El Salvador, Guatemala and Honduras, former presidents and other high-ranking officials were prosecuted, are under investigation or were suspected of widespread corruption. In Mexico, the former governor of Veracruz pleaded guilty to corruption-related charges. Against this backdrop, corruption was a dominant issue in the 2018 presidential elections held in various countries in Latin America. Governments of the region worked on new anti-corruption initiatives, including the Lima Commitment: Democratic Governance Against Corruption. As expected, the US government actively continued to investigate and prosecute US nationals suspected of being involved in political corruption or bribery in Latin America under the Foreign Corrupt Practices Act (FCPA) and the Money Laundering Control Act (MLCA). In addition, the USA implemented further aggressive measures to fight corruption in the region, including the imposition of economic and migratory sanctions under the Global Magnitsky Human Rights Accountability Act (GLOMAG), the creation of the Central America Corruption Blacklist and the issuance of new advisories by the US Financial Crimes Enforcement Network (FinCEN). New Anti-Corruption Initiatives In 2018, six countries in Latin America held their presidential elections, including Mexico, Colombia and Brazil. Not surprisingly, the candidates campaign rhetoric about combating corruption was a dominant issue for voters. And, upon election, the new presidents promised to develop new anti-corruption initiatives. For example, Colombia s new president introduced a bill in Congress to make bribery a crime without statute of limitations. This bill also seeks to prohibit Colombian judges from granting house arrest and parole to defendants in corruption cases. Further, the legislative bodies in countries such as Chile, Mexico, Colombia and Ecuador have promulgated bills expanding the list of crimes punishing corruption, increasing penalties for bribery, enhancing legal protections for whistle-blowers and imposing corporate liability. Colombia, for instance, is seeking to promulgate a bill authorising the Colombian government to impose economic sanctions on members of the Venezuelan government believed to be involved in corruption in Venezuela. Additionally, in countries such as Argentina and Colombia, the executive branch issued new regulations and/or guidelines requiring corporations to enhance their compliance programmes. This year s Summit of the Americas, the only event that gathers the leaders of every nation in the region (except Venezuela), adopted the Lima Commitment: Democratic Governance Against Corruption. In this international instrument, the regional leaders adopted commitments on the protection of whistle-blowers; political campaign finance reform; prevention of corruption in public works, public procurement and contracting; and international co-operation in the fight against bribery, transnational corruption, organised crime, money laundering and asset recovery. Similarly, in 2018, countries such as Colombia and Peru adopted the Organisation for Economic Co-operation and Development s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Finally, the Americas Business Dialogue, an initiative that gathers the region s largest private sector companies, issued its Policy Recommendations And Action Plan For Growth In The Americas, including seven recommendations for strengthening transparency and integrity. The US FCPA Enforcement Against Corruption in Latin America The FCPA s anti-bribery provisions prohibit US persons and businesses, US and foreign public companies listed on stock exchanges in the USA or that are required to file periodic reports with the SEC, and certain foreign persons and businesses acting while in the territory of the USA from making corrupt payments to foreign officials to obtain or retain business. Notably, two US bodies enforce the FCPA: the Department of Justice (DOJ) and the SEC. Subsequent to the enactment of the FCPA in 1977, the US government has prosecuted cases of corruption in Latin America through the FCPA s anti-bribery provisions. Most recently in 2018, the DOJ criminally charged individuals and corporations for FCPA violations in connection with the bribery of foreign officials in or from countries such as Brazil, Mexico, Venezuela, Aruba, Ecuador and Argentina. Moreover, in 2018, the DOJ continued to bolster FCPA criminal charges against individuals and companies with charges under the MLCA. These additional money laundering charges have enabled the US government to prosecute not only the briber, but also the foreign official receiving the laundered bribe monies. 14

5 Trends and Developments USA Noteworthy, in 2018, US courts rendered two decisions narrowing the scope of the FCPA that might have future ramifications for FCPA prosecutions in Latin America. First, in SEC v Michael L Cohen and Vanja Baros, US District Judge Nicholas G Garaufis of the Eastern District of New York held that the SEC s ability to disgorge allegedly ill-gotten gains from defendants in FCPA cases was subject to the five-year statute of limitation set out in 28 USC 2462 for suits brought by the US government to enforce any civil fine, penalty, or forfeiture. Second, in United States v Hoskins, the US Court of Appeals for the Second Circuit held that criminal liability under the FCPA should not apply to a non-resident foreigner if the crime was not committed within the USA and the individual was not an officer, director, employee, or stockholder of an American company, or otherwise had no agency relationship with a US person. Non-FCPA Actions Against Corruption in Latin America Concomitantly, in 2018 the US government continued to utilise economic and migratory sanctions to fight corruption in Latin America. Since the issuance of Executive Order (EO) on 20 December 2017 by President Donald J. Trump, the US government has sanctioned a number of Latin American individuals and companies under GLOMAG including individuals and companies from Nicaragua, Guatemala and the Dominican Republic for their alleged involvement in corruption issues. Pursuant to the 2016 GLOMAG and EO 13818, the US government may impose economic and migratory sanctions on foreign persons and entities believed to be involved in serious human rights abuses or corruption in anyforeign country, as well as those who assist or provide material support, including goods and services, to the designated persons or the targeted activities. Critically, the Office of Foreign Assets Control (OFAC) may block their assets by incorporating their name into the Specially Designated Nationals List. Moreover, if the person is an alien, the US government may also impose the ineligibility to receive a US visa or may revoke any active visa. Similarly, on 1 November 2018 President Trump issued EO authorising OFAC to impose economic sanctions on any person determined to be participating in any transaction or series of transactions involving corruption and Diaz, Reus & Targ, LLP 100 SE 2nd Street Suite 3400 Miami Tower Miami, Florida Tel: mdiaz@diazreus.com Web: the government of Venezuela or projects or programmes administered by the government of Venezuela. EO also authorises OFAC to impose economic sanctions on an immediate adult family member of a designated person. Second, on 14 August 2018 President Trump signed the National Defense Authorization Act into law, which requires the US State Department to publish the names of senior government officials in Honduras, Guatemala, and El Salvador who are known to have committed or facilitated acts of grand corruption or narcotics trafficking. While the inclusion on this new list is not a penalty itself, the inclusion of a person on the list will likely result in successive economic and migratory sanctions against them, as it occurred before with the individuals included in the Section 241 Report, a similar list targeting Russians. Finally, in 2018 the US FinCEN also took actions to fight corruption in Latin America. On 12 June 2018, it issued Advisory FIN-2018-A003 On Human Rights Abuses Enabled By Corrupt Senior Foreign Political Figures And Their Financial Facilitators. Critically, in this advisory FinCEN warned financial institutions how corrupt senior foreign political figures, including political figures in Latin America, and their facilitators access the US financial system to obscure and launder the proceeds of corruption. Second, on 4 October 2018, FinCEN issued Advisory FIN-2018-A005 warning financial institutions about the increasing risk that proceeds of corruption from Nicaragua may enter or traverse the US financial system. Notably, FinCEN warned that growing instability in Nicaragua may result in senior foreign political figures in Nicaragua moving assets out of their accounts in the country. Previously, when FinCEN has issued advisories such as those described above, those advisories have been taken into consideration when US law enforcement brings a legal action against a financial institution and/or its representatives, including the filing of criminal charges pursuant to the US Bank Secrecy Act or its related regulations. Further, FinCEN itself could bring enforcement actions that may result in substantial fines. Thus, FinCEN s recent advisories can serve as a predicate for future law enforcement actions against corruption in Latin America. Conclusion In 2018, many countries in Latin America established the foundations for enhancements in their anti-corruption laws and further anti-corruption initiatives, investigations and prosecutions should be anticipated. In addition to FCPA and MLCA enforcement, the USA developed new mechanisms to fight corruption in Latin America, including economic and migratory sanctions against individuals and companies believed to be involved in such activities. 15