January 31, 2024 | Amanda Khatri
Estimated reading time: 4 minutes
US prosecutors to mine banking data as part of anti-corruption drive
US justice officials are to build corruption cases with data analysis of bank transactions under a new white-collar crime drive, senior officials have announced.
Nicole Argentieri, acting assistant attorney general for the Criminal Division, said the Department of Justice (DOJ) is deploying its own form of data analytics across Suspicious Activity Reports (SARs) filed by banks to identify instances of corporate misconduct.
The agency also aims to boost cooperation with overseas law enforcement and open more anti-corruption cases, with consequences for any international firm that transacts with the US financial system, Argentieri said.
Experts have noted the DOJ and the Securities and Exchange Commission (SEC) are increasingly focused on data analytics for corporate compliance, signalling heightened expectations for larger companies.
Both agencies have successfully adopted data analytics for use in other areas such as securities and healthcare fraud.
How bank data is used in corruption prosecutions
Millions of SARs are filed by financial institutions each year, containing enormous amounts of unstructured information that the agency intends to filter down to viable leads for Foreign Corrupt Practices Act (FCPA) prosecutions.
Argentieri said the move underpinned continued efforts to leverage the FCPA in the fight against white-collar crime, noting the Criminal Division had a “banner year” in 2023.
“We are not just waiting for companies to self-report, or witnesses to come forward, or for anomalies to reveal themselves on a one-off basis,” she said. “Let me be the first to tell you that we have proactively used data to generate FCPA cases, and we’ve only just gotten started.”
While the DOJ has successfully prosecuted individuals for FCPA violations using data analytics, “there is yet to be a high-profile corporate FCPA violation case that has arisen from the department’s own data analytics”, said FCPA expert Thomas Fox.
“On the other hand, the SEC has a dedicated data analytics team called the EPS team, which has uncovered cases of accounting fraud and insider trading,” Fox said. “The SEC’s data-rich environment and lower burden of proof on the civil side have allowed them to successfully prosecute cases using data analytics. This demonstrates that regulators can effectively utilise data analytics to identify corporate misconduct.”
Either way, there will be consequences for regulated businesses; the intelligent use of data analytics can unearth risks that cannot be ignored once discovered.
He noted that the 2023 Evaluation of Corporate Compliance Programs (2023 ECCP) instructs prosecutors to press companies on their use of data analytics to identify misconduct, and increasingly within other parts of the business.
“Just as we are upping our game when it comes to data analytics, we expect companies to do the same,” said Argentieri.
Some experts have observed the data mining efforts by the DOJ’s criminal fraud team yielding positive returns in overseas bribery matters, while others say the department’s efforts don’t yet have the sophistication required to tackle complex cases.
“Everyone’s sort of just waiting to see the fruits of it arrive and are there going to be investigations really coming out of the use of data analytics in the FCPA space or not,” said Alison Anderson, a white-collar defence partner at Boies Schiller and former DOJ fraud section supervisor in an interview with Bloomberg.
Why international firms should pay attention
The DOJ will also introduce a new resource dedicated to enhancing international partnerships to work together against global corruption, Argentieri said in the end-of-year address.
The International Corporate Anti-Bribery Initiative, or ICAB, will be headed by three experienced prosecutors, Argentieri said.
“We will start by focusing on regions where we can have the most impact in both coordination and case generation, with a focus on key threats to financial markets and the rule of law,” she said.
In the last year, the agency has brought cases with the help of South African, Swiss, and Colombian authorities for the first time, and expects to announce further new partnerships over the coming 12 months.
Regulated organisations worldwide can expect increased scrutiny around bribery and other white-collar crimes as regulators gear up to protect the integrity of financial markets, Argentieri said.
Stronger international partnerships and cooperation are “mission critical” to make strides in the struggle against corruption, she said.
The direction of travel has been marked as US regulators indicate their willingness to lean on intelligent tools and AI to flush out bad actors undermining the finance system anywhere in the world.
Argentieri also noted that “our white-collar practice has shown, that corporate criminal enforcement and individual accountability are two sides of the same coin”, signifying the C-suite can’t hide behind their company.
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