On May 27, 2021, Bank Julius Baer & Co. Ltd. (BJB), a Swiss private banking group with international operations, entered into a three-year deferred prosecution agreement (DPA) with the US Department of Justice. As part of the DPA, BJB admitted that it conspired to launder more than $36 million in bribes through the US financial system to Fédération Internationale de Football Association (FIFA) officials and other soccer federations. The soccer officials were allegedly bribed by sports marketing companies in exchange for the rights to broadcast soccer matches.
Under the DPA, the terms of which were broadly disclosed by BJB in a November 2020 press statement, the bank must pay approximately $79 million in penalties, including a $43.3 million fine and forfeiture of more than $36.4 million. According to the DPA, BJB did not receive voluntary disclosure credit because the bank did not disclose the conduct “until there was an imminent threat of disclosure and government investigation.” Nor did BJB receive cooperation credit because BJB “made representations about relevant facts . . . that misled” the DOJ. BJB also received a larger criminal fine because two members of senior management were involved in the improper conduct, including a member of the company’s executive board. However, the criminal fine was reduced by 5 percent due to the bank’s significant remediation, specifically improvements to its anti-money laundering program and controls.
As described in the criminal information, from 2012 to 2015 Jorge Luis Arzuaga, the former BJB relationship manager for offices in Montevideo, Uruguay and Zurich, Switzerland, conspired with various sports marketing executives to launder $36 million in bribe payments using BJB accounts in an effort to disguise the true nature of the payments. According to the DOJ, Arzuaga knew the funds were bribes or proceeds from some other illegal activity. Arzuaga’s supervisors allegedly approved these transactions despite significant red flags, including Arzuaga’s use of falsified documents to justify payments to soccer officials’ relatives and other third parties, the use of facially false contracts, and payments for services purportedly rendered by shell corporations. BJB also admitted that one of its executives “fast tracked” the opening of Arzuaga’s client accounts in the hope of obtaining lucrative business for the bank, despite having knowledge that the clients were associated with international soccer, an industry notorious for its high corruption risks.
Arzuaga pleaded guilty in 2017 to a money laundering conspiracy charge for his role in this bribery and money laundering scheme. He was sentenced to three years of probation in November 2020.
In February 2020, BJB was sanctioned by the Swiss Financial Market Supervisory Authority (FINMA) for significant deficiencies in its anti-money laundering program between 2009 and 2018. As part of its settlement with FINMA, BJB made specific changes to its AML program, including a temporary prohibition on handling “large or complex acquisitions” and appointing an independent auditor to monitor BJB’s remediation. The DOJ highlighted this independent monitor in the DPA and stated that given this monitorship was already in place, it was unnecessary to appoint another monitor as part of the DPA.
DOJ Press Release | Deferred Prosecution Agreement | Information | Arzuaga Sentencing (2020)