Noteworthy Trends in French White Collar Crime

France’s Sapin II Law was created in 2016 to address corporate corruption and implement antibribery measures. The legislation took effect in 2017, marking a significant shift in the country’s regulatory compliance landscape. The law, which tracks closely with similar laws in the US, UK, and other EU countries, requires large companies [1] to implement a robust compliance program, including anti-corruption policies, monitoring procedures, and accounting controls.  The law also significantly changes the government’s prosecution strategies for white collar crime, particularly in light of guidelines issued in 2023 and discussed below. For large entities operating in France, understanding these changes and their impact is critical to business continuity.

International authorities: collaboration on the rise

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Federal Courts Continue to Grapple with Causation in Anti-Kickback-Based False Claims Act Cases

Courts around the country continue to disagree on the causation standard to be applied in False Claims Act cases based on alleged Anti-Kickback Statute violations.  Two recent federal district court decisions out of the District of Massachusetts add to differing conclusions on what the causation standard should be, i.e., “but-for,” “exposure,” or some other, less demanding standard.  In United States v. Regeneron Pharms., Inc., No. 20-11217-FDS, 2023 WL 7016900 (D. Mass. Oct. 25, 2023), the district court adopted the Sixth and Eighth Circuits’ “but for” causation standard.  See United States ex rel. Martin v. Hathaway, 63 F.4th 1043 (6th Cir. 2023), and United States ex rel. Cairns v. D.S. Med. LLC, 42 F.4th 828 (8th Cir. 2022).  In United States v. Teva Pharmaceuticals USA, Inc., No. 20-11548-NMG, 2023 WL 4565105 (D. Mass. July 14, 2023), a different judge of the same court adopted the Third Circuit’s “exposure” standard.  See United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 96-98 (3d Cir. 2018).  Both judges certified their decisions for immediate appeal to the United States Court of Appeals for the First Circuit.  In short, anticipate the First Circuit adding its view to the mix soon.

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Recent Discover Lawsuits Provide Compliance Lessons

In September, a class action lawsuit (Mannacio v. Discover Financial Services, et al., No. 23-cv-06788 (N.D. Ill.)) was filed against Discover Financial Services (“Discover”) alleging Discover and certain current and/or former executives violated the Securities Exchange Act of 1934. Specifically, the class action complaint alleged that the defendants made false and/or misleading statements and/or failed to disclose that: (i) Discover maintained deficient risk management and compliance procedures; (ii) as a result, Discover, among other things, failed to comply with applicable student loan servicing standards, misclassified certain credit card accounts, overcharged customers, and failed to stem its ballooning credit card delinquency rate; and (iii) when these issues became known, they subjected Discover to significant financial exposure, regulatory scrutiny, and reputational harm.

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Yet Another False Claims Act Salvo (now #4) in DOJ’s “Civil Cyber-Fraud Initiative”

We have been tracking and reporting on the U.S. Department of Justice’s Civil Cyber-Fraud Initiative (“CCF Initiative”), which U.S. Deputy Attorney General Lisa O. Monaco announced in October 2021. The CCF Initiative employs the powerful False Claims Act (“FCA”) in an effort to “hold accountable entities or individuals that put U.S. information or systems at risk by knowingly providing deficient cybersecurity products or services, knowingly misrepresenting their cybersecurity practices or protocols or knowingly violating obligations to monitor and report cybersecurity incidents and breaches.” We previously offered insight into the first two FCA enforcement actions brought under this initiative. There was a third. And now, there’s a fourth.

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DOJ Extends Self-Reporting and Cooperation Incentives To M&A Transactions

Under a new safe harbor policy announced by Deputy Attorney General Lisa Monaco on October 4, 2023, an acquiring company that discloses potential wrongdoing at a company being acquired within six months of the deal closing date—and fully cooperates and fixes the underlying problems within a year of closing—can presume it will not be criminally prosecuted by the U.S. Department of Justice (DOJ).

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Less than Three Months Until FinCEN’s Beneficial Ownership Reporting Rule Takes Effect: Recent Corporate Transparency Act Developments

FinCEN’s beneficial ownership reporting rule takes effect on January 1, 2024.  This rule requires certain entities to file with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) reports that identify two categories of individuals: the beneficial owners of the entity, and individuals who have filed an application with specified governmental authorities to create the entity or register it to do business.  The regulation implements the Corporate Transparency Act (CTA).[1]  FinCEN has recently released a flurry of materials relating to the CTA and the beneficial ownership reporting rule, including a compliance guide for small businesses, a notice of proposed rulemaking to extend the deadline for certain reporting companies to file their initial beneficial ownership information, and comment requests.

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FinCEN Penalizes Puerto Rican Bank for BSA Violations in First Enforcement Action Involving the “Gap Rule”

bank building

On September 15, 2023, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) announced a $15 million civil money penalty against a Puerto Rican International Banking Entity (“IBE”), Bancrédito International Bank and Trust Corporation (“Bancrédito” or “the Bank”).  The public consent order details the Bank’s multiple violations of the Bank Secrecy Act (“BSA”), which occurred between October 2015 and May 2022.[1] The penalty assessed against Bancrédito marks FinCEN’s first enforcement action against a Puerto Rican IBE, also known as a “gap institution” due to such entities lacking a federal functional regulator.  This is also FinCEN’s first enforcement action involving a violation of a 2020 rule requiring gap institutions to have in place anti-money laundering programs by March 2021.

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VARA’s Strict Application of its Virtual Assets and Related Activities Regulations 2023

The United Arab Emirates (“UAE”) has long been at the forefront of embracing technological and financial innovation.  For example, Dubai has emerged as a global hub for virtual assets (“VAs”) and cryptocurrencies.  Earlier this year, the Dubai Virtual Assets Regulatory Authority (“VARA”) adopted its first Virtual Assets and Related Activities Regulations 2023 (the “Regulations”), along with four compulsory rulebooks, seven activity-specific rulebooks, and a virtual asset issuance rulebook (the “Rulebooks”).[1]  The Regulations provide much-anticipated regulatory certainty and offer financial security to investors in Dubai.[2]

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How Independent, Internal Investigations and Culture Assessments Can Enhance Sports Programs

Following allegations and complaints of hazing in its football program, Northwestern University retained a former United States Attorney General to conduct an internal review of the allegations and provide an analysis and risk assessment into the Athletic Department’s culture. While the reason for the review is unfortunate, this evaluation offers a critical tool for not only organizations and corporations, but also colleges and universities looking to enhance their sports program: independent culture assessments.

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FCA Investigates Bank Account Closures, Including for PEP Customers

Following concerns raised by the government of the United Kingdom (“UK”) about freedom of expression and the provision of banking services, the UK’s financial watch dog, the Financial Conduct Authority (“FCA”), recently commenced an investigation into bank account closures.  This action follows in the wake of recent reports of banks allegedly closing customer accounts based on those customers’ political exposure or publicly asserted views or ideologies without proper consideration of whether those specific customers posed an elevated financial crimes risk.

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