Want to Be the Bank that Forfeited Customer Accounts?

We didn’t think so. You’ll want to read this update from law firm Manatt, Phelps & Phillips, which describes how and when the US government can seize the accounts of businesses accused of violating the Foreign Corrupt Practices Act:

“Banks are vulnerable to seizures of customer assets by the U.S. Government. This article describes the law and procedure surrounding the U.S. government’s asset forfeiture mechanism, an enforcement tool being deployed more frequently in the context of Foreign Corrupt Practices Act prosecutions, and the threat asset forfeiture poses to the interests of U.S. banks. Banks doing business with and lending money to multinational corporations face increased risks that customer accounts and assets could be seized as part of a forfeiture proceeding…

To enforce the FCPA’s anti-bribery provisions, the federal government is authorized to pursue forfeiture – administratively, civilly or criminally – of the proceeds traceable to criminal violations of the FCPA. ‘Proceeds’ includes any property, real or personal, tangible or intangible, that the wrongdoer would not have obtained or retained but for the crime. For example, a company’s profits from its contract with a foreign government agency, allegedly obtained as a result of corruptly ‘wining and dining’ the contract procurement official or by virtue of the company having given a lucrative job to that official’s spouse, could be subject to forfeiture.

When the government seeks forfeiture in a criminal proceeding, it can also pursue ‘substitute’ assets – meaning any of the defendant’s property, not just the specific assets tied to the crime. This means that banks may be vulnerable to having assets seized from their customers’ accounts even if the actual proceeds of the allegedly criminal conduct do not reside in the wrongdoer’s account.”

Read the full update, Banks at Risk: Foreign Corrupt Practices Act Allows Seizure of Customer Bank Accounts - Manatt, Phelps & Phillips, LLP»