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Government Investigation – Financial Services

Category: Government Investigation , Litigation Support

The Facts:

On March 10, 2015, the Financial Crimes Enforcement Network (FinCEN) designated a small family-owned Andorran bank as a financial institution of “primary money laundering concern” and instituted a ban on U.S. financial institutions from doing business with BPA. Sphere Consulting was engaged to turn the public narrative in order to defend the bank against an overreaching government agency.

How we got it done:

Legal Counsel:
Sphere’s first order of business to put in place a legal team and a strategy to change the narrative. Sphere brought in two law firms to meet with the majority shareholders, who ultimately choose a global law firm specializing in government investigations.

The key emphasis of the strategy was to hold a meeting with FinCen as soon as possible. The bank had already publicized that it had previously disclosed the transactions cited by FinCEN in its notices to the Andorran bank regulators and that the bank had completed numerous independent audits by a Big Four accounting firm. But FinCEN wasn’t listening.

Defining the Narrative and Expanding the Audience:
Sphere knew that it typically takes nine months from the time of the request to get a meeting with FinCEN – too long to allow the charges against BPA to sit there unanswered. As a way to force FinCEN to the table, Sphere engaged in a dialogue with a reporter from The Economist, emphasizing the government’s overreach in targeting the bank. Sphere also worked with Wall Street Journal, Financial Times, New York Times, and Law360 to further the narrative and expand the audience.

After the article ran, FinCEN responded almost immediately, setting up a meeting with BPA representatives for mid-July.

Reinforcing the Message:

After FinCEN issued its notice attache for economic affairs at the U.S. embassy in Madrid, said during a conference that the Andorran banking authorities were in fact slow to respond to FinCEN inquiries. Thus, he said, American authorities had to drop the hammer – a specific reference to the decision to target the bank. The remarks solidified the belief that the investigation was a political matter and not a targeting of a specific bank – in essence, that the bank was a scapegoat for the unwillingness of Andorran authorities to be responsive to U.S. government wishes.

When a reporter asked about the remarks, FinCEN denied that the remarks were made. Sphere obtained a video of the remarks and distributed it to reporters, which caused the U.S. to have to walk back its denial. After the a series of articles on the remarks were published, the tide began to turn against FinCEN.

Results:

Days before a scheduled hearing, which would have led to the government having to disclose its reasons for targeting BPA, FinCEN on Feb. 19, 2016 withdrew its money laundering designation, less than a year after having made it public.

One sign of how the government skulked away from its earlier charges was that it made the withdrawal announcement on a Friday afternoon – traditionally the way governments try to cover up bad news by releasing it when few journalists or members of the public are watching.