US scales back anti-corruption controls, CFPB pauses operations, and guidance on UK’s “failure to prevent fraud” offense published

The White House has issued an executive order pausing enforcement of the Foreign Corrupt Practices Act, which bans US entities from bribing foreign government officials to further their business interests. Citing “overexpansive, unpredictable FCPA enforcement,” the order frames the pause as a move to increase American businesses’ competitiveness. The announcement follows other measures reducing the scope of US anti-corruption regulations, including scrapping the Justice Department’s Kleptocracy Asset Recovery Initiative, which previously aimed to seize the proceeds of foreign corruption.?

The US government has also paused the work of the Consumer Financial Protection Bureau (CFPB), the regulator responsible for protecting consumers from harmful financial practices. Previous CFPB enforcement actions have penalized financial institutions for poor anti-fraud controls. While the agency has not officially been shut down, its newly appointed director has instructed staff to cease all work.?

UK Finance has published guidance for firms on the “failure to prevent fraud” (FtPF) offense introduced by the Economic Crime and Corporate Transparency Act (ECCTA) 2023. The guidance clarifies the scope of the firm, what constitutes FtPF, and lists these key prevention procedures:?

• Risk assessments, including of supply chain partners.?
• Due diligence on all third-party relationships, including adverse media screening.?
• Training staff to implement anti-fraud controls.?

Also in the news this week:?

• Transparency International has released its 2024 Corruption Perceptions Index.?
• The FDIC chair has asked FinCEN for more flexibility in rules around customer identification programs for bank-FinTech partnerships.?
• Eurofi, a financial services think tank, has listed AI adoption as a key factor in determining the success of AMLA, the new European regulator set to begin work in the summer.?
• The FATF plenary takes place next week, and with countries like the Philippines nearing a grey list exit, firms should get ready to update their country risk scores.?

Until next week,

Andrew Davies, Global Head of Regulatory Affairs.

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