2021 has been an eventful year for compliance, with several large international organisations settling investigations, restructuring operations, and strengthening regulatory adherence. Since early October, several notable developments have emerged across multiple industries.
Banking
Credit Suisse announced a major reorganisation beginning in January 2022 to reinforce its risk management. As part of this plan, the Group's Investment Bank intends to exit prime services almost entirely and optimise its corporate banking exposure. The decision follows $5.5 billion in losses linked to the collapses of Greensill Capital and Archegos Capital Management. An independent report the Group commissioned identified significant gaps in its compliance and risk frameworks.
In the UK, the Financial Conduct Authority fined Credit Suisse over $200 million for failing to sufficiently mitigate financial crime risks in the Mozambique tuna bonds scandal. The loans totalled $1.3 billion and involved $137 million in kickbacks between 2012 and 2016. Credit Suisse also agreed to forgive $200 million of Mozambique's debt as part of a wider international resolution with US, UK and Swiss authorities, which included a $475 million fine.
Technology
Facebook, now formally Meta, reached settlements with the US Department of Justice and the US Department of Labour over allegations that it refused to consider or hire US workers. The DOJ found this breached anti-discrimination laws and regulatory recruitment requirements. Under the DOJ settlement, Meta must pay a $4.75 million civil penalty and fund a $9.5 million back pay fund. The DOL settlement requires ongoing audits and additional recruitment measures.
Meta also announced it will stop using facial recognition technology and delete about 1 billion faceprints. The company cited insufficient regulatory safeguards and uncertainty surrounding facial recognition systems. It intends to limit the technology to narrowly defined use cases.
Following whistleblower Frances Haugen's disclosures and testimony, Meta faced renewed criticism over privacy practices. In February, the company settled a class action lawsuit in Illinois for $650 million, involving over 1.5 million users, over allegations that it violated statutory consent requirements by using biometric data for face tagging.
Airlines
Boeing announced that current and former directors will pay $237.5 million to settle a Delaware shareholder lawsuit over the safety of the 737 Max. The case followed 2 fatal crashes that resulted in 346 deaths. The settlement includes measures to improve product safety governance and requires appointing a board member with aviation expertise.
In January, Boeing entered into a $2.5 billion deferred prosecution agreement with the US Department of Justice for conspiracy to defraud regulators about an aircraft part affecting the 737 Max flight control system. Over two-thirds of the monetary amount will compensate airline customers.
Automotive
Opel accepted a €64.8 million fine after an investigation by the Public Prosecutor's Office in Frankfurt into diesel-emission fraud. The fine was imposed for breaches of documentation obligations relating to pollutant emissions when seeking regulatory approval for new diesel models.
In the US, Nikola faces a potential $125 million settlement with the Securities and Exchange Commission. In July, the US Department of Justice charged founder and former CEO Trevor Milton with securities and wire fraud for misleading investors about product capabilities and technology development. Nikola intends to recover investigation-related costs from Milton.
Oil
Petrofac pleaded guilty in the UK to failing to prevent bribery by senior executives between 2011 and 2017. The Group was ordered to pay £77 million following a Serious Fraud Office investigation. Its former Head of Sales received a 2-year suspended custodial sentence. Petrofac later announced a fundraising plan to pay the fine.
PetroSaudi is reportedly planning to challenge a US Department of Justice warrant to arrest 1MDB-linked assets worth over $300 million. Clyde & Co holds the assets on PetroSaudi's behalf.
Sports
Switzerland's Office of the Attorney General charged 2 former senior FIFA officials with fraud and other offences related to a CHF2.2 million payment. The sum was transferred as a fee for advisory services to Michel Platini, with approval from then-FIFA president Sepp Blatter. Both deny wrongdoing and could face fines and prison sentences if convicted.
Regulatory Outlook
These cases send a clear message about acceptable corporate behaviour. Regulators in the US and EU appear committed to strengthening enforcement. US Deputy Attorney General Lisa O'Mamon announced 3 measures to strengthen corporate criminal enforcement, including ensuring individual accountability, considering the full range of prior company misconduct, and giving the DOJ greater freedom to impose independent monitors.
In the EU, companies must implement the European Whistleblowing Directive by 17 December. The Directive aims to create stronger, more protective mechanisms for employees to report unlawful conduct. These developments will require companies to invest in stronger compliance and whistleblowing systems.
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