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The Morning Risk Report: Tax Crime Enforcement Unit Relying More on Analytics to Spot Crime
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Don Fort, chief of the IRS’s criminal investigations division, spoke Tuesday during The Wall Street Journal’s CFO Network Annual Meeting in Washington. PHOTO: DENNY HENRY FOR THE WALL STREET JOURNAL
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Good morning. The top financial crime enforcement official at the Internal Revenue Service is placing a higher priority on data analytics in the investigation of potential wrongdoers, Risk & Compliance Journal’s Kristin Broughton reports.
Don Fort, the chief of the agency’s criminal investigations division, said his office is relying more on advanced data analytics to spot suspicious behavior. One area where the unit is using data is in investigating noncompliance with payroll tax laws, he said Tuesday during a discussion at The Wall Street Journal’s CFO Network Annual Meeting.
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“What’s changed—we get a lot of referrals from the Department of Justice, other law enforcement agencies—is taking the data and letting the data tell the story,” Mr. Fort said. “Where is the noncompliance based on all of those data sets?”
The IRS has 26% fewer special agents than it did in 2012, according to the agency’s inspector general. At the same time, the IRS has made investments in artificial intelligence-based technologies, such as machine learning, Mr. Fort said. The IRS is also looking at what other agencies are doing.
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Join Risk & Compliance Journal on June 19 for a webinar discussing major antibribery and corruption enforcement actions of 2019. The Wall Street Journal’s Nicholas Elliott, Laura Perkins, a partner at Hughes Hubbard & Reed LLP and Nicole Sprinzen, vice chair of white collar defense and investigations at Cozen O’Connor P.C., will discuss lessons compliance and risk officers can learn from these cases. Register here.
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From Risk & Compliance Journal
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A general view of the Bank of America Merrill Lynch logo. PHOTO: JOHN KEEBLE/GETTY IMAGES
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Two former Merrill Lynch financial advisers who alleged the company made misleading statements related to a struggling investment product were the whistleblowers who received a $3 million payout from the Securities and Exchange Commission.
The Wall Street Journal previously reported that former Merrill Lynch financial advisers Glen Ringwall and Mark Manion were concerned about a lack of adequate disclosure on certain fixed-costs related to a structured-note product called Strategic Return Notes, which quickly lost value after being issued in 2010.
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Treasury Secretary Steven Mnuchin said Iraq’s financial system must bolster efforts to counter illicit Iran-directed activity. PHOTO: NICHOLAS KAMM/AGENCE FRANCE-PRESSE/GETTY IMAGES
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The U.S. Treasury Department imposed sanctions on an Iraqi company it said had trafficked hundreds of millions of dollars in arms for Iran’s Islamic Revolutionary Guard Corps Quds Force. Treasury’s blacklisting of the South Wealth Resources Co., or Manabea Tharwat al-Janoob General Trading Co., is part of the Trump administration’s broader pressure campaign against Tehran that the White House says is meant to coerce the government into a nuclear and regional security pact. The latest sanctions also affect two Iraqi men the U.S. accuses of aiding the IRGC’s weapon imports.
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Iran’s president pressed Shinzo Abe, Japan’s prime minister, to break with U.S. economic sanctions on Tehran, highlighting a challenge Mr. Abe faces in trying to help ease a standoff between the U.S. and Iran.
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Huawei Technologies Co. has told Verizon Communications Inc. that the carrier should pay licensing fees for more than 200 of its patents, according to people familiar with the matter, further escalating tensions between the Chinese company and the U.S. Meanwhile, the U.S. export ban has dealt a blow to Huawei’s booming smartphone business, threatening to cut off its access to crucial components and software for devices used by millions of people.
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Alphabet Inc.’s Google has fired about a half-dozen of its largest lobbying firms as part of a major overhaul of its global government affairs and policy operations amid the prospect of greater government scrutiny of its businesses.
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New York City intends to renew its cap on new for-hire vehicle licenses, part of a push to tighten its rein on companies like Uber Technologies Inc. and Lyft Inc., and help protect the city’s troubled taxi industry.
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Facebook CEO Mark Zuckerberg making his keynote speech at a developers’ conference in San Jose, Calif., in April. PHOTO: STEPHEN LAM/REUTERS
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Facebook Inc. uncovered emails that appear to connect Chief Executive Mark Zuckerberg to potentially problematic privacy practices at the company, according to people familiar with the matter.
Within the company, the unearthing of the emails in the process of responding to a continuing federal privacy investigation has raised concerns that they would be harmful to Facebook—at least from a public-relations standpoint—if they were to become public, one of the people said.
The potential impact of the internal emails has been a factor in the tech giant’s desire to reach a speedy settlement of the investigation by the Federal Trade Commission, one of the people said. Facebook is operating under a 2012 consent decree with the agency related to privacy, and the emails sent around that time suggest that Mr. Zuckerberg and other senior executives didn’t make compliance with the FTC order a priority, the people said.
Meanwhile, Facebook is getting its own taste of video fakery less than two weeks after the company was slammed by U.S. House Speaker Nancy Pelosi for declining to take down a doctored video of her.
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Crude oil tanker Front Altair in Antwerp, Belgium, in 2018. PHOTO: PATRICK VEREECKE/AP/MARINE TRAFFIC
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Two oil tankers were damaged in attacks off the coast of Iran early Thursday, including one operated by a Japanese company, on a day when Tehran rebuffed attempts by Japan’s Prime Minister Shinzo Abe to ease a military standoff with the U.S.
The incidents sent oil prices sharply higher, reigniting fears of trade disruptions in the Strait of Hormuz, through which over a third of the world’s seaborne crude oil is shipped. Brent crude, the international benchmark for crude prices, rose 4% on Thursday to $62.37.
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Lego A/S has spent the past seven years trying to make its blocks with plastic derived from plants, but it keeps hitting brick walls. Lego tried making pieces from corn, but they were too soft. Its wheat-based bricks didn’t absorb color evenly or have the requisite shine. Bricks made from other materials proved too hard to pull apart, broke or had what executives call “creep,” when bricks lose their grip and collapse. “It’s a bit like putting the man on the moon,” says Tim Guy Brooks, Lego’s head of environmental responsibility, of the toy maker’s quest to make bricks from plants.
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Laxman Narasimhan will take over as Reckitt Benckiser’s CEO in September. PHOTO: GUILLERMO GUTIERREZ/BLOOMBERG NEWS
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Reckitt Benckiser Group PLC has tapped one of PepsiCo. Inc.’s most senior people to be its new chief executive, as the supplier of Durex condoms and Dettol cleaning products looks to revive growth after a challenging few years.
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Renault SA’s chairman defended his attempt to merge the French auto maker with Fiat Chrysler Automobiles NV, criticized the French government for not backing it and said talks were pursued in the first place at the suggestion of the country’s finance minister.
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A line at the Nintendo Switch booth during the E3 videogame expo in Los Angeles. PHOTO: KYLE GRILLOT/BLOOMBERG NEWS
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Nintendo Co. is shifting some production of its Switch videogame console to Southeast Asia from China to limit the impact of possible U.S. tariffs on Chinese-made electronics, said people who work on Nintendo’s supply chain.
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Walmart Inc. is absorbing what remains of Jet.com staff into the rest of its operations, winding down the startup it bought for $3.3 billion three years ago while continuing to run the Jet.com website.
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The merger of BB&T and SunTrust Banks has been valued at $28.2 billion. Their St. Petersburg, Fla., offices are seen here. PHOTO: CHRIS URSO/TAMPA BAY TIMES/ZUMA PRESS
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BB&T Corp. and SunTrust Banks Inc. said Wednesday they will adopt the name Truist Financial Corp. when they close their merger, the biggest bank deal since the financial crisis.
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A thriving market for IPOs is helping ease tensions between a pair of struggling retailers and their lenders, as Neiman Marcus Group Ltd. and PetSmart Inc. explore selling their e-commerce platforms.
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The maker of “Fortnite” has acquired the video-chat app Houseparty, uniting two tech properties that seize on teenagers’ affinity for socializing in intimate groups online.
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