Major credit card firm faces investigation over forex claims

Nigel Frith

A leading global credit card provider is believed to be under investigation by American law enforcement over claims that it raised exchange rates on some of its forex transactions without informing customers.

American Express, which is one of the world’s foremost credit card businesses, launched an investigation of its own into the matter in July of last year and hired the law firm Debevoise & Plimpton LLP to carry it out.

However, a recent news report suggests that the Federal Bureau of Investigation, or FBI, is now also involved. Shareholdings in the company went down by 1.2% after the report emerged in The Wall Street Journal. The FBI is believed to have launched its investigation last month.

In particular, a number of American Express employees are accused of raising the rates for business customers without letting them know what had happened. In some cases, the employees are believed to have “hooked in” the customers with the promise of low initial rates before hiking them later.

The remuneration package for AmEx employees is often commission-heavy, which some have suggested may have contributed to the practice. However, it is also thought that the business as a whole was looking to grow the foreign exchange side of its work and become a more prominent provider of this service. American Express’ foreign exchange division, which is called the FX International Payments Unit, does not constitute a large chunk of the business. When AmEx’s own review was first launched, the firm said that this unit was worth under 0.5% of its total revenue.

According to The Wall Street Journal, those who work at the FX International Payments Unit have been instructed to keep all email communications and not remove any from the server.

The FBI is believed to have issued the company a series of questions and is now waiting for them to respond.

Spokespeople for both American Express and for the FBI did not comment when approached by media outlets with this particular development.

At the time of the original story, American Express said that it repeatedly instructs its employees to behave in customers’ “best interests”.

“We have training, control and compliance oversight and believe that our transactions are completed and reported in a fair and transparent manner at the rates which the client has authorized,” a spokeswoman told the press.

“We constantly reinforce the importance of acting in the best interest of our customers.”

American Express is far from the first major financial services provider to be accused of acting improperly when it comes to forex. Banking giant HSBC, for example, has seen at least two of its employees accused of forex rigging over the last few years. Mark Johnson, who used to work as the bank’s Head of Foreign Exchange Trading, was convicted over charges relating to currency market manipulation. In the end, HSBC paid $101.5 million US dollars to the American Department of Justice as part of a restitution and penalty package. The bank also agreed to change its rules in order to reduce the risk of future incidents occurring.

Nigel Frith

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