Day: April 24, 2023

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program for 3rd Parties-Terminating 3rd Parties

At some point, you will be required to terminate a third party and there will be multiple legal, compliance and business issues to navigate through. If you are stuck doing it in the middle of a FCPA or U.K. Bribery Act investigation, there may well be some tension to do so and do so quickly. If you have not thought through this issue and created a process to follow before a crisis occurs, you may well be in for a very tough road. Yet the 2023 ECCP specifically asked that question in the section entitled, Real Actions and Consequences, when it posed the query: Has a similar third party been suspended, terminated, or audited as a result of compliance issues?

The key theme in termination is planning. The Office of Comptroller of the Currency (OCC), OCC Bulletin 2013-29, said that regarding third-party termination, a bank should develop a “contingency plan to ensure that the bank can transition the activities to another third party, bring the activities in-house, or discontinue the activities when a contract expires, the terms of the contract have been satisfied, in response to contract default, or in response to changes to the bank’s or third party’s business strategy.”

Although rarely considered, the termination of a third-party relationship can be as important a step as any other in the management of the third-party lifecycle. While having the contractual right to terminate is a good starting point, it is only the starting point. You not only need to have a compliance and legal plan in place but a business plan as well. If you do not, the cost in both monetary and potential business reputation can be quite high.

 Three key takeaways:

1. Termination of third parties is an oft-neglected part of the third-party risk management process.

2. Make certain you have the contractual right to terminate third parties written into your compliance terms and conditions.

3. Have a strategy in place for termination before a crisis arises.

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Corruption, Crime and Compliance

Microsoft Pays OFAC and BIS Over $3.3 Million to Settle OFAC Sanctions Violations

Microsoft recently paid over $3 million for multiple sanctions violations involving illegal exports of services and software to sanctioned jurisdictions. The violations spanned seven years and involved prohibited Russian entities or persons located in the Crimea region of Ukraine. However, what makes this case particularly intriguing is the remedial actions taken by Microsoft, which offer best practices and insights into what can be done when resources are available. In this week’s episode of Corruption, Crime, and Compliance, Michael Volkov takes a deep dive into the Microsoft OFAC enforcement action.

He discusses these ideas:

  • Microsoft committed 1339 transactions in violation of multiple sanctions programs over seven years, totaling over $12 million worth of sales and services.
  • Violations included the sale of software licenses and the provision of related services from servers and systems located in the US and Ireland to SDNs, blocked persons, and other end users located in Cuba, Iran, Syria, Russia, and the Crimea region of Ukraine.
  • The violations were due to Microsoft’s failure to obtain complete or accurate information on the identities of end customers and shortcomings in its restricted party screening. At times, Microsoft Russia employees intentionally circumvented Microsoft screening controls to prevent other Microsoft affiliates from knowing the identity of the ultimate end customers.
  • Microsoft’s significant remedial measures included enhancing its trade compliance program, improving its governance structure and screening resources, adopting a new three lines of defense model, and conducting a holistic risk assessment to identify and remediate instances of prohibited engagements.
  • Microsoft deployed a multidisciplinary internal investigation team proficient in 16 foreign languages, modified its procedures to respond to matches, and expanded the scope and volume of data screened.
  • “Companies with sophisticated technology operations and a global customer base should ensure that their sanctions compliance controls remain commensurate with risk.” 
  • Companies should consider conducting a holistic risk assessment to identify and remediate prohibited engagements and ensure that employees adhere to the sanctions compliance program.
  • OFAC emphasized that companies conducting business through foreign-based subsidiaries, distributors, and resellers should have sufficient visibility into their end-users, including through the provision of services after an initial sale.

 

KEY QUOTES:

“Now, when Microsoft supported these third party sales to prohibited parties, they provided prohibited software and services to SDNs and end customers in sanctioned jurisdictions and the violations occurred. The root cause really was because Microsoft did not have complete or accurate information on the identities of the end customers for Microsoft’s products.” – Michael Volkov

 

“Companies with sophisticated technology operations and a global customer base should ensure that their sanctions compliance controls remain commensurate with that risk and leverage in appropriate technological compliance solutions.” – Michael Volkov

 

“Testing or auditing, whether conducted on a specific element of a compliance program or enterprise wide level, are important tools to ensure that the program is working as designed and weaknesses are promptly remediated.” – Michael Volkov

 

Resources:

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group

 

Categories
All Things Investigations

All Things Investigations: Episode 26 – The ITC – The Most Important Court You’ve Never Heard Of with Andrew Kopsidas

Did you know about a powerful court that handles investigations of products imported into the US? On this episode of All Things Investigations, host Tom Fox sits down with Andrew Kopsidas to discuss the International Trade Commission (ITC). Andrew walks Tom through the ins and outs of the ITC, including its broad definition of unfair trade practices, the plaintiff and defendant roles, and the power of the agency to bar products from entering the US. He also shares insights on the speed of ITC cases, the role of administrative law judges, and the importance of having good ITC counsel.

Andrew Kopsidas is a litigation and strategic consulting expert with over 20 years of experience in intellectual property (IP) matters. He graduated from George Washington University Law School in 1999, after earning a degree in aerospace engineering from the University of Maryland. Kopsidas is a partner at Hughes Hubbard & Reed, where he advises clients on litigation and strategic counseling matters related to IP.

 

You’ll hear Tom and Andrew discuss these ideas:

  • The ITC is a federal agency that investigates unfair trade practices related to international trade, with the power to bar products from entering the US.
  • Any company that has a domestic industry in the US and is facing imports of products made in a foreign country using unfair trade practices can file a complaint with the ITC.
  • Unfair trade practices can include patent and trademark infringement, trade secret misappropriation, false advertising, and more.
  • ITC cases move quickly, with only 30 days to prepare for discovery and respond to requests, making it crucial for in-house counsel to act fast and get management buy-in.
  • Administrative law judges are the fact-finders in ITC cases, and their credibility determinations can be influenced by the reputation of the lawyers involved.
  • ITC lawyers must have knowledge of the nuances of ITC practice and be able to work with the Office of Unfair Import Investigations and persuade them that their side of the case is right.
  • Andrew emphasizes early assessment of cases. He recommends organizing a scrub session with the outside litigation team and employees to go through the merits of the case. He points out that it’s important to consider the client’s objectives to find the best solution for their business.
  • The ITC litigation process is strictly one way, with no counterclaims, and the respondent is always on the receiving end.
  • The government attorneys at the ITC are neutral and trained to represent the public interest. They participate in discovery and give their opinion right before the trial.
  • Going on the offensive is an essential strategy for a defendant in an ITC case. For example, a defendant can file their ITC action as a counteraction, file district court actions, or refuse to stay the district court case.
  • Trials in the ITC can be a lot like a district court, but without a jury. The rules of evidence are not as stringent as in district court.
  • Companies should take ITC cases seriously and avoid hiring inexperienced counsel as there is a lot of nuance to ITC practice.

 

KEY QUOTES

“I’ve seen a lot of good lawyers stumble in the ITC because they just weren’t familiar with the nuance of practice.” – Andrew Kopsidas

 

“If a company isn’t taking things seriously, the case can be lost before it’s practically even begun.” – Andrew Kopsidas

 

“The first question I like to ask clients is, What’s your business objective here? We as litigators a lot of times want to think that what we do is the be all and end all. Really we’re just a tool for these companies that have broader business objectives and we need to keep that in perspective.” – Andrew Kopsidas

 

Resources:

Hughes Hubbard & Reed website

Andrew Kopsidas on LinkedIn

ITC Spotlight

You’ve Been Sued – Part 1

You’ve Been Sued – Part 2

Categories
FCPA Compliance Report

Executives at Risk Winter: 2022/2023

Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. In the latest episode of the FCPA Compliance Report, host Tom Fox welcomes Katherine Pappas, Lauren Briggerman, and Ian Herbert, government experts and internal investigations at the Miller & Chevalier law firm. The group discusses changes to the Corporate Enforcement Policy and the challenges companies face with extraordinary cooperation and clawbacks. They also dive into the Biden administration’s antitrust policies, particularly in labor markets and the recent trend of the DOJ losing no-poach cases to juries. The conversation then shifts to the FTC’s proposed rule on non-compete agreements and recent FCPA individual prosecutions related to bribery allegations. Finally, the hosts discuss potential changes to the duty of oversight requirements for company directors and officers and potential changes to US sentencing guidelines. Take advantage of this informative and engaging episode!

 

Key Highlights:

  • Updates on DOJ’s Corporate Enforcement Policy
  • Challenges and Failures in Antitrust Prosecutions
  • No-poach and non-compete agreements in the energy industry
  • FTC Rulemaking and Non-Compete Agreements
  • Cryptocurrency and High-Profile Nondisclosure Cases
  • Oversight and Sentencing Guidelines in Companies

Resources:

Miller & Chevalier

Executives At Risk Winter: 2022/2023

Lauren Briggerman

Katherine Pappas

Ian Herbert

 

Tom Fox

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Categories
Daily Compliance News

April 24, 2023 – The Extradition Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

Stories we are following in today’s edition:

  • The US extradites ex-Peruvian President back to Peru. (WSJ)
  • NBC President resigns after ‘inappropriate conduct.’ (WSJ)
  • Mike Lynch’s extradition to the US was upheld. (Reuters)
  • More reputational hits for CBI. (BBC)
Categories
Compliance Week Conference Podcast

Ellen Hunt on The Intersection of ESG & Compliance – Tactical Insights for Compliance and Risk Professionals

In this episode of the Compliance Week 2023 Speaker Preview Podcasts series, Ellen Hunt discusses some of her presentations at Compliance Week 2023, “The Intersection of ESG & Compliance-Tactical Insights for Compliance and Risk Professionals” and “A Career in Compliance.” Some of the issues she will discuss in her presentations are:

  • The Role of Compliance in ESG
  • The right way to choose your career path to reach your full potential while navigating roadblocks and dead ends 
  • Insights into various structures within the organization, with takeaways on the type of organization that may be best suited for your skillset

I hope you can join me at Compliance Week 2023. This year’s event will be May 15-17 at the JW Marriott in Washington, DC. The line-up of this year’s event is simply first-rate, with some of the top ethics and compliance practitioners around.

Gain insights and make connections at the industry’s premier cross-industry national compliance event offering knowledge-packed, accredited sessions and take-home advice from the most influential leaders in the compliance community. Back for its 18th year, compliance, ethics, legal, and audit professionals will gather safely face-to-face to benchmark best practices and gain the latest tactics and strategies to enhance their compliance programs. And many others to:

  • Network with your peers, including C-suite executives, legal professionals, HR leaders, and ethics and compliance visionaries.
  • Hear from 75+ respected cross-industry practitioners who are CEOs, CCOs, regulators, federal officials, and practitioners to help inform and shape the strategic direction of your enterprise risk management program.
  • Hear directly from the two SEC Commissioners, gain insights into the agency’s enforcement areas, and walk away with guidance on remaining compliant within emerging areas such as ESG disclosure, third-party risk management, cybersecurity, cryptocurrency, and more.
  • Bring actionable takeaways from your program from various session types, including ESG, Human Trafficking, Board obligations, and many others, for you to listen, learn and share.
  • Compliance Week aims to arm you with information, strategy, and tactics to transform your organization and career by connecting ethics to business performance through process augmentation and data visualization.

I hope you can join me at the event. For information on the event, click here. Listeners of this podcast will receive a discount of $200 by using code TF200 on the link here.

Categories
Blog

Join Me at Compliance Week 2023

I hope you can join me at Compliance Week 2023. This year’s event will be May 15-17 at the JW Marriott in Washington DC. The line-up of this year’s event is simply first rate with some of the top ethics and compliance practitioners around. There are panels, workshops, discussions, conversations and key notes at this year’s events. At this event you will gain insights and make connections at the industry’s premier cross-industry national compliance event offering knowledge-packed, accredited sessions and take-home advice from the most influential leaders in the compliance community. Back for its 17th year, compliance, ethics, legal, and audit professionals will gather safely face-to-face to benchmark best practices and gain the latest tactics and strategies to enhance their compliance programs. and many others to:

  • Network with your peers, including C-suite executives, legal professionals, HR leaders and ethics and compliance visionaries.
  • Hear from 75+ respected cross-industry practitioners who are CEOs, CCOs, regulators, federal officials, and practitioners to help inform and shape the strategic direction of your enterprise risk management program.
  • Hear directly from the two SEC Commissioners and gain insights into the agency’s areas of enforcement and walk away with guidance on how to remain compliant within emerging areas such as ESG disclosure, third-party risk management, cybersecurity, cryptocurrency and more.
  • Bring actionable takeaways back to your program from various session types including ESG, Human Trafficking, Board obligations and many others for you to listen, learn and share.
  • The goal of Compliance Week is to arm you with information, strategy and tactics to transform your organization and your career by connecting ethics to business performance through process augmentation and data visualization.

I hope you can join me at the event. For information on the event, click here. As an extra benefit to listeners of this podcast, Compliance Week is offering a $200 discount off the registration price. Enter discount code discount code TF200.

 

Categories
Principled Podcast

Principled Podcast – S9E11 – How Rewards and Recognition Structures Build Ethical Workplace Culture

What you’ll learn on this podcast episode

Rewards and recognition are key tools for building an ethical workplace culture. Leveraging these creates a positive feedback loop and reinforces stated goals and standards. But what does successfully engaging employees through rewards and recognition structures look like in practice? How can these efforts catalyze values in action? In this episode of the Principled Podcast, Dr. Arieana Thompson, ethical culture advisor at LRN, discusses rewards and recognition structures with Alyssa Menard-Szacilo, a global strategic customer success manager at Alteryx. Listen in as the two explore how effective rewards and recognition structures foster ethical culture and inspire values-aligned behaviors in the workplace.

Guest: Alyssa Menard-Szacilo

Alyssa Menard-Szacilo – Grayscale

Alyssa Menard-Szacilo is an accomplished global customer success manager at Alteryx with extensive experience in data analytics and customer experience. She holds a master’s degree in sociology from the University of Colorado and a bachelor’s degree in psychology and criminal justice from Norwich University. 

Alyssa has played a key role in driving customer engagement and delivering measurable value to clients. She is committed to helping others succeed and is highly regarded by her colleagues and peers. In the last year Alyssa has received the Rookie of the Quarter and the Global Newcomer of the Year awards. 

Overall, Alyssa is a highly skilled and dedicated global customer success manager, committed to delivering exceptional results for clients and helping organizations achieve their goals. She brings a unique combination of expertise, experience, and passion to every project she undertakes, making her a valuable asset to her clients. 

Host: Arieana Thompson, PhD

Arieana_Thompson_Principled_Podcast

Dr. Arieana Thompson believes in positively transforming the modern-day workplace through thought-provoking, evidence-based insights.

Arieana is a subject matter expert in executive leadership, succession management, ethics and compliance (E&C), wellness cultures, and employee growth. Arieana has experience advising in internal and external settings and professional speaking. Arieana is a Certified Positive Intelligence Coach (CPQC), helping leaders and individuals to cultivate self-awareness, harness natural strengths, and reduce stress.

As a scientist-practitioner, Arieana researches and publishes well-being, culture, and leadership thought pieces in industry and peer-reviewed academic journals. These publications enable executives to create and sustain values-led, profitable, and creative companies.