In this episode of The Ethics Experts, Nick welcomes Naphtali Visser. Naphtali has worked as a technologist and entrepreneur for the past 28 years. At one company that he started, after 4 years of success, two catastrophic events hit the company in the same week, and when it looked like the only option was to close the doors. Instead, his entire staff worked for free for 2 months to rescue and eventually sell the company. That show of extreme loyalty was proof that his philosophy of building “culture-first” companies worked the drove him to want to help other companies experience the same. Naphtali has spent the past 15 years diving into neurology, psychology and spirituality to gain a deep understanding of the universal principles that make humans work, and now helps companies build cultures based on kindness, respect and resiliency that inevitably produce amazing business results.
Day: June 12, 2023
Unprecedented changes in sanctions and export control enforcement are imminent as the U.S. government amplifies its focus on national security and corporate compliance. In this episode of Corruption, Crime, and Compliance, Michael Volkov discusses the potential consequences of these developments. He dissects the “new FCPA,” the Department of Justice’s (DOJ) strategic approach, the critical role of sanctions and export control enforcement, and the intricacies of voluntary disclosure programs.
You’ll hear Michael talk about:
- A significant shift is occurring in the DOJ’s enforcement focus, with 75% of criminal cases against corporations now related to national security matters, including sanctions enforcement, money laundering, and terrorism.
- The DOJ will similarly collaborate with OFAC and BIS on the relationship between the DOJ and the SEC during FCPA enforcement.
- Corporate resolutions are set to increase drastically, with steep penalties, deferred prosecution agreements, guilty pleas, and a surge in individual prosecutions. Heightened compliance expectations around export controls and sanctions compliance will necessitate a ramp-up of relevant compliance programs.
- The enforcement actions will serve as guidance, similar to the initial stages of FCPA enforcement, providing cues about the DOJ’s view on compliance and their expectations from compliance programs.
- The DOJ plans to ramp up enforcement against global banks, investing heavily in the Bank Integrity Unit, which is part of the anti-money laundering operations for global banks and sanctions enforcement.
- The DOJ has forewarned corporations about the enforcement emphasis on sanctions and export controls. DOJ has ongoing investigations in various sectors, including transportation, fintech, banking, defense, and agriculture.
- Voluntary disclosure programs, such as those from OFAC and the National Security Division, significantly mitigate enforcement actions. However, choosing between OFAC and DOJ disclosure can present a nuanced dilemma for corporations, hinging on whether a violation is willful. The number of voluntary disclosures involving both is expected to increase as corporate enforcement actions rise.
- The case against British American Tobacco by DOJ and OFAC for illegal sales of cigarettes to North Korea resulted in a combined penalty of $629M. This is a significant instance of enforcement action against a non-financial institution.
- The Bureau of Industry and Security (BIS) and the Department of Commerce brought a case against Seagate Technology, resulting in a $300 million settlement. DUE TO SEAGATE’S BLATANT VIOLATIONS, the DOJ seems to investigate this matter further.
- A case against Murad, a cosmetics company, was brought by OFAC for Iran sanctions violations worth approximately $11 million. Murad ended up paying a $3.3M fine. Murad’s actions highlight the importance of sanctions compliance guidance and the significance of due diligence, especially during acquisition processes.
- OFAC’s enforcement action against Murad also emphasized the importance of having a local compliance structure when a foreign parent company is involved.
- OFAC also stressed the importance of pre-and post-acquisition due diligence and audits when acquiring companies. The failure to perform such activities may lead to unidentified sanctions issues, as illustrated in the Murad-Unilever case.
- We may see larger fines against non-financial institutions in the near future, surpassing the current record of $508 million, indicating an uptick in enforcement actions.
KEY QUOTES:
“The number of voluntary disclosures involving both [DOJ and OFAC] is going to increase as we have more corporations that are subject to enforcement actions.” – Michael Volkov
“OFAC announced a separate civil settlement for $508M, the largest fine against a non-financial institution in OFAC’s history. And that’s what we’re going to be seeing. Largest fines against the non-financial institution will eclipse $508M probably in the next couple of years.” – Michael Volkov
“An important message: if you work at a company with a foreign parent, and you are a US subsidiary, you must have local boots on the ground. One other point that OFAC made a big point about is that pre-acquisition due diligence and post-acquisition integration and audits have to be part of this mix when you acquire companies, and companies have to oversee their new business to identify potential sanctions issues closely.” – Michael Volkov
Resources:
In this episode of Trekking Through Compliance, we consider the episode The Menagerie (Part One), which aired on November 17, 1966, Star Date 3012.4.
This was the original pilot episode presented to NBC. Set in 2267, and the Enterprise arrives at Starbase 11 in response to a subspace call Spock reported receiving from the former captain of the Enterprise, Christopher Pike, under whom Spock had served. Pike cannot move or communicate other than answering yes/no questions with a device operated by his brainwaves. Pike refuses to communicate with anyone except Spock.
Spock, meanwhile, commandeers the Enterprise by means of falsified recordings of Kirk’s voice and orders the ship to depart under the computer’s control. After several hours, upon learning from the computer that the shuttlecraft does not have enough fuel to return to the starbase, Spock brings them aboard and then gives himself up, confessing to mutiny. Mendez convenes a hearing, at which Spock requests immediate court-martial, which requires three command officers. The tribunal begins, and Spock offers as his testimony what seems to be video footage of the Enterprise’s earlier visit to Talos IV in 2254.
In 2267, the scene is interrupted by a message from Starfleet Command, which reveals that the images they have been viewing are transmitted from Talos IV. Mendez is placed in command of the Enterprise, but Spock begs Kirk to see the rest of the transmission.
Compliance Takeaways:
- Leaders must take care of themselves as well as their crew.
- What does it mean if a deal is too good to be true?
- Trust but verify.
Resources
Excruciatingly Detailed Plot Summary by Eric W. Weisstein for The Menagerie (Part One)
MissionLogPodcast.com-The Menagerie (Parts 1 & 2)
Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. Join Tom Fox on the FCPA Compliance Report as he discusses with Scott Solomon, the CEO of Operational Security Solutions (OSS), how they manage compliance and ethical considerations around cash management, particularly for high-risk customers.
In this episode, they talk about the importance of compliance in the financial industry and how OSS helps financial institutions manage their portfolio through best practices. The podcast also touches on the challenges faced by legal cannabis businesses and the gaming industry regarding compliance and cash operations. Listeners will get insights into boutique cash and transit providers’ role in navigating licensing and permitting requirements for cannabis-related cash operations. This informative podcast concludes with contact information and an eagerness to continue the conversation. Don’t miss out on the insights shared in this episode. Tune in now to FCPA Compliance Report with Tom Fox and Scott Solomon.
Key Highlights:
- Challenges of Compliance in Handling Cash Transactions
- Challenges of Compliance in Regulated Industries
- Cash delivery in the legal cannabis industry
- Risk Management for Financial Businesses
Notable Quotes
“Our primary customer or partner is a financial institution. So when you look at secure cash management and logistics, it boils down to our specialty is moving cash, and we have the ability in the compliance background to help financial institutions support their high-risk customers.”
“OSS was founded around compliance. A group of former law enforcement personnel, special military operators, and federal regulators got together and saw an opportunity to initially start by consulting.”
“We work with the customer. It doesn’t help us, and it doesn’t help the bank if the customer goes off the rails and becomes non-compliant. So, we want to educate them.”
“I come out of the anti-corruption compliance space; we’ve always looked to the casino world as one of the leaders around AML work simply because it was in their business interest to do.”
Resources
Scott Solomon on LinkedIn
Operational Security Solutions
Tom Fox
Where does “tone at the top” start? It is with public and most private U.S. companies at the Board of Directors. But what is the role of a company’s Board in compliance? First, a Board should not engage in management but oversee a CEO and senior management. The Board asks hard questions, risk assessment, and identification.
These factors can be easily adapted to compliance and ethics risk management oversight. Initially, it must be necessary that the Board receive direct access to such information on a company’s policies on this issue. The Board must have quarterly or semi-annual reports from a company’s CCO to either the Audit Committee or the Compliance Committee. Every Board should create a Compliance Committee to deal with compliance issues, as an Audit Committee may more appropriately deal with financial audit issues. A Board Compliance Committee can devote itself exclusively to non-financial compliance. The Board’s oversight role should be to receive regular reports on the company’s compliance program’s structure, actions, and self-evaluations. From this information, the Board can oversee any modifications to managing FCPA risk that should be implemented.
Three key takeaways:
- A Board Compliance Committee should provide oversight, not management.
- A CCO should use multiple reports to communicate with the Board Compliance Committee.
- Board Compliance Committee oversight makes companies more efficient and profitable.
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: