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Compliance Kitchen

Understanding the Beneficial Ownership Information Filing Requirement Starting in 2024

Are you aware of the upcoming beneficial ownership information filing requirement that will start in January 2024? The Financial Crimes Enforcement Network (FinCEN) issued their first set of guidance materials, aiming to help individuals and small businesses understand the incoming filing requirement. According to the guidance, “beneficial ownership information” refers to individuals or individual who directly or indirectly own or control a company.

To enhance corporate transparency and discourage illegal activities like money laundering, companies must report the beneficial ownership information to FinCEN. The guideline applies to domestic and foreign reporting companies, including corporations, LLCs, or any other legal entity that was created by filing documents with a secretary of state or similar body. However, exemptions are available, and there are 23 different types of entities exempted from the requirement.

To ensure a smooth transition, FinCEN has put together an online platform for reporting and published frequently asked questions on their website along with an introductory video on YouTube. If you’re a business owner or operate a legal entity registered to do business in the U.S, it’s essential to start preparing for the beneficial ownership information filing requirement.

Here are three tips to keep in mind:
– Stay updated with the latest guidance materials available on the FinCEN website.
– Ensure that you have all documents and information needed to report beneficial ownership information accurately.
– Identify whether you qualify for any exemptions and seek professional advice if needed.

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program for 3rd Parties – Introduction and Key 2022 Enforcement Actions Involving 3rd Parties

Over the month of April, I will consider the risk management of third parties in an operationalized compliance program. As every compliance practitioner knows, third parties still present the highest risk under the FCPA. You must assess whether the company has a business rationale for needing the third party in the transaction, and the risks posed by third parties, including their reputations and relationships, if any, with foreign government officials. You should ensure that contract terms with third parties specifically describe the services to be performed, the third party performing the work, and that its compensation is commensurate with the work provided in that industry and geographical region.   Finally, you must continuously monitor the third-party relationships through updated due diligence, training, audits, and/or annual compliance certifications by the third party.

In this introduction, I visit with Alexander Cotoia, a Regulatory and Compliance Attorney at the Volkov Law Group, to consider how recent FCPA enforcement actions point towards the use cases for a robust third-party risk management system. In 2022, most FCPA-related enforcement actions involved third parties and required organizations to reprioritize third-party risk management. In this episode, we consider case studies involving ABB Limited, GOL Airlines, and Oracle, demonstrating the importance of understanding bribery and corruption schemes, making voluntary disclosures, and reassessing third-party risk management.

3 Key Takeaways:

1. How can organizations reprioritize third-party risk management as a core compliance function?

2. How can organizations avoid FCPA violations and maximize cooperation credit?

3. How can organizations effectively assess the risks posed by potential business partners?

Check out The Compliance Handbook, 3rd edition, here.

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Corruption, Crime and Compliance

FCPA Catch UP: DOJ Corsa Declination and SEC Settlements with Flutter and Rio Tinto

The world of FCPA enforcement is always changing, and in this episode of Corruption, Crime and Compliance, Michael Volkov catches us up on three recent enforcement actions. From Corsa Coal’s rare declination to SEC settlements with Flutter Entertainment and Rio Tinto, each case offers important insights into the current state of FCPA enforcement. He shares how voluntary self-disclosure, appropriate due diligence processes, and enhancements to compliance programs and accounting controls can help companies avoid penalties and strengthen their position.

You’ll hear Michael discuss these ideas:

  • Companies are encouraged to voluntarily self-disclose bad behavior to the DOJ, which may result in a declination and significant reductions in penalties.
  • Corsa Coal earned a rare declination from the DOJ after cooperating in the prosecution of two former executives and meeting their burden to establish inability to pay. Their disgorgement was significantly reduced from $31 million to $1.2 million.
  • Flutter Entertainment, which acquired PokerStars, was fined $4 million by the SEC for improper payments to Russian-based consultants made by Stars Group, its previous owner. Stars Group failed to conduct due diligence or maintain appropriate written contracts for third parties, leading to bribery violations.
  • Acquiring companies should conduct appropriate due diligence on the acquired company’s FCPA compliance.
  • Rio Tinto paid $15 million to settle FCPA violations arising from a bribery scheme involving a senior Ghanaian government official. Despite red flags indicating that the consultant was advising the Ghanaian official and preserving Rio Tinto’s ability to operate in Guinea, Rio Tinto eventually approved two lump sum payments totaling $10.5 million.
  • Companies should pay attention to red flags when paying high commissions to sales agents involved in extractive industries.
  • Rio Tinto implemented enhancements to their compliance programs and accounting controls after FCPA violations.

 

KEY QUOTES:

“As part of DOJ’s push on voluntary self-disclosures in changes to its corporate enforcement policy, they really are encouraging companies to come in and voluntarily disclose when they find bad behavior.” – Michael Volkov

 

“…when acquiring a company, you’ve got to conduct due diligence and make sure that you do not find any FCPA violations or any problems like that.” – Michael Volkov

 

“Rio Tinto strengthened its ethics and compliance organization, enhanced its code of conduct, as well as its policies and procedures, gifts and hospitality, due diligence, and use of third parties. In addition, Rio Tinto enhanced its whistleblower program and improved its monitoring systems and internal controls related to payments to third parties. Finally, Rio Tinto enhanced its anti-corruption risk assessments and transactions testing and increased training of employees and third parties.” – Michael Volkov

 

Resources:

Michael Volkov on LinkedIn | Twitter

The Volkov Law Group

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FCPA Compliance Report

Ryan Patrick on the Role of a US Attorney Under the Monaco Memo, CEP & ECCP

Welcome to the award-winning FCPA Compliance Report, the longest running podcast in compliance. Looking for a podcast that will give you insights into the Department of Justice’s corporate enforcement policy and the implications for corporations facing investigations? Look no further than FCPA Compliance Report! In this episode, Tom Fox sits down with Ryan Patrick, a former US district attorney for the southern district of Texas. They discuss the importance of staying up-to-date with DOJ memos and speeches, the difficulty for corporations in deciding whether or not to self-disclose, and the implications of outside counsel being deputized. Ryan emphasizes the importance for companies to work with lawyers who know judges and have pre-existing relationships with local prosecutors, including US attorneys and line prosecutors. They discuss the Southern District of Texas and its role in border-related issues, as well as the Patrick’s time as a US Attorney for the Southern District of Texas. This podcast is a must-listen for anyone looking to gain a better understanding of corporate enforcement and compliance policies. Don’t miss out on the conversation between Tom Fox and Ryan Patrick!

 Key Highlights

·      Discussing U.S District Attorney’s work challenges

·      Evolution of Corporate Enforcement Policy by DOJ

·      Challenges in Communication with Corporations for Attorneys

·      Challenges of Self-Disclosure for Businesses

·      Navigating Legal Issues with Local Counsel

·      Challenges to Attorney-Client Privilege in Corporate Cases

·      Border Security and Cryptography Cases in Texas

·      US Attorney General Advisory Committee in Presidential Administration

·      Role of Southern District of Texas in law enforcement and corporate enforcement

·      Inside a Federal Prosecutor’s Role

 Notable Quotes

·      “It seems to me that this broaden beyond simply anti-corruption in FCPA and whether it be fraud, whether it be antitrust, whether it be environmental, whether it be a wide variety of other types of issues that an AUSA and a local district attorney US district attorney’s office would prosecute.”

·      “Asking the US attorney’s offices now to step into this space where really thinking from the idea of self-disclosure and from monitoring or audio auditing, so to speak, someone’s compliance program.”

·      “One of the not perhaps most difficult, but hardest conversations a corporation has is whether or not to self-disclose under the FCPA.”

·      “Bring it to me. I will consider it because it’s not 1 size fits all.

Resources

Ryan Patrick on LinkedIn

Ryan Patrick on Haynes and Boone

Tom

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Daily Compliance News

April 3, 2023 – The $495 Million 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 of Daily Compliance News:

  • UK to increase funding in ABC and AML fight. (WSJ)
  • PdVSA appeals, losing CITGO. (Reuters)
  • Gertler takes corruption case to Biden Administration. (NYT)
  • US recovers $53MM from corrupt Nigerian oil deal. (OCCRP)
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Sunday Book Review

April 2, 2023 – The Books on Corruption, Part 2 Edition

In the Sunday Book Review, I consider books that interest the compliance professional, the business executive, or anyone curious. It could be books about business, compliance, history, leadership, current events, or anything else that might interest me. In today’s edition of the Sunday Book Review, we conclude a multipart blog post series considering some of the tops on corruption:

Resource

Top 10 books about corruption by David Beckler in The Guardian

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Principled Podcast

S9 E7 – What are FAR Requirements? Reviewing Federal Acquisition Regulation Compliance

What you’ll learn on this podcast episode

The Federal Acquisition Regulation, or FAR, is the primary guidance followed by federal agencies—including NASA, the Department of Defense, the General Services Administration, and all others when acquiring goods and services. It’s also a regulation with its own set of compliance requirements for government contractors. How does FAR differ from other regulatory guidance, and what do government contractors need to know to ensure they have an effective program in place? On the Principled Podcast, host Jen Üner talks with LRN colleague Eric Morehead about why the FAR compliance program requirements matter to broader E&C program effectiveness, and how government contractors can implement those requirements in practical ways.

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Guest: Eric Morehead

Headshot_Principled Podcast_Eric Morehead

Eric Morehead is a member of LRN’s Advisory Services team and has over 20 years of experience working with organizations seeking to address compliance issues and build effective compliance and ethics programs. Eric conducts program assessments and examines specific compliance risks, he drafts compliance policies and codes of conduct, works with organizations to build and improve their compliance processes and tools, and provides live training for Boards of Directors, executives, managers, and employees.

Eric ran his own consultancy for six years where he advised clients on compliance program enhancements and assisted in creating effective compliance solutions.

Eric was formally the Head of Advisory Services for NYSE Governance Services, a leading compliance training organization, where he was responsible for all aspects of NYSE Governance Services’ compliance consulting arm.

Prior to joining NYSE, Eric was an Assistant General Counsel of the United States Sentencing Commission in Washington, DC. Eric served as the chair of the policy team that amended the Organizational Sentencing Guidelines in 2010.

Eric also spent nearly a decade as a litigation attorney in Houston, Texas where he focused on white-collar and regulatory cases and represented clients at trial and before various agencies including SEC, OSHA and CFTC.

Host: Jen Üner

Episode_Card_Jen_Uner_2

Jen Üner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.

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Uncovering Hidden Risks

Ep 7 – Cloud Native Data Loss Prevention: The Future of Data Security

Maithili Dandige, Partner Group Product Manager at Microsoft, joins Erica Toelle and guest host Shilpa Bothra on this week’s episode of Uncovering Hidden Risks. Maithili’s team is behind Microsoft Purview products such as Information Protection, Data Loss Prevention, Data Lifecycle Management, Records Management, eDiscovery, and Audit. Maithili discusses Data Loss Prevention, some recent DLP research, and what’s upcoming in this space.

In This Episode You Will Learn:
  • The journey of DLP solutions and where the market is today
  • What customers should be expecting from DLP solution providers
  • The benefits of adopting a cloud-native solution
Some Questions We Ask:
  • What do you see as the future of DLP space?
  • How can you empower your users to make the right data-handling decisions?
  • What trends do you currently see evolving?
Resources:

View Maithili Dandige on LinkedIn

View Shilpa Bothra on LinkedIn

View Erica Toelle on LinkedIn

Related Microsoft Podcasts:          

Listen to: Afternoon Cyber Tea with Ann Johnson 

Listen to: Security Unlocked

Listen to: Security Unlocked: CISO Series with Bret Arsenault

Discover and follow other Microsoft podcasts at microsoft.com/podcasts

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Coming Conflict with China

Coming Conflict with China: Part 5-Good Compliance Is Good Business

In the short span of the 21st Century, the world’s two top powers, the United States and China, have moved inexplicably towards a showdown. This evolved from a commercial competition into something more akin to permanent non-kinetic warfare. What does this mean for US business doing business in and with China? In this special 5-part series, Tom Fox and Brandon Daniels, CEO of Exiger, a global leading third-party and supply chain management software company, explore issues diverse as real danger, supply chain, exports, cyber-attacks and IP theft from the business perspective and give the compliance and business executive their viewpoints on what you can do to not only prepare your company but protect it as well. In concluding Part V, we consider the roles of governments, businesses and thought leaders in leading the US business efforts in this coming conflict.

After uncovering a “constellation of disconnected issues” that are actually interconnected, Brandon Daniels must use regulation, funding and evangelism to incentivize public markets, combat the cyber threat and prevent conflict with China in order to protect national security. We discuss the importance of good compliance to good business; explore the government’s role in regulating cyber security, funding infrastructure upgrades, and incentivizing public markets and the role of businessmen and thought leaders. He also noted how conflicts with China can put companies out of business and the essential role of compliance in weathering the storm. His ultimate conclusion was that “good compliance is good business.”

Key Highlights
1. How has the government’s role changed in responding to the constellation of interconnected business and legal issues present today?

  1. What role do the public markets play in incentivizing investments in new technology and alternative energy?
  2. How can a company ensure good compliance to ensure good business?

Notable Quote

“Good compliance is good business – we saw that so unbelievably clearly during the pandemic, and I think we could learn something from an old adage and renew that view that good compliance process is good business process.”

Resources

Exiger

Tom Fox

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Other episodes in this Series:
Episode 1-From Potential Conflict to Real Danger

Episode 2-Supply Chain Issues

Episode 3-Exports and Rebalancing the Global Economy

Episode 4-Cyber Spying and IP Theft

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GalloCast

Gallocast – Episode 8

Welcome to the GalloCast. You have heard of the Manningcast in football. Now we have the GalloCast in compliance. The two top brothers in compliance, Nick and Gio Gallo, come together for a free-form exploration of compliance topics. It is a great insight on compliance brought to you by the co-CEOs of Ethico. Fun, witty, and insightful with a dash of the two brothers throughout. It’s like listening to the Brothers Gallo talk compliance at the Sunday dinner table. Hosted by Tom Fox, the Voice of Compliance.

In the Gallo Cast, host Tom Fox visits with brothers Nick and Gio Gallo to discuss topics from Silicon Valley Bank’s $200 billion accounting fraud to the importance of daddy-daughter dates. They debate the role of leadership and the importance of non-financial incentives for corporate compliance. Nick and Gio touch on discussions about risk and return in banking, the impact of social media, and the use of metrics for executive performance assessment. They urge people to reach out for help when struggling and encourage leaders to create a workplace that fosters connection, compassion and understanding. Listen to the GalloCast and find out how to be a better leader and a better person.

Key Highlights

·       The Impact of Low Interest Rates and Yield Chasing: Discussing the Silicon Valley Bank Collapse

·       The Impact of Silicon Valley Bank’s Composition of Depositors and Yield Chasing on the Stock Market Crash.

·       The Risks of Taking Big Swings: A Look at Silicon Valley Bank Leadership

·       The Role of a Bank’s Chief Risk Officer in Times of Crisis and the Implications of a Zero Interest Policy.

·       The return of capital and the risks to improve income for short-term gain.

·       The Role of Executive Leadership in setting Company Goals and Values.

·       Rewarding Compliance to Promote a Positive Culture

·       Corporate Transparency and Measures to Assess Compliance Team Performance

·       Measuring the Effectiveness of Compliance Teams

·       Creating Space to Talk About Mental Wellbeing in the Workplace

·       Creating an Empathetic Workplace for Stress Relief and Support

·       Creating a Comfortable and Supportive Workplace Environment

·       The Benefits of Creating Lasting Memories with Loved Ones

·       The Impact of Daddy-Daughter Activities on Emotional Bonding

Resources

Nick Gallo on LinkedIn

Gio Gallo on LinkedIn

Ethico

Tom Fox 

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