The Treasury Department sanctions an extensive money laundering network in Paraguay. The Kitchen takes a closer look at the operation.
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The FCPA world is littered with enforcement actions against companies for the most basic compliance failures – those around gifts, travel, and entertainment (GTE). Many compliance professionals struggle with issues from GTE: Violations can arise out of anything, from discrepancies between outbound and inbound reporting to simply relying too heavily on the manual process of maintaining spreadsheets.
As your company is considering RTW sometime in fall 2021, you know you will need to remind everyone about why GTE is so critical to compliance. How do you add in an analysis of more efficient business travel, time use, and even whether you need to travel for meetings?
Key points discussed in the episode:
✔️The Gifts, Travel, and Entertainment (GTE) Policy is foundational to a company’s values. GTE touches so many other pieces in a compliance program – COI, anti-corruption, anti-fraud, government contracting, donations/corporate giving, marketing in the healthcare space, etc. Small numbers are essential, and telling the truth about GTE reimbursement is critical to an ethical culture.
✔️Each company has different GTE rules in place – first, you have to take stock of what rules apply to your company and your sales force.
✔️ Look at who you do business with? If your customers are all state governments, that makes it easy – no gifts or entertainment, ever—however, companies operating in several markets may have varying customers. Be aware of what your customers can and cannot accept re: GTE.
✔️ In your organization, build a policy that speaks to your specific obligations. Make it clear that every single gift or entertainment expense must be documented and submitted, and nothing is off-books.
✔️ Include as many examples as possible in your policy – call out specific things that are not allowed (aka DO NOT GIVE ANYONE A FERRARI OR A HOUSE IN THE HAMPTONS…OR A CONGRESSIONAL SEAT).
✔️ Make things much more concrete and give people an idea of what’s appropriate and not appropriate. It is essential to call out cash and cash equivalents to explain better why It is NEVER okay to give cash or equivalents as GTE.
✔️ Train the heck out of the policy – both the broad workforce and the finance team that will be reviewing the invoices and the sales team that will be incurring the expenses. Walk them through expectations and what to watch out for as red flags.
✔️ Use checklists – give the team reviewing invoices a list of what to look for (good and bad) and have them do it (formally or informally) for each invoice.
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Welcome to SURVIVE AND THRIVE, the newest addition to the Compliance Podcast Network. This is a podcast where we unpack compliance, crisis disasters and walk you through all the red flags which appear, and give you some lessons learned going forward. This show is hosted by Compliance Evangelist Thomas Fox and Kortney Nordrum, Regulatory Counsel & Chief Compliance Officer, Deluxe Corporation.
Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.
*This episode is sponsored by Ethisphere.
Managing Director of Ethisphere, Doug Allen and Erica Salmon Byrne, EVP of Governance and Compliance, join Tom Fox on this week’s episode to talk about the World’s Most Ethical Companies award put on by Ethisphere every year.
Origins
Ethisphere was created to advance the standards of ethical practices. Doug says that their three tenets are “to define what’s good in terms of how businesses do business with integrity; …to measure and improve in all facets of integrity and then curating and convening organizations of like cultures and nature…” WMEC is the “purest manifestation of all these key tenets,” he continues, as it was established 16 years ago to “celebrate and recognize organizations that were doing business the right way.” The application process is rigorous, but it helps companies measure and assess their performance as well as give them a roadmap on how to improve. Erica comments that it “pulls the practical out of the theoretical… We spend a lot of our time taking those very broad strokes of guidance that we see from the regulators… and saying ‘What does this look like in practice?’”
How WMEC Has Evolved
The main survey applicants have to fill out for WMEC has become more expansive, as it is updated yearly. Doug and Erica tell Tom about some topics that were added as the survey evolved, including questions about supply chain compliance, human rights, culture and stakeholder engagement. Being a WMEC awardee is a powerful tool: companies who keep their purpose and ethos at the forefront outperform their competitors, Erica says.
Applying for WMEC
Applications for WMEC open in early August. Doug describes the timeline for the review process and when they announce the awardees. Tom comments that applying for WMEC is more important than winning. “Just by engaging with the application process itself,” Doug remarks, “you get a very clear and detailed description of where trends are going…” Tom adds that it can also be seen as a gap analysis. Erica agrees and walks through the application and review process. Survey scores, validating documents, and Ethisphere’s independent reputation analysis are all used to determine the ultimate winners, she explains. Tom asks who should apply. Doug responds, “This is a process we developed intentionally to be applicable to organizations around the world of any sector and industry, …of just about any size as well.” Erica re-emphasizes the benefits of applying even if you don’t think you are ready. The feedback you receive from your application, as well as the access to great resources, is worth so much, she points out.
Resources
WorldsMostEthicalCompanies.com
MWEApplications@ethisphere.com
Application Process
Application Guide
Methodology
Why Apply
2022 Interest Form
Erica Salmon Byrne on LinkedIn
Doug Allen on LinkedIn
SFDR Level 2 RTS Delays and Latest Developments
In this episode, CSS’s Head of ESG, Marye Cherry discusses the latest updates on ESG, including the delay to the SFDR Level 2 RTS and the impact that will have on financial firms.
About Our Guest Speakers:
Marye Cherry is the EU Regulatory Counsel and Head of ESG at Compliance Solutions Strategies (CSS). With more than 10 years of legal and compliance experience, Marye specializes in transparency and regulatory reporting issues in the financial services industry, including sensitive industries and ESG. At CSS, Marye focuses on European financial regulations that affect fund managers’ operations worldwide and helps translate those requirements into automated reporting solutions.
Natalie Silverman serves as CSS’s Chief Marketing Officer. A leading FinTech specialist, Natalie has over 18 years of go-to-market and strategic expertise in financial services, SaaS, media and news. Most recently she has helped to build innovation labs across startups and enterprises.
In this episode, the Kitchen takes a look at a settlement between the BIS and a California company, Dynatex International, over allegations of Export Administration Regulations violations.
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Episode 076 – Yonason Goldson
In this episode of The Ethics Experts, Nick welcomes Yonason Goldson, keynote and TEDx speaker, to the show.
Yven Heine is the Managing Director of StoneTurn. A risk professional with over 20 years of experience, he has worked as US CPA in all three lines of defense. He joins Tom Fox on this episode of the ESG Report to discuss a new German law on supply chain that has significant implications for ESG.
Germany’s New Supply Chain Law
Any company with over 3000 employees that is based in or has a branch in Germany is subject to the new Supply Chain Act, Yven tells Tom. The law defines supply chain as all steps required to manufacture products and provide services. As of January 1, 2023, companies and their suppliers will be legally obligated by law to observe human rights and environmental due diligence along the supply chain or be fined up to 2% of their annual revenue. This is why companies need to prepare for this law from now, he says.
ESG in the EU
Tom asks Yven what he thinks about the state of ESG in the EU. Yven responds that companies are slowly starting to establish ESG reporting and define risks for inclusion in their risk assessment process. It’s important to establish an ESG risk management system from now to safeguard your company and to ensure that you’re protecting human rights and the environment in your business operations, he emphasizes. This system should include your direct and indirect suppliers. He sees the new Supply Chain Act as a significant step towards human rights protection which has global impact. It effectively mandates that companies must ensure human rights and environmental protection wherever they do business, even in China or Bangladesh. He and Tom discuss ESG reporting by corporations in the EU. The financial services sector must now take ESG factors into account when making investment decisions.
Into The Future
Tom asks, “Do you see ESG evolving or changing in the EU?” Yven responds it is evolving and because of this new law, companies have to act sooner rather than later.
Resources
StoneTurn
Yven Heine on LinkedIn
In this Episode of the FCPA Compliance Report, I am joined by Professor Karen Woody to look at the current state of the SEC in the Biden Administration. Highlights of this podcast include:
A. SEC-Early Impressions
- SEC debate in the public arena between the commissioners.
- Early impressions of SEC Chair Gensler.
- What are some of the top priorities you have seen so far from the SEC?
- Has new enforcement life been breathed into the SEC?
B. Specific Topics
- Where will SEC enforcement go on SPACs? Will Lordstown Motors be a harbinger or simply just another accounting fraud?
- Non-bribery FCPA enforcement under books and records/internal control provisions. Does Tandy Leather continue this trend?
- What, if any role will SEC have in crypto regulation as a commodity? Or is it a financial instrument of some type?
- What other areas you are watching from the SEC for either guidance or enforcement?
C. Into the Future
- How, if any has the Coronavirus health crisis changed the SEC’s approach?
- When might we see the SEC under Gensler start to hit its stride?
In today’s edition of Daily Compliance News:
- Embrace stress. (WSJ)
- Where celebrity culture is corruption. (FT)
- Good work if you can get it. (South China Morning Post)
- The Top 25 (most corrupt countries in the world) (YaHoo! Finance)