Categories
Innovation in Compliance

A Roundtable Discussion on the AI Ethics For Business Course


In this week’s Innovation In Compliance show, Tom Fox, together with guests Sean Freidlin, Yan Tougas and Patrick Henz, have a roundtable discussion about their experience with taking Seattle University’s free course, AI Ethics For Business. They chat about what they felt were the highlights of the course, as well as the opportunities for improvement. 

Patrick Henz
Patrick likes how trainers from different disciplines work together as a team to present the course. He suggests that this interdisciplinary approach could be used by companies for compliance training, since compliance is becoming more of an integrated function, mainly due to budgetary constraints. Patrick emphasizes the importance of continuous learning: the world is changing so quickly that we cannot rely solely on our university training to keep abreast. 
The topic of robotic process automation was missing from the course, Patrick thinks. He believes that psychology and ethics, topics discussed in the first module, are relevant for all compliance practitioners. He comments, “We’re not only here to identify the bad employees but furthermore to protect the good employees, which includes protecting them against themselves…” 
Yan Tougas
Organizations using and/or creating AI must create their own set of governing values and principles from the outset, Yan points out. Two of those values should be transparency and agency. “If we are going to use AI to make some critical decisions about people’s welfare,” Yan says, “…we need to create room in the process for a human to make a final decision.”  He points out that the pressure to rush to market is one reason companies do not create their own values and principles around AI. “We need to be extra careful and make sure that we don’t let this pressure to get to market and this pressure to adopt AI blind us from the homework we need to do up front,” he comments.
Yan appreciates the Operational Readiness document in Module Three, which he describes as a practical tool compliance practitioners can use. On the other hand, he thinks that the user interface and the quizzes at the end of each module could be improved.
Sean Friedlin
Sean finds it refreshing that a large corporation such as Microsoft has partnered with Seattle University to create free training for the public good. He hopes that more companies would embrace these types of partnerships in the spirit of corporate social responsibility. Sean sees this as the emergence of a deeper commitment to ethics as AI develops. He notes with interest that the Vatican has joined in this conversation. 
Sean poses two interesting questions:

  1. What impact will COVID-19 have on AI advancement? 
  2. What makes a good online learning experience?

Having the subject matter experts as narrators and anchors throughout the course establishes their credibility; Sean views this as a pattern other course creators should follow. He finds the course content too text-heavy, however, and the UI design mobile unfriendly.
Tom Fox
The exercise emphasized for Tom the need for companies to start with ethical values and accountability for the entire organization. You cannot simply ask those involved with these cutting-edge questions to be the sole corporate repository of ethical and moral values, he argues. Put these values in place now, enshrine them throughout your organization so when the
business opportunity or a crisis arrives, you would already have the framework in place to make a decision aligned with your company values. 
The course is a good reminder to consider governance and structure as part of your compliance regime, Tom comments. It was a positive experience overall; however, it may not work for ongoing communications or training due to time.
Resources
Seattle University course- AI Ethics for Business
Rome Call for AI Ethics
Rome Call
Vatican joins IBM, Microsoft to call for facial recognition regulation

Categories
Daily Compliance News

April 7, 2020-the Scared to Death edition


In today’s edition of Daily Compliance News:

  • Former Fox Sports execs indicted for bribery violations. (Reuters)
  • Whining Acting Navy Sec attacks former Captain of Theodore Roosevelt. (NYT)
  • BoJo moved to intensive care. (WSJ)
  • Companies now afraid of arbitration by customers. (NYT)
Categories
The Affiliated Monitors Expert Podcast

Rod Grandon on Suspension and Debarment

This podcast series features Rodney A. Grandon, Managing Director at Affiliated Monitors, Inc., with a five-part series on Suspension and Debarment. During a 27-year career with the US military and government, Grandon served as the Air Force’s Suspending and Debarring Official as well as a wide variety of other functions which gives him subject matter expertise into issues surrounding this topic.
This series includes:
Introduction to Suspension and Debarment
Suspension and debarment are not civil or criminal matters resulting in a penalty being imposed on a particular party. Suspension and Debarment is an administrative matter. In a civil or criminal matter, the Department of Justice takes the lead in those actions which are contested litigated matters, with civil and criminal rules around evidence and procedure.  While suspension and debarment have evidentiary and procedural considerations, they are much more informal. Grandon noted the rules basically say they should be as informal as it as is practicable under the circumstances.

What is the difference between Suspension and Debarment?
Interestingly many of the benefits of a company in working with a monitor come from A suspension is used when there is an immediate need. It is a temporary measure; there is a twelve-month limit, which can be extended for another six months. A debarment is for a specific term but is generally not longer than three years.  Grandon emphasized the temporary nature of a suspension while debarment is seen as more permanent, even with the limit of the term.

What is the convergence between Suspension & Debarment and the FCPA?
Debarment may be based on actions so serious or compelling that it affects the present responsibility of the contractor or subcontractor. Grandon noted, “there is some fairly broad language as to what the basis for a suspension and debarment can be.” This means that in the context of anti-corruption laws, it can be the basis of a suspension or debarment, further meaning that under the FCPA, the conduct to incur a violation does not require actual bribery or corruption.

What is a present responsibility determination?
Present responsibility has become sort of a buzzword. It’s the underlying basis for action involving excluding a party from the federal marketplace through suspension or department.” Unfortunately, the phrase itself is not defined anywhere in the regulatory structure. This means its determination comes “down to the discretion of the federal officials who have been empowered to exercise the suspension and debarment authority.

Remedies and Compliance in Suspension and Debarment
Grandon said that the defense community largely led the process of putting together an effective ethics and compliance programs. “There were defense industry initiatives where the contractors get together and talk about what it takes to promote ethics and compliance and the defense industry been doing this for years.” This led Grandon to find, that non-governmental commercial industries were not as far along as defense industries.

For more information on Affiliated Monitors, visit their website at www.affiliatedmonitors.com.

Categories
The Ethics Experts

The Ethics Experts: Bonus Episode 004 – COVID-19 Edition with Mark Alexander


On this special bonus episode of The Ethics Experts, we speak with Mark Alexander about how compliance is key during the COVID19 pandemic to identify risks currently and in the future.

Check out more episodes, and don’t forget to subscribe on your favorite podcast platform!

Categories
31 Days to More Effective Compliance Programs

Designing a process for continuous monitoring


Most CCOs and compliance practitioners understand the need for continuous monitoring. Whether it be as a part of your overall monitoring of third-parties, employees, or to test the overall effectiveness of internal controls and compliance, continuous monitoring is clearly a part of a best practices compliance program. Further, while most compliance practitioners are aware of the tools which can be applied for continuous monitoring, they may not be as aware of how to engage in the process. Put another way, how do you develop a methodology for building a continuous controls monitoring process that yields sustainable, repeatable results?
Joe Oringel, co-founder and principal at Visual Risk IQ uses a five-step process. The steps are: 1) brainstorm, 2) acquire and map data, 3) write queries, 4) analyze and report, and 5) refine and sustain. If you can establish your extraction and mapping rules, using common data models within your organization, you can use them to generate risk and performance checks going forward. Finally, through thoughtful use of continuous monitoring parameters, you can create metrics that you can internally benchmark your compliance regime against over time to show to any regulators who might come knocking.
 Three key takeaways: 

  1. Create a process to monitor your controls.
  2. Use a compliance SME to work with your internal controls specialist to develop queries from the compliance perspective.
  3. Finally, do not forget the feedback loop nature of the process by integrating your results going forward.
Categories
Why a Duck

COVID-19 and Compliance: Part 1-Business Ethics Matters Even More Now


In this five-part series, Mike Volkov and Tom Fox consider COVID-19 from a variety of angles and perspectives; from the Board of Directors, the CCO, the ethical company, new laws and regulations, crisis management and leadership. In this first episode, we consider the why compliance and ethics are even more important during coronavirus health crisis and what it may all mean going forward. Highlights from the podcast include:

  1. Businesses must lead from the top.
  2. Ethical decision making must be the guidepost for all decisions.
  3. Who are all the stakeholders which need to be considered?
  4. There are a variety of stakeholders which must be considered but health and safety should be the Number 1 consideration.
  5. Should employees be the No. 1 consideration?
  6. How will Gen Z view your company’s actions?

Resources
Mike Volkov-Ethical Business Decisions in the COVID-19 Crisis
Tom Fox–Company Responses

Categories
FCPA Compliance Report

Karen Woody on Profit Disgorgement at the Supreme Court


In the Episode, I visit with Karen Woody, Assistant Professor of Law. Her areas of expertise include, Securities Law, Financial Regulation and White-Collar Crime. We visit about the recent Supreme Court argument in the Lui case and how it might (or might not) impact the SEC’s ability to seek profit disgorgement for fraudsters.
Some of the highlights include:

  • What is profit disgorgement? Is it different from restitution?
  • How has the SEC used this doctrine in the past?
  • How did the Kokesh decision open the way for the Lui appeal?
  • How does the Lui case attack this doctrine?
  • What question was before the Supreme Court?
  • What were the parties arguments?
  • From the Court’s questioning, what can be gleaned?
  • Will the Court really allow convicted fraudsters to keep their ill-gotten gains by doing away with profit disgorgement?
Categories
Daily Compliance News

April 6, 2020-the Relieved of Command edition


In today’s edition of Daily Compliance News:

  • White House lawyer nominated to be CAREs IG. (WaPlo)
  • Roosevelt Captain respectfully asked for help, was fired for his efforts. (WSJ)
  • Zoom CEO admits ‘I really messed up’ over security flaws. (WSJ)
  • Veneto leads the way in Italy. (FT)
Categories
The Affiliated Monitors Expert Podcast

On The Affiliated Monitors Expert Podcast-Don Stern on Working with Monitors

This podcast series features Don Stern, Managing Director, Corporate Monitors and Consulting Services at Affiliated Monitors, Inc. on working with monitors. At the end of this series you will have a much broader appreciation on the benefits of an independent monitor, how monitors work and how the different types of monitorships can benefit a wide variety of businesses, transactions and business relationships.
This series includes:
Fears and Concerns in Working with Monitors
There can be a wide variety of concerns for those considering or being required to work with a monitor, both from the corporate perspective and individual employees. From the corporate perspective, the concerns can include the costs of a monitorship and that impact on the bottom line; opening up books the books to an outsider and interference with business operations. These are acerbated by a fear the monitor does not understand the business of the organization or even how business in done in the real world.

Impact Monitors Can Have for an Organization
Interestingly many of the benefits of a company in working with a monitor come from answering the employees fears and concerns. Many employees are intimidated by attorneys and some even fell guilty about themselves and their work even though they have done nothing wrong. Often employees do not feel like them can trust the company, particularly if the company does not employ the Fair Process Doctrine or institutional justice as a core value of the organization.

How Monitors Do Their Jobs
Stern explained that there are variety of tasks and roles a monitor uses when engaging in an independent monitorship. A monitor should understand type of approaches they will take to make an organization more compliant, starting with understanding the work plan. Many times, the monitor must push the organization along by getting buy-in and building consensus. Finally, there should be an awareness of helping the company being compliant in the future.

Regulators Using Monitors
At its most basic level, an independent monitor is a way for the government to extend its reach. Both in terms of lengthening out the time that you have true government oversight and in terms through many of the techniques we discussed earlier:  focus group meetings, review documents, talking senior and middle management. It is a very cost-effective way for federal, state and even local governments to extend out their reach. This cost-effectiveness is driven home by that fact that the cost is not borne by the governmental entity or the regulators. The cost is borne by the entity involved.

Attorneys Using Monitors
Using an independent monitor in a pro-active manner which demonstrates how serious the company is about compliance. It can also be a way to demonstrate any illegal conduct may simply have been an outlier and does not reflect the values, culture and the way the company generally does business. This can provide quite a positive story to present to prosecutors, particularly under the new FCPA Corporate Enforcement Policy.

For more information on Affiliated Monitors, visit their website at www.affiliatedmonitors.com.

Categories
Sunday Book Review

April 5, 2020, the Music to Brighten Your Day edition


In today’s edition of Sunday Book Review: