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31 Days to More Effective Compliance Programs

One Month to More Effective Reporting and Investigations – Investigative Challenges

What are some of the top challenges you may face during an investigation? Beyond the basics, a company must consider the intake process as a starting point, which Jonathan Marks noted is one of the biggest challenges. Rather surprisingly, he noted there are still companies without a hotline or anonymous reporting system, stating “We still see organizations whereby there is no formal ethics hotline except for the fact that they might send an email to some member of management or some member of the Board.”
Planning your investigation, having the right team members involved, and meeting the challenges which inevitably arise during an investigation can be difficult. However, beginning with the DOJ’s 2015 Yates Memo, the 2016 FCPA Pilot Program, and the 2017 and 2019 versions of Evaluation of Corporate Compliance Programs, together with the 2020 Update, 2023 ECCP, and FCPA Corporate Enforcement Policy, the pressure on every CCO and company to get an investigation done quickly, efficiently and, most importantly, right is even greater now. Marks has laid out a concrete way for you to think through how to plan an investigation, staff it correctly, and meet the inevitable challenges.

Three key takeaways:

  1. The intake process may seem the most straightforward but many companies drop the ball at this initial step.
  2. You must never retaliate against employees who come forward in good faith.
  3. Always think several steps ahead.
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31 Days to More Effective Compliance Programs

One Month to More Effective Reporting and Investigations -The Investigative Team

Since 2015, DOJ has put even more pressure on every CCO, compliance practitioner, and indeed company, to get an investigation done quickly, efficiently, and, most importantly, right. This is even more true after the U.S. Supreme Court’s decisions in Digital Realty Trust v. Somers, which limited whistleblower protection and benefits to only those whistleblowers who go to the SEC, rather than initially report internally. What do all these documents tell who should be on your investigation team?

As data collection, retention and preservation are critical elements of any significant internal investigation you will need to have the involvement of your IT function. IT can help put a litigation hold on documents that can help with the preservation of data in other areas of the organization. Further, they can assist with certain other aspects as more facts and circumstances are known.

HR is often an underutilized function for an internal investigator. HR can provide context about employees’ work history. There may be notes in HR areas as diverse as training and exit interviews. HR can also give the investigator some insight regarding the credibility of the individual who might be making the allegation. For example, are they good and trusted employees? How long have they been there? What’s their general demeanor? What’s been the feedback on that particular individual?

Forensic accountants should be a part of your investigation team. Such a skilled set team member can bring an investigative mind that drives them to answer questions about what occurred, when and how it happened, and who was involved. However, most lawyers do not understand how forensic accounting is performed and how they can assist your compliance investigation going forward.

Obviously, the GC would be involved to help protect the attorney-client privilege if for no other reason. Further, an investigation needs to have compliance involved, to understand what compliance program was in place at the time of the incident in question, what procedures submission had, and understand if this truly was a gap in the compliance function or maybe there was an area within the compliance function that was not operating as prescribed, or maybe it was a little bit weak.

 Three key takeaways:

1. HR plays a key but often underused role in internal investigations.

2. The Board of Directors and senior management have different roles.

3. Use your legal department to protect the privilege.

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FCPA Compliance Report

FCPA Compliance Report – Maria D’Avanzo on the Intersection of AI, ChatGPT and Compliance

Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. In the latest episode of FCPA Compliance Report, Maria D’Avanzo from Traliant returns to discuss the intersection of AI, ChatGPT, and compliance. The recent Federal Trade Commission investigation into OpenAI serves as a reminder of the importance of staying up to date on the latest developments in the field of AI technology and the potential implications of such developments. With AI and Chat GPT being powerful tools that can automate processes and generate content, organizations must implement AI Policies and Training to ensure these technologies’ safe and responsible use. AI Compliance Training is necessary to educate employees on the risks posed by AI technology and to guarantee that their compliance program is robust and effective. Organizations must create a comprehensive policy and provide ongoing training to ensure AI’s safe and responsible use.

Key Highlights:

  • AI and Chat GPT Consequences
  • AI Policy and Training
  • Creating a Policy
  • AI Compliance Training
  • FTC OpenAI Investigation

Resources:

Maria D’Avanzo on LinkedIn

Traliant

Tom Fox

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Compliance Into the Weeds

Compliance into the Weeds: BOA Enforcement Action for Bogus Accounts

The award-winning, Compliance into the Weeds is the only weekly podcast that takes a deep dive into a compliance-related topic, literally going into the weeds to explore a subject and looking for some hard-hitting insights on sanctions compliance. Look no further than Compliance into the Weeds! In this episode, Tom and Matt take up the recent CFTC enforcement action involving Bank of America.

In yet another reminder of the importance of ethical practices within the banking industry, Bank of America recently faced civil charges for misconduct, including a junk fees scheme and opening credit cards for customers without their authorization. This follows in the footsteps of similar misconduct from Wells Fargo in the mid-2010s, which resulted in a hefty $185 million fine. To address the issue, Bank of America has agreed to discontinue its flawed incentive program and develop a compliance plan within 90 days. Banks must remain vigilant in their compliance efforts, capture customer consent and documentation, and have data analytics capabilities, or risk similar fines. Furthermore, this penalty emphasizes the need for banks to keep their practices updated with regulations.

 Key Highlights 

·      Facts of enforcement action

·      BOA penalty

·      BOA remediation

·      Comparisons to Wells Fargo

·      Banks behaving badly

 Resources:

Matt Kelly

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Blog Post in Radical Compliance

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31 Days to More Effective Compliance Programs

One Month to Better Reporting and Investigations – Selection of Investigative Counsel

Dan Dunne, in a Compliance and Ethics Professional article, entitled “Foxes and henhouses: The importance of independent counsel”, discussed what he termed a “critical element” in any investigation, which he denominated as “fair and objective evaluation.” Dunne wrote that a key component of this fair and objective evaluation is the Who question: who should supervise the investigation and who should handle the study? Dunne’s clear conclusion is that independent counsel should handle any serious investigation.

There are three reasons for a company to retain independent counsel for internal investigations of severe whistleblower complaints. First, André Agassi was right, perception is reality. Secondly, if regular outside counsel investigates their own prior legal work or legal advice, a very large and potentially messy number of loyalty and privilege issues can arise in the internal investigation. The third reason is the relationship of the regular outside counsel or law firm with regulatory authorities. If a company’s regular outside counsel performs the internal investigation and the results turn out favorably for the company, the regulators may ask if the investigation was a whitewash or at the very least, less than robust. If the SEC or DOJ cannot rely on a company’s own internal investigation, it may perform the investigation all over again with its own personnel. Further, these regulators may believe that the company, and its law firm, have engaged in a cover-up. This is certainly not the way to buy credibility.
Three key takeaways:

  1. Serious allegations demand a serious response, with seriously good lawyers leading the investigation.
  2. Credibility is the biggest thing that any person or company brings to the table when sitting across from the DOJ or SEC.
  3. The use of regular corporate counsel can negatively impact your investigation because of the issues of loyalty and privilege.

For more information, check out The Compliance Handbook, 4th edition.

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Blog

Miranda Zolot on the Distributed Workforce

As companies across the globe look to expand their workforce, many are turning to a distributed remote work model. This model has become even more popular due to the pandemic, and many companies are now more comfortable with remote work. But with this shift to a distributed workforce comes new challenges, such as how to convey culture and expectations to a worker across the globe.

Tom Fox and Miranda Zolot of Oyster, an EOR company, recently discussed this issue. Tom, an employment lawyer, and Oyster’s first employee, believes that culture is key to worker engagement and worker engagement is key to efficiency and effectiveness. He suggests that companies should be purposeful about creating a culture in a distributed environment, and Oyster has a culture of radical transparency, encouraging employees to ask hard questions publicly of the leadership. Oyster is mission-driven, with people joining the company to be part of the change, and the company works with customers to help them share information internally and add social activities and affinity groups into their work environments.

Oyster is a platform that helps customers hire talent from around the world. Customers go through their normal process for hiring and then log onto the Oyster platform to put the information for the individual in the platform and press Go. Oyster provides a contract for the individual to sign, gets them signed up for benefits, and automates the process in the bulk of countries where they operate. The company also offers HR consulting to help customers understand what they’re looking for and suggest where they might look for that talent. Oyster’s website provides information on labor laws, salary ranges, and leaves required in different countries. In the US, employers have to deal with about 60 to 70 jurisdictions, while in the international arena, things are different with worker’s protections, works councils, guaranteed bonuses, and benefits.

Zolot, an employment lawyer who has worked in law firms and in-house for clients from the hospitality industry, steel manufacturers, potato chip manufacturers, and retail, as noted, is the General Counsel. She and Tom translate complex employment laws into a common language. Oyster’s mission is to bring meaningful work to people in different geographies, and the website offers resources for people looking for remote work and companies looking to hire remotely. Oyster Academy offers remote best practices and helps people present themselves to the market as ready for remote work, and the company also offers a misclassification analyzer, salary information, country guides, and open policies and handbooks. Oyster’s website and LinkedIn page have resources and information about remote work.

Cross-border hiring is becoming more popular due to market forces. Companies are looking for ways to hire workers at a lower cost than in the US or UK, and workers are excited to work for a higher salary than they would make in their local market. With Oyster, companies can navigate country labor laws by providing information on law changes and benefits. This helps companies save money while still finding quality talent.

In conclusion, the current distributed model of remote work is becoming more popular, and companies need to be aware of the challenges that come with it. Tom and Miranda believe that culture is key to worker engagement, and companies should be purposeful about creating a culture in a distributed environment. Oyster offers resources to people looking for remote work and companies looking to hire remotely, and the company helps customers navigate country labor laws by providing information on law changes and benefits. With the help of Oyster, companies can find the right workers for their particular job in a compliant and cost-effective way.

For the compliance professional, the critical element will be conveying your corporate culture to those who may live and work in countries outside your home base of operations. Moreover, you must both write policies and procedures for such employees and then train and monitor their compliance with those said policies and procedures. The distributed workforce is here to stay. Are you ready now for it? If not, how, when, and where will you get ready? The clock is ticking.

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Adventures in Compliance

Adventures in Compliance – Lessons from A Case of Identity

Welcome to a review of all the Sherlock Holmes stories which are collected in the work, “The Adventures of Sherlock Holmes.” They appeared in the Strand Magazine from July 1891 to June 1892. Over the 12 episodes, I will be reviewing each story and mine them for leadership, compliance, and ethical lessons. “A Case of Identity” was published in the Strand Magazine in August 1891 and is the third story in the collection of “The Adventures of Sherlock Holmes”.

Summary

In this case, Mary Sutherland, a typist, approaches Holmes for help after her fiancé, Mr. Hosmer Angel, mysteriously disappears on the day they were to be married. Holmes agrees to take the case. Sutherland gives Holmes a few letters written by Angel, and Holmes quickly observes that they were written on a typewriter, odd for a personal letter. Also, the writing style was similar to the letters of her stepfather, James Windibank.

As Holmes investigates, he deduces that Hosmer Angel does not exist and is, in fact, an alternate identity created by Mary’s stepfather, James Windibank. The motive for this strange charade was financial. Mary’s stepfather didn’t want to lose the income he gained from her, as her late mother left her a significant annual income which would be redirected upon her marriage.

The stepfather, who was young enough to pass as a man of Mary’s age, concocted the alternate identity to court Mary and then conveniently disappear to maintain control over Mary’s income. Holmes, however, decides not to reveal the truth to Mary to save her from further heartbreak. He suggests that Angel was a scoundrel who did not deserve her, leaving her to hope that Angel might return one day.

Compliance Lessons

1.         Empathy: Holmes was able to solve the case of identity by putting himself in the shoes of the victim and understanding her perspective. Leaders should also have empathy and be able to understand the perspectives of their colleagues, employees, or customers.

2.         Observation: Holmes used his powers of observation to gather information and uncover the truth behind the case of identity. Leaders should also be observant and pay attention to the details, as they can provide valuable insights.

3.         Problem-solving skills: Holmes used his problem-solving skills to solve the case and bring justice to the victim. Leaders should also be effective problem-solvers and should be able to find creative solutions to challenges.

4.         Communication skills: Holmes communicated effectively with the victim and the other characters in the story, and he was able to get the information he needed to solve the case. Leaders should also have strong communication skills, as they are crucial for building relationships and achieving success.

5.         Respect for the law: Throughout the story, Holmes showed respect for the law and acted within the bounds of the legal system. Leaders should also respect the law and act ethically, as they set an example for others and maintain the integrity of their organization.

Resources

The New Annotated Sherlock Holmes

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31 Days to More Effective Compliance Programs

One Month to Better Reporting and Investigations – Preparing for the Investigation

Under Part 1, Section D. Confidential Reporting Structure and Investigation Process stated in part, Properly Scoped Investigation by Qualified Personnel –What steps does the company take to ensure investigations are independent, objective, appropriately conducted, and properly documented? How does the company determine who should conduct research, and who makes that determination? These questions were presaged by the DOJ’s 2015 Yates Memo and the 2016 FCPA Pilot Program. The pressure on every CCO and company to get an investigation done quickly, efficiently and, most importantly, right is even greater now.
Jonathan Marks began by cautioning that when considering any well-run internal investigation, a CCO must be cognizant of the strictures laid out in the Evaluation. It all begins with who in-house is looking at the complaint and does the CCO, compliance practitioner, or legal team have the skills and capabilities to handle the matter which has arisen. Obviously, if there are esoteric accounting issues or significant internal control workarounds and overrides, a CCO may not have the skills to really understand all the issues. Similarly, if the matter is a global FCPA or equivalent bribery and corruption matter, Marks related, these “come in different flavors, and because they come in different flavors you may not have the skills or capabilities to do an investigation that would take place in say Brazil or Russia or China or India.”

Three key takeaways:

  1. Always remember your ultimate audience may be the government.
  2. You must understand both the business environment and extended business enterprise.
  3. Communication and collaboration in any investigation are critical so you should begin early and continue to do so throughout the investigation.
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10 For 10

10 For 10: Top Compliance Stories For the Week Ending July 15, 2023

Welcome to 10 For 10, the podcast which brings you the week’s Top 10 compliance stories in one podcast each week. Tom Fox, the Voice of Compliance brings to you, the compliance professional, the compliance stories you need to be aware of to end your busy week. Sit back, and in 10 minutes hear about the stories every compliance professional should be aware of from the prior week. Every Saturday, 10 For 10 highlights the most important news, insights, and analysis for the compliance professional, all curated by the Voice of Compliance, Tom Fox. Get your weekly filling of compliance stories with 10 for 10, a podcast produced by the Compliance Podcast Network.

·       EU-US agree on data sharing pact. (NYT)

·       Max Schrems slams back, vows legal challenge.  (Reuters)

·       Labor Party to back global ABC court. (The Guardian)

·       Chinese ABC probe moves to advanced stage.  (FT)

·       Did a sheriff’s corruption lead to a mass shooting? (Houston Chronicle)

·       Is your company investing in China?  (NYT)

·       Alleged fraudster said customers devised the fraud. (FT)

·       UK AML regime ‘not fit for purpose’.  (FT)

·       BOA has its own fake accounts scandal. (Radical Compliance)

·       Merrill Lynch to pay $12MM fine for failure to report.  (WSJ)

You can check out the Daily Compliance News for four curated compliance and ethics related stories each day, here.

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Blog

Mastering ChatGPT: Business Uses

Join us as we dive into the world of ChatGPT and discover how this powerful tool can revolutionize your business. Today we conclude our five-part blog post series on Mastering ChatGPT. In today’s final blog post, we look at how you can incorporate ChatGPT into various business uses for any organization. As always, I was joined in this exploration by Larry Roberts, CEO of Red Hat Media.

The transformative power of artificial intelligence tools in business processes is an unfolding narrative that every professional should be aware of. These tools, taking center stage in customer service and decision-making processes, are poised to shape the future of business operations. Businesses can offer superior customer service while making data-driven decisions by using AI for things as varied as content generation to data analytics. The result is a significant leap in customer satisfaction and a more nimble operational procedure.

Chat GPT and SEO Content Creation

In the digital era, Search Engine Optimization (SEO) is crucial in enhancing businesses’ online visibility. AI, like Chat GPT, data analysis, and content creation, could improve a company’s SEO strategy, increasing discoverability and driving more organic traffic to their platforms.  Larry’s insight into data analytics and decision-making and Chat GPT provided a new perspective on SEO content creation. He recognized the tool’s potential to analyze content and aid in data analytics through its API, although he cautioned that it may not be the most effective out-of-the-box solution for analytics.

Chat GPT and SEO Content Creation

In the digital era, Search Engine Optimization (SEO) is crucial in enhancing businesses’ online visibility. AI, like Chat GPT, data analysis, and content creation, could improve a company’s SEO strategy, increasing discoverability and driving more organic traffic to their platforms.  Larry’s insight into data analytics and decision-making and Chat GPT provided a new perspective on SEO content creation. He recognized the tool’s potential to analyze content and aid in data analytics through its API, although he cautioned that it may not be the most effective out-of-the-box solution for analytics.

Understand and Define Customer Needs

Who in a corporation is your customer? If you are in the compliance function, it is the employees and other stakeholders. This means identifying and defining customer needs is a fundamental step in tailoring your operations to meet your audience’s expectations. A deep understanding of what your customers need and prefer enables you to build products or services that resonate with them. Not only will this step increase customer satisfaction, but it also paves the way for more efficient and effective business operations. The action involves conducting meticulous research and surveys to collect invaluable data, allowing businesses to step into their customers’ shoes and view their operations from a customer’s perspective.  Just change the word customer to employee.

Customer Service

Sticking with the insight that your compliance customers are your employees, in the world we live in today, consistent advancement in technology brings about powerful tools businesses can use to enhance their operations. One such tool is the application of artificial intelligence (AI) in customer service. AI has presented a massive potential for improving how businesses interact with their clients, making processes faster, better, and more efficient. One critical aspect is deploying AI tools like ChatGPT to deliver efficient customer service interactions. These tools can be incorporated into platforms to provide automatic responses to customer inquiries promptly and accurately.

Chat GPT in Email Communication

Email communication remains a vital element of business operations. AI tools like ChatGPT can enhance this aspect of the business by automating tasks such as summarizing lengthy emails or drafting responses. AI can significantly save time and increase overall productivity for businesses.  From his professional experiences, Larry commended how ChatGPT could be utilized in email communication. The tool’s ability to summarize extensive emails and draft others based on inputs underscores its potential to streamline professional communication processes.

But remember, simply implementing ChatGPT does not guarantee success—it requires perseverance, adaptability, and continuous improvement. By staying committed to refining and optimizing the use of ChatGPT, businesses can unlock their full potential and achieve remarkable results. So, dive in, explore the possibilities, and witness the transformative impact ChatGPT can have on your business.

In an increasingly digital age, leveraging AI technology to enhance customer service and improve decision-making is a crucial advantage for business professionals. Central to this is understanding and defining customer needs, allowing personalized products and services. Further, using AI tools like ChatGPT for customer service can provide prompt and efficient responses to customer inquiries. Coupled with machine learning for content generation, this can significantly boost a business’s marketing efforts. Additionally, ChatGPT can aid in data analytics, underscoring the importance of data in driving business decisions. With this knowledge, you can embark on a journey toward business transformation, leading to higher customer satisfaction and operational efficiency.

For more information on Larry Roberts, check out Red Hat Media.