Tag: Data Analytics

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Data Driven Compliance

Data Driven Compliance: The Journeys of Albemarle and ABB to Data – Driven Compliance

Are you struggling to keep up with the ever-changing compliance programs in your business? Look no further than the award-winning Data-Driven Compliance podcast, hosted by Tom Fox. This podcast features an in-depth conversation around the uses of data and data analytics in compliance programs. Data-Driven Compliance is back with another exciting episode. Today, I co-hosted with Vince Walden, CEO of KonaAI, to visit with our guests Andrew McBride, Chief Risk Officer at Albemarle, and Tapan Debnath, Head of Integrity, Regulatory Affairs, & Data Privacy—Process Automation at ABB, on their respective companies’ journeys to data-driven compliance.

We consider the importance of integrating due diligence systems with business conduct and anticipate 2024 to be a breakthrough year for data-driven compliance. McBride, recognized by the Department of Justice for his work in data-driven compliance, believes in the critical role of data in identifying and responding to risks, testing the effectiveness of compliance programs, and reporting to internal stakeholders. Debnath stressed the need for visibility and alignment with senior business stakeholders during investigations and the use of data analytics platforms to measure integrity and key performance indicators. Join Tom Fox, Vince Walden, Andrew McBride, and Tapan Debnath on this episode of the Data Driven Compliance podcast as they delve deeper into the challenges and importance of data-driven ethics and compliance programs.

Key Highlights:

  • Using data analytics to assess program effectiveness
  • Proactive risk management through continuous monitoring
  • Leveraging due diligence for proactive risk management
  • Data transparency and collaboration for compliance success
  • Transitioning from external dependencies to internal capabilities

Resources:

Vince Walden on LinkedIn

KonaAI

Tom Fox 

Connect with me on the following sites:

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Facebook

YouTube

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LinkedIn

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Compliance Program Use of Data Analytics

Matt Galvin, Counsel, Compliance & Data Analytics at the DOJ and one of the experts leading the DOJ’s data analytics initiative, highlighted in another talk, the proactive use of data to generate cases related to the FCPA and emphasized that this is just the beginning. The DOJ expects companies to adopt a similar data-driven approach to compliance. In her speech, Argentieri speech where she stated, “just as we are upping our game when it comes to data analytics, we expect companies to do the same.” This expectation extends beyond simply tracking trainings, policies, and investigations. The DOJ’s focus is on monitoring third parties throughout the lifespan of the relationship, not just during the onboarding process.

This means that  while due diligence and background checks are essential, the real risk of fraud occurs during the actual business transactions with third parties. Companies need to go beyond initial checks and continuously monitor high-risk vendors, contract terms, and other relevant data sources. By mapping risks to data sources and implementing effective tests, companies can identify and prioritize risky transactions. The increasing accessibility and cost-effectiveness of data analytics have made it a viable option for companies of all sizes. It can help companies demonstrate effective compliance programs, uncover hidden financial irregularities, and improve overall efficiency. The importance of continuous data analysis in compliance programs was highlighted by the Bank of America CFPB enforcement action.

However, implementing a data-driven compliance program comes with its own set of challenges. There is still confusion among the compliance community regarding what data analytics entails and how it should be applied. Data-analytics should be seen as a process-oriented approach rather than treating it as a one-time project. Data analytics should be integrated into the compliance program as a continuous business process, similar to third-party due diligence.

The Bank of America CFPB enforcement action case serves as a reminder of the importance of the use of data analytics in corporate compliance. Bank of America had the necessary data and tools to build an analytics program, but they failed to effectively utilize it, leading to compliance issues. This case highlights the need for companies to not only have data analytics capabilities but also to ensure they are properly implemented and maintained.

While data analytics can be a powerful tool for corporate compliance, there are challenges associated with its use. Companies must navigate the tradeoffs involved in balancing different factors, such as the level of sophistication required, resource allocation, and the potential risks of self-disclosure. Additionally, companies must consider the potential criticism they may face if they fail to effectively utilize their analytics tools in the event of a major compliance violation.

The Argentieri speech highlighted the DOJ’s (and SEC’s) increasing focus on data analytics for corporate compliance highlights the importance of this tool in identifying and addressing corporate misconduct. Companies, especially larger ones, are expected to enhance their data analytics capabilities and may face increased pressure for voluntary self-disclosure. However, companies must also navigate the challenges and tradeoffs associated with data analytics to ensure effective compliance and mitigate risks.

The DOJ’s increasing use of data analytics for proactive enforcement has far-reaching implications. Companies must recognize the importance of adopting a data-driven approach to compliance and invest in the necessary resources and technology. By doing so, they can not only meet the DOJ’s expectations but also improve the effectiveness of their compliance programs and mitigate the risk of fraud.

The DOJ’s increasing use of data analytics for proactive enforcement signifies a significant shift in their approach to combating white-collar crime. Companies must embrace this data-driven approach to compliance, continuously monitor high-risk transactions, and invest in the necessary resources and technology. By doing so, they can demonstrate effective compliance programs, uncover hidden financial irregularities, and improve overall efficiency.

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31 Days to More Effective Compliance Programs

31 Days to a More Effective Compliance Program: Day 7 – Compliance Program Use of Data Analytics

Matt Galvin, Counsel, Compliance & Data Analytics at the DOJ and one of the experts leading the DOJ’s data analytics initiative, highlighted in another talk the proactive use of data to generate cases related to the FCPA and emphasized that this is just the beginning. The DOJ expects companies to adopt a similar data-driven approach to compliance. In her speech, Argentieri stated, “Just as we are upping our game when it comes to data analytics, we expect companies to do the same.” This expectation extends beyond simply tracking trainings, policies, and investigations. The DOJ’s focus is on monitoring third parties throughout the lifespan of the relationship, not just during the onboarding process.

The DOJ’s increasing use of data analytics for proactive enforcement signifies a significant shift in their approach to combating white-collar crime. Companies must embrace this data-driven approach to compliance, continuously monitor high-risk transactions, and invest in the necessary resources and technology. By doing so, they can demonstrate effective compliance programs, uncover hidden financial irregularities, and improve overall efficiency.

Three key takeaways:

1. This also means that data analytics in the compliance function has moved from cutting edge to best practice. It soon may simply mean table stakes for compliance.

2. The DOJ is seeking to incentivize an acquiring company to timely disclose misconduct uncovered during the M&A process.

3. The DOJ has made it clear that under this new Mergers & Acquisitions Safe Harbor Policy, organizations that do not perform effective due diligence or self-disclose misconduct at an acquired entity will be subject to full successor liability.

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31 Days to More Effective Compliance Programs

31 Days to a More Effective Compliance Program: Day 1 – What 2023 Brought to Compliance

2023 was a very significant year for every compliance practitioner and compliance program. While there was a paucity of corporate enforcement actions under the Foreign Corrupt Practices Act (FCPA), there were significant announcements from the Department of Justice (DOJ) that directly impacted compliance professionals and compliance programs.

The first came in January, and it was an update to the Evaluation of Corporate Compliance Programs (2023 ECCP). Next, we heard speeches about the increased focus on clawbacks and other areas of consequence management. In October, Deputy Attorney General (DAG) Lisa Monaco introduced a new Mergers & Acquisitions Safe Harbor Policy in October. Finally, in late November, Acting Principal Deputy Assistant Attorney General Nicole M. Argentieri Delivered remarks at the 39th International Conference on the Foreign Corrupt Practices Act (FCPA) on the use of data analytics in a compliance program and DOJ expectations going forward.

The 2023 ECCP brought forward several new initiatives laid out in the 2020 Update to the Evaluation of Corporate Compliance Programs, including additions and deletions.

In October 2023, Deputy Attorney General Lisa Monaco announced a new policy regarding M&A. It is a Mergers & Acquisitions Safe Harbor policy that encourages companies to self-disclose criminal misconduct discovered by an acquiring company during the acquisition of a target company.

In November, Nicole Argentieri, Acting Assistant Attorney General for the Criminal Division, speaking at the ACI National FCPA, reported that the DOJ is stepping up its own use of data analytics to identify instances of corporate misconduct and will boost its cooperation with overseas law enforcement to bring more anti-corruption cases as well. The DOJ and SEC are increasingly focusing on data analytics for corporate compliance, signaling higher expectations for larger companies. Both agencies have successfully utilized data analytics in various areas, such as securities and healthcare fraud, and are actively improving their own capabilities in this field. She made several important points for all compliance professionals, which will be significant going forward into 2024 and beyond.

Three key takeaways:

1. 2023 was a key year for the DOJ’s evolution in its views on compliance programs.

2. Clawbacks, incentives, and consequence management have become more important.

3. The new DOJ safe harbor initiative for M&A raises many questions.

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What 2023 Brought to Compliance

2023 was a very significant year for every compliance practitioner and compliance program. While there was a paucity of corporate enforcement actions under the Foreign Corrupt Practices Act (FCPA), there were significant announcements from the Department of Justice (DOJ) which directly impact compliance professionals and compliance programs.

The first came in January and it was update to the Evaluation of Corporate Compliance Programs (2023 ECCP). Next we heard speeches about the increased focus on clawbacks and other areas of consequence management. In October, Deputy Attorney General (DAG) Lisa Monaco introduced a new Mergers & Acquisition Safe Harbor Policy in October. Finally, in late November Acting Principal Deputy Assistant Attorney General Nicole M. Argentieri Delivered remarksat the 39th International Conference on the Foreign Corrupt Practices Act (FCPA) on the use of data analytics in a compliance program and DOJ expectations going forward.

The 2023 ECCP brought forward several new initiatives laid out in the 2020 Update to the Evaluation of Corporate Compliance Programs, include additions and deletions. It also incorporated many of the concepts from the 2022 Monaco Memo. We begin with a review of the new incentives, both financial and non-financial; consequence management; messaging apps and provide a summary for the compliance professional.

In March there were two days of speeches from the DOJ which added to the compliance complexity for 2023 and beyond.  The speeches were made by Deputy Attorney General (DAG) Lisa Monaco (2023 Monaco Speech) and Assistant Attorney General Kenneth A. Polite, Jr. (Polite Speech) and they previewed a number of initiatives by the DOJ which every compliance professional needs to study in some detail. These new initiatives included: (1) The Criminal Division’s Pilot Program Regarding Compensation Incentives and Clawbacks; (2) Evaluation of Corporate Compliance Programs; and (3) Revised Memorandum on Selection of Monitors in Criminal Division Matters.

In October 2023, Deputy Attorney General Lisa Monaco announced a new policy regarding M&A. It is a Mergers & Acquisitions Safe Harbor policy that encourages companies to self-disclose criminal misconduct discovered by an acquiring company during the acquisition of a target company. Under the policy, the acquiring party will receive a presumption of criminal declination if it promptly and voluntarily discloses criminal misconduct, cooperates with any ensuing investigation, and engages in appropriate remediation, restitution and disgorgement.

The Safe Harbor policy is a clear continuation of the DOJ’s push for corporate voluntary self-disclosure. Monaco outlined efforts by DOJ to increase the benefits to companies that voluntary disclose corporate misconduct rather than those companies that decide not to disclose misconduct. The key for the acquirer company to  obtain the “carrot” DOJ is dangling and poses questions as to the “stick” the DOJ might wield if a self-disclosure does not achieve safe harbor, or more broadly, if an acquirer fails to identify criminal misconduct in the acquisition process, either pre or post-closing. This new Mergers & Acquisitions Safe Harbor Policy clearly demonstrates the DOJ’s interest is to avoid discouraging companies with strong compliance programs from acquiring companies with ineffective compliance programs and/or a history of misconduct. To the contrary, DOJ is seeking to incentivize an acquiring company to timely disclose misconduct uncovered during the M&A process.

In November, Nicole Argentieri, Acting Assistant Attorney General for the Criminal Division, speaking at the ACI National FCPA reported that the DOJ is stepping up its own use of data analytics to identify instances of corporate misconduct, and will boost its cooperation with overseas law enforcement to bring more anti-corruption cases as well. The DOJ and the Securities and Exchange Commission (SEC) are increasingly focusing on data analytics for corporate compliance, signaling higher expectations for larger companies. Both agencies have successfully utilized data analytics in various areas, such as securities and healthcare fraud, and are actively improving their own capabilities in this field. She made several important points for all compliance professionals which will be significant going forward into 2024 and beyond.

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program Through Data Analytics – Day 15: Data Analytics – Fuel that Powers Both Law and Compliance

Data analytics is revolutionizing the field of law and compliance, providing valuable insights and enhancing effectiveness. Data analytics is often referred to as the fuel that moves the compliance engine. It provides the necessary insights to make informed decisions and drive compliance programs effectively. By analyzing data, compliance professionals can gain a deeper understanding of their organization, such as the number of employees per region, which can inform communication strategies and training initiatives. Simply put, to become a better compliance professional, you must become a better businessperson.  This underscores the importance of understanding the business context and using data analytics as a tool to drive compliance efforts.

Data analytics is of utmost importance in the field of law and compliance. It provides valuable insights, enhances effectiveness, and drives compliance programs. Compliance professionals must strive to become better businesspeople and understand the role of data analytics as the fuel that moves the compliance engine. By leveraging data analytics, law firms like Thinkeen can offer innovative solutions for complex transactions. However, education and awareness about the importance of data analytics are still needed to fully harness its potential. Balancing tradeoffs and addressing challenges associated with data analytics are crucial for successful implementation. Ultimately, data analytics is a powerful tool that can transform the way laws and compliance are approached, leading to more effective and efficient outcomes.

Three key takeaways:

1. Data analytics is often referred to as the fuel that moves the compliance engine.

2. We need more education and awareness about the importance of understanding data so that you can extract the right information

3. Data analytics is a powerful tool that can transform the way laws and compliance are approached, leading to more effective and efficient outcomes.

For more information on KonaAI, click here.

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program Through Data Analytics: Day 14 – Continuous Converged Compliance

How can you integrate compliance, risk management, and your security framework? Igor Volovich, Vice President, Compliance Strategy at Qmulos, introduced the innovative concept to this discussion: Converged Continuous Compliance. This approach aims to reunite compliance, security, and risk management, which have historically operated independently.

One of the key requirements impacting this new approach is the need to bridge the gap between these functions from both a data and human perspective. These concepts serve as a translator, helping organizations navigate the complex landscape of compliance, security, and risk management. By speaking the language of these three functions, Converged Continuous Compliance brings them together and facilitates collaboration.

Corporate compliance needs to promote new approaches to compliance and risk management by challenging misconceptions, reuniting compliance, security, and risk management, emphasizing data governance oversight, and advocating for automation. These approaches aim to enhance efficiency, increase trust in compliance reports, and ultimately drive a greater return on investment. As organizations navigate the ever-evolving landscape of compliance, it is crucial to consider the impact of new approaches and strike a balance between different factors to achieve effective compliance and risk management.

Three key takeaways:

  1. The DOJ has stated that a chief compliance officer and a corporate compliance function must have visibility across all data sets in an organization. Converged Continuous Compliance aligns with this message.
  2. The bottom line is that we have accepted certain models of how compliance is done, what compliance means, what it delivers to the enterprise, and what it fails to deliver to the enterprise.
  3. It is crucial to consider the impact of new approaches and strike a balance between different factors to achieve effective compliance and risk management.

For more information on KonaAI, click here.

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The DOJ on the Need for Compliance Program Data Analytics

The Department of Justice (DOJ) is increasingly utilizing data analytics for proactive enforcement, signaling a significant shift in their approach to combating white-collar crime. This move reflects the recognition of data analytics as a crucial component of compliance programs, extending beyond historical reporting to transactional details and third-party interactions.

Recently, Acting Principal Deputy Assistant Attorney General Nicole M. Argentieri Delivered remarks at the 39th International Conference on the Foreign Corrupt Practices Act (FCPA). She stated, “the Criminal Division has long been an innovator in using data to enhance its investigations and prosecutions. I am proud to announce that we are taking that experience and expertise with data analysis and applying these tools to our FCPA investigations. Through investments in personnel, we have improved our ability to harness and analyze available data — both public and non-public — to identify potential wrongdoing involving foreign corruption. This approach has already generated successful FCPA investigations and prosecutions.” 

In this week’s episode of “Data Driven Compliance,” host Tom Fox and Vince Walden, discussed the importance of data analytics in the DOJ’s enforcement efforts was discussed. Matt Galvin, an expert leading the DOJ’s data analytics initiative, highlighted the proactive use of data to generate cases related to the FCPA and emphasized that this is just the beginning.

The DOJ expects companies to adopt a similar data-driven approach to compliance. Vince Walden, cited to the Argentieri speech where she stated, “just as we are upping our game when it comes to data analytics, we expect companies to do the same.” This expectation extends beyond simply tracking trainings, policies, and investigations. The DOJ’s focus is on monitoring third parties throughout the lifespan of the relationship, not just during the onboarding process.

Walden emphasized that while due diligence and background checks are essential, the real risk of fraud occurs during the actual business transactions with third parties. Therefore, companies need to go beyond initial checks and continuously monitor high-risk vendors, contract terms, and other relevant data sources. By mapping risks to data sources and implementing effective tests, companies can identify and prioritize risky transactions.

The increasing accessibility and cost-effectiveness of data analytics have made it a viable option for companies of all sizes. It can help companies demonstrate effective compliance programs, uncover hidden financial irregularities, and improve overall efficiency. The importance of continuous data analysis in compliance programs was highlighted by the Bank of America enforcement action by the Consumer Financial Protection Bureau (CFPB).

The DOJ’s use of data analytics is not limited to public data available from public companies. They are also leveraging private information, which could potentially include information obtained during investigations within specific industries. The DOJ has made significant investments in technology and resources to enhance their enforcement capabilities, taking inspiration from techniques used in the healthcare division to combat fraud.

However, implementing a data-driven compliance program comes with its own set of challenges. There is still confusion among the compliance community regarding what data analytics entails and how it should be applied. Walden stressed the need for a process-oriented approach rather than treating it as a one-time project. Data analytics should be integrated into the compliance program as a continuous business process, similar to third-party due diligence.

The DOJ’s increasing use of data analytics for proactive enforcement has far-reaching implications. Companies must recognize the importance of adopting a data-driven approach to compliance and invest in the necessary resources and technology. By doing so, they can not only meet the DOJ’s expectations but also improve the effectiveness of their compliance programs and mitigate the risk of fraud.

The DOJ’s increasing use of data analytics for proactive enforcement signifies a significant shift in their approach to combating white-collar crime. Companies must embrace this data-driven approach to compliance, continuously monitor high-risk transactions, and invest in the necessary resources and technology. By doing so, they can demonstrate effective compliance programs, uncover hidden financial irregularities, and improve overall efficiency.

For the full podcast episode, click here.

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Data Driven Compliance

Data Driven Compliance: Vince Walden on DOJ Remarks on Data-Driven Compliance

Are you struggling to keep up with the ever-changing compliance programs in your business? Look no further than the award-winning Data Driven Compliance podcast, hosted by Tom Fox. This podcast features an in-depth conversation around the uses of data and data analytics in compliance programs. Data-Driven Compliance is back with another exciting episode. Today, I visited with Vince Walden, CEO of KonaAI, on the recent remarks by the DOJ on data-driven analytics and compliance.

Vince Walden, an expert in data-driven compliance and fraud examination, has made significant strides in the industry as the CEO of Kona AI. His perspective on the Department of Justice’s (DOJ) increasing use of data analytics for proactive enforcement is that it marks a significant shift in the DOJ’s approach to enforcement. Walden notes that the DOJ is now actively using data analytics to proactively identify risks and cases, rather than relying solely on self-reporting or anomalies. He believes that data analytics is no longer considered cutting-edge but rather an expected part of a best practices compliance program. His extensive experience in white-collar crime and FCPA cases, as well as his participation in events such as the annual FCPA conference, have shaped this perspective. Join Tom Fox and Vince Walden as they delve deeper into this topic on the next episode of the Data Driven Compliance podcast. 

Resources:

Vince Walden on LinkedIn

KonaAI

Tom Fox 

Connect with me on the following sites:

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Facebook

YouTube

Twitter

LinkedIn

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Data-Driven Compliance – From Cutting Edge to Table Stakes

Compliance programs play a crucial role in ensuring that companies adhere to legal and ethical standards. In today’s digital age, where data is abundant and easily accessible, the importance of data-driven compliance programs cannot be overstated. This message was driven home very forcefully in a speech in November by Nicole Argentieri, acting assistant attorney general for the Criminal Division. She stated, “I’d like to now turn to our use of data. In the Criminal Division, we too are going above and beyond in our effort to combat white-collar crime. We are not just waiting for companies to self-report, for witnesses to come forward, or for anomalies to reveal themselves on a one-off basis. Let me be the first to tell you that we have proactively used data to generate FCPA cases, and we’ve only just gotten started.”

Anselmo Guevara, manager at VMware, has emphasized the need for companies to have a compliance program that provides visibility into their data at their fingertips. It is no longer sufficient to simply collect data and have someone review and reconcile it. Compliance professionals must actively analyze the data for trends, anomalies, and potential compliance risks. This proactive approach allows companies to identify and address compliance issues before they escalate.

But as with all new initiatives in compliance, one must emphasize the importance of starting a compliance journey with a formal risk assessment. Guevara suggested collaborating with various departments within the organization, such as accounts payable, receivables, internal audit, and business operations, to understand the risks associated with different processes. This collaborative effort helps identify compliance controls that need to be in place and ensures that the data required for analysis is available.

While low-hanging fruit may seem like an attractive starting point, Guevara cautioned against solely focusing on easy wins. He advised against presenting a weak business case to secure budget approval for compliance projects. Instead, he recommended conducting a comprehensive compliance risk assessment to prioritize areas that require immediate attention. This approach ensures that compliance efforts are aligned with your organization’s overall risk management strategy.

Data analytics play a crucial role in enhancing compliance efforts. By leveraging data analytics tools and techniques, compliance professionals can identify patterns, detect anomalies, and uncover potential compliance risks. However, Guevara highlighted the importance of validating suspicious transactions before raising concerns. It is essential to conduct due diligence and thoroughly investigate any potential issues to maintain financial integrity and credibility.

Data-driven compliance programs have moved from cutting edge and are now seen as best practices. Soon, they will simply be table stakes for companies to effectively manage compliance risks. By actively monitoring and analyzing data, companies can identify potential compliance issues, mitigate risks, and maintain their reputation and integrity. Collaboration between different departments and a formal risk assessment are key factors in establishing a robust compliance program. As technology continues to advance, the role of data analytics and AI in compliance monitoring is expected to become even more significant. It is crucial for compliance professionals to stay informed, continuously learn, and adapt to the evolving landscape of data-driven compliance.