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Daily Compliance News

Daily Compliance News: August 30, 2023 – The Matt Levine Explains NFTs 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.

  • Is Shein using forced labor? (Reuters)
  • A convicted agent sues Adidas. (Yahoo Sports)
  • Are NFTs securities? Matt Levin explains it all. (Bloomberg)
  • Start the day like Jamie Dimon. (FT)
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Hidden Traffic Podcast

New Human Trafficking and Child Labor Regulation in Canada with Sean Stephenson

The global landscape of human trafficking and forced labor is evolving, and no country is immune. In this episode of Hidden Traffic, Gwen Hassan sits down with Sean Stephenson, an accomplished attorney based in Toronto. Sean works for the multinational law firm Dentons, and has extensive experience in trade and investment. The growing concern for supply chain integrity forms a significant part of his work, with particular emphasis on human trafficking, forced labor, and child labor. Together, he and Gwen delve into the new Canadian law aimed at preventing human trafficking, forced labor, and child labor within supply chains. Their conversation also provides insights into the practices of various multinational companies and explores the need for coherence in the anti-slavery reporting and measures across different jurisdictions.

The new Canadian legislation is known as the Modern Slavery Act, but is officially titled “Fighting Against Forced Labor and Child Labor in Supply Chains Act.” This law is set to come into effect on January 1, 2024. Sean underscores the legislation’s scope, noting that it will apply to a wide range of entities and industries that produce, sell, or distribute goods in or import goods into Canada. Sean clarifies, “The legislation is roughly based on another piece of legislation we have in Canada that was adopted a few years ago called the Extractive Sector Transparency Act, that’s focused specifically on the extractive sector, …But it’s much broader in nature. It’s not specific to the extractive sector. It applies to essentially any business formation.”

 

Despite the legislation’s primarily reporting nature, Sean distinguishes it from an actual diligence standard. He emphasizes the need for convergence in anti-slavery laws globally, which calls for a balance between compliance and alignment in disclosure across jurisdictions. However, he points out some unique features of the Canadian Act, such as its focus on child labor and specific liabilities for companies and directors for false and misleading statements.

 

Both Gwen and Sean believe in the Act’s potential to drive meaningful change in business practices related to human trafficking, forced labor, and child labor. 

 

Sean sheds light on the operations and mandate of the Canadian Ombudsperson for Responsible Enterprise (CORE). CORE is an arm of the Canadian federal government, focusing on promoting the implementation of the UN and the OECD guidelines on multinational enterprises. The organization targets three specific areas: garment business, mining, and oil and gas. “Anyone can submit complaints to the CORE about business activities of Canadian businesses, either inside Canada or abroad”, Sean explains. He distinguishes CORE’s investigative powers, which are funded by the Canadian government, from those of a non-governmental organization. Gwen likens its investigative powers to those of a regulatory authority.

 

Sean points out that CORE cannot force document production but can accept and facilitate discussions around complaints. While CORE can’t directly impose penalties, they can recommend fines and referrals to law enforcement. Gwen highlights the potential reputational damage these investigations can pose for companies, and they both agree on the importance of proactive measures in mitigating these risks.

 

For companies seeking to comply with the CORE and other modern slavery regulations, Sean suggests starting with a thorough risk assessment, creating comprehensive supplier codes of conduct, and gradually building out compliance measures. He and Gwen emphasize the importance of proactive, transparent efforts in supply chain management, including the wider benefits beyond compliance, such as evaluating the overall health of suppliers. While enforcement in Canada has been less, businesses should still stay vigilant about international guidance to avoid potential issues.

 

Resources

Sean Stephenson on LinkedIn | Twitter

Dentons 

Canada’s Forced Labour and Child Labour Reporting Legislation: What You Need to Know  

The CORE of the matter: An overview of the Canadian Ombudsperson for Responsible Enterprise (CORE) and its relevance to Canadian businesses operating abroad

Categories
FCPA Compliance Report

FCPA Compliance Report – Virginia Newman on Enhancing UFLPA Compliance: Solutions for Forced Labor Prevention

Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. In the latest episode of FCPA Compliance Report, Tom Fox visits Virginia Newman from Miller & Chevalier, an expert on the Uyghur Forced Labor Prevention Act (UFLPA) and supply chain ESG work. Together, they discuss the UFLPA, its affirmative obligation on companies to comply with US import laws, and the burden of proof on businesses to prove their goods were not made using forced labor. Virginia shares valuable insight into the CBP’s enforcement efforts and how companies can exercise reasonable care to avoid having their goods detained. They also delve into trade compliance and third-party screening, predictive mapping, and the long-term changes companies must make to their compliance and sourcing programs. Thomas recommends Virginia as a source of knowledge on the subject because of her passion. Listen to this engaging and informative podcast to better understand the UFLPA and its impact on businesses.

Key Highlights:

  • Virginia’s background and UFLPA
  • US Law Prohibiting Import of Xinjiang-made Goods
  • US Customs’ Role in Enforcing UFLPA
  • CBP’s Forced Labor Technical Expo Solutions
  • Types of Companies for Supply Chain Mapping
  • Impact of a trade war on supply chain compliance

Notable Quotes:

“The US government had an import prohibition for any goods made in whole or in part with forced labor.

“The US import prohibition is one of the longstanding ones that has had the most effect on companies, but it wasn’t enforced too much until about 3 years ago.”

“If your goods are coming from Xinjiang, and you accept that they’re coming from Xinjiang, Then, really, the burden is on you to prove that they’re not made with any forced labor, which is an incredibly high burden and to our knowledge importers have not been trying meet it.”

“Customs put together this enforcement dashboard that contains all of these statistics on how they’ve been enforcing the UFLPA.”

Resources

Virginia Newman on LinkedIn

Miller & Chevalier

Tom Fox

Instagram

Facebook

YouTube

Twitter

LinkedIn

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Daily Compliance News

May 5, 2023 – The Corruption is a Cancer 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:

  • Doing business in China is getting much riskier. (NYT)
  • Canada passes anti-forced labor law. (WSJ)
  • Guilty verdict in NFT insider trading trial. (WSJ)
  • EU seeks to harmonize ABC laws. (EUObserver)
Categories
Coming Conflict with China

Coming Conflict with China: Part 2-Supply Chain Issues

In the short span of the 21st Century, the world’s two top powers, the United States and China have moved inexplicably toward 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 podcast series, Tom Fox and Brandon Daniels, CEO of Exiger, a leading global third-party and supply chain management software company, explore issues diverse as a 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 Part II, we discuss the issues in the Supply Chain, including issues of human rights, forced labor, and supply chain management in the Asia Pacific region.

Obviously, the issues around Uyghur forced labor in China are an important consideration for all American businesses with supply chains in China. While that issue focuses on human rights, it is also a wider world economic issue that requires a business solution. The key is to diversify the supply of goods, investing in other countries’ manufacturing capabilities to ensure that human rights abuses do not go unchecked.

Key Highlights:

1. What is the inextricable connection between human rights and economic policy when it comes to current geopolitical tensions with China?
2. How is the subjugation of Uyghurs in Xinjiang impacting the global economy?
3. What risks does reliance on China’s manufacturing pose for businesses, and how can companies diversify their supply chain to mitigate them?

Notable Quote

“It just takes investment. It takes time, but it’s an investment worth having because it provides us security in the potential and the ever more serious potential of a conflict with China.”

Resources

Exiger

Tom Fox

Connect with me on the following sites:

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YouTube

Twitter

LinkedIn

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

Categories
Daily Compliance News

December 29, 2022 – The How Big Tech Got it Wrong Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you four 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.

Stories we are following in today’s edition of Daily Compliance News:

  • EU corruption target denied bail. (Reuters)
  • 3 companies were barred from using forced labor. (WSJ)
  • How big tech got it wrong. (FT)
  • Novartis pays $245MM to settle an anti-trust case. (Reuters)
Categories
Hidden Traffic Podcast

Forced Labor and Fast Fashion with Mike McDonnell


 
Mike McDonnell, a CSR/ESG Consultant to the RBA/RLI and a founding member of the Responsible Business Alliance’s Responsible Labor Initiative, joins host Gwen Hassan to discuss the impact of fast fashion on workers, forced labor, and the responsibility of companies to ensure that they don’t use vendors and suppliers who engage in unethical and harmful practices.  
 

 
Many workers who end up in the grips of human trafficking often flee hardship and poverty. This makes them targets for exploitation by agencies and facilities. Mike explains that some workers have to pay fees to be hired, and because of these fees, they are put under tremendous pressure by the employers. The workers feel indebted to the ones exploiting them, allowing their superiors to maintain a sense of control over them. Companies may also be receiving free hiring services and benefits through human trafficking, sometimes without their knowledge.
The workers pay fees in two ways: above board by charging limits or extracting cash in rougher aspects. These fees are ongoing so that workers can keep their heads down and out of the line of fire. There are digital programs put in place to audit this. Surveys are given to workers with questions on whether anyone has asked them for money. One of the positives about this type of technology is that companies can monitor real-time when these situations arise.
It’s not enough to not harm a company. It’s not enough to say that you’re following your code of ethics. You have to show it in your actions and break it down to its elements. Rethink your tools, assess your suppliers and their business practices, and these can become your rail factors on whether or not to engage in business with them. If they present too much risk, or you cannot prove that they aren’t engaging in unethical behavior, you will have to rethink your outsourcing.
 
Resources
Mike McDonnell on LinkedIn 
Responsible Labor Initiative
 

Categories
Compliance Kitchen

Forced Labor Guidance


CBP issues a forced labor program visual guidance. Listen in as the Kitchen reviews this resource for importers.

Categories
Compliance Kitchen

CPB FAQ’s Re: Forced Labor


The CBP recently answered FAQs in regards to its detection and enforcement of regulations against imports of products made with forced labor.  Stop by to hear a summary from The Kitchen on imports compliance and exclusion from CBP’s Withhold Release Orders.