OCTOBER 24, 2020 BY TOM FOX

In today’s edition of Daily Compliance News:

In this first live recording of Everything Compliance, an abbreviated crew of Matt Kelly, Jay Rosen and Tom Fox provide their initial thoughts and questions on the Goldman Sachs 1MDB FCPA settlement.

For a preliminary look, check out Matt’s blog post Goldman Sachs Giant FCPA Deal on Radical Compliance.

Many compliance practitioners generally view distributors as a part of their third-party risk management program, with most of their attention on the pre-contract phase of the risk management process. Typically, most of the efforts are spent on due diligence with less on managing the relationship after the contract is signed. However, many facets of a corporate relationship with a distributor are closer to those of other business venture partners.

One of the issues in any compliance program is the compensation paid to a business venture partner as FCPA exposure arises when companies pay money – either directly or indirectly – to fund bribe payments. In the traditional intermediary scenario, the company funnels money to a business venture partner, who then passes on some or all of it to the bribe recipient. Often, the payment is disguised. Rethinking approaches to evaluating distributor activities is but one of the ways that the increased number of enforcement actions, 2020 FCPA Resource Guide, 2nd edition and DOJ’s 2020 Update to the Evaluation of Corporate Compliance Programs, have provided insight into how the government interprets and enforces the FCPA. This information, in turn, allows companies to get smarter about FCPA compliance. With a manageable amount of forethought, companies who rely on distributors can create, install and maintain systems which allow them to spend fewer resources to more effectively prevent violations. Moreover, these systems generate tangible proof of a company’s genuine commitment to FCPA compliance, by more fully operationalizing this aspect of their compliance program.

Many companies have been involved in FCPA enforcement actions because of distributors. This sales side channel does not receive the focus equal to that of commissioned sales agents. Yet it can present an equally large compliance risk. By using this DAR approach, you will have created a well-thought out process which will operationalize your compliance program around distributor compensation, in a manner which documents your decision-making calculus.

Three key takeaways:

  1. The creation of well-thought out process which operationalizes your compliance program around distributor compensation, in a manner which documents your decision-making calculus is key.
  2. Require multiple levels of approval for an out of range distributor discount.
  3. Tracking distributor discounts globally makes your company more efficient.

In this episode, we discuss the rapidly expanding use of artificial intelligence, machine learning and robotic process automation to undertake trade surveillance and mitigate fraud. In this episode, we discuss the rapidly expanding use of artificial intelligence, machine learning and robotic process automation to undertake trade surveillance and mitigate fraud. Joining me today are two experts on the subject of Artificial intelligence from both the technical and legal and compliance perspectives.

Join us each week as we take a deep dive into the various forms of fraud across the world and discuss crime families, penny stock boiler rooms, international money launderers, narco-traffickers, oligarchs, dictators, war lords, kleptocrats and more.

Scott Moritz is a leading authority on white-collar crime, anti-corruption, and in the evaluation, design, remediation, implementation, and administration of corporate compliance programs, codes of conduct. He is also considered an authority in the establishment, training, and oversight of the investigative protocols carried out by financial intelligence, corporate security, and internal audit units.