Understanding the Risk Beyond Your Borders - SCCE
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3/1/2021
Understanding the Risk
Beyond Your Borders
March 16th, 2021
SCCE ECEI – Amsterdam (Virtual)
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Agenda
Compliance has never been more challenging with evolving regulations
and a dispersed workforce
Influences, Impacts and the ‘Long Arm of the Law’
Global influence of US and EMEA regulations and requirements on the
compliance landscape
Trade Sanctions, Foreign Influence, Foreign Investment, Data
Sovereignty, Environmental Influences
Practical advice to adapt your Assessment process and innovative
thinking to address today's Risks
Evolved risk, EU Initiatives, Duty of Care, Creative ways to instill
growth
LOTS of examples
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3/1/2021
Maria Lancri
Attorney, Partner at Squair Law
Mlancri@squairlaw.com
Jacki Cheslow
Global Compliance Program Leader ‐ IEEE
info@rucompliance.com
Susan Du Becker
Director, Azure Hardware & Software Risk & Compliance,
Sdubecker@microsoft.com
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COVID Impacts
Sovereignty
• Politics, Persuasion & Pontification
• Data & Security : People, Product, Company Covid
• IP
Repatriation of Manufacturing and Business
Impacts
• Supply Chain movement
• New EU initiatives: mandatory EU system of due diligence for supply chains
Remote working: New Business Models
• Travel & Hospitality Industries
• Location, Location, Location
• Whistleblowing directive
• Management and Control ‐ The right to disconnect from work ?
Altered Business Focus
• Compliance Conflict
• Commission squeeze: Corruption & bribery increase?
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Political and Economic Impacts
Consequence
of the • Shrinking of civic and media space
Current Crisis
• Increased concentration of power in the executive
• Weakening of accountability and oversight
institutions
• Limited state capacity
• Deepest recession since the great depression
• Marginalization of poorest people, women &
disabled
• Decreasing social cohesion
• Major shift of business as it used to be
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Direct Impacts on Compliance
Using
the Harder to engage citizens in anticorruption
Lack of accountability for corruption and abuse of office
Economy Increased incentives and opportunities for corruption
as an Low trust in government and high corruption
Excuse Money Laundering & Corruption increase
Stimulus Packages
Downside
Corruption risks associated with informal economy
Fraud Triangle Influence ?
More resources ripe for abuse (e.g. bailouts, emergency procurement)
Disruption of global supply chains and ensuing shortages, increasing risk of kickbacks
Upside
Citizens and Activists are getting involved
Common Good
Environment
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New Economy
Using
the • New Champions – Tech Co.
Economy • Traditional Industry – Affect & Consequence
as an • Concentrations and Restructuring
Excuse • Shareholder's influence: Boards, Audit
Committees
Using the Law as an Excuse
• Force majeure
• Bankruptcy
• Emergency Laws
• New sanctions
• Brexit
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• 47% of compliance leaders say that COVID‐19 has accelerated a
Covid focus towards digital products, approaches and tools in their
organizations.
Impacts
• 56% of compliance leaders report that budgets have been cut as
a result of COVID‐19
• 41% state that ill‐considered and poorly implemented technology
has already resulted in enforcement investigations.
• Up to 64% of compliance leaders predict that scrutiny of tech‐
enabled business models as a result.
• Yet 47% suggest that the compliance team is excluded from
strategic decision‐making on technology and digital acquisitions.
Source: The Currency of Connection: Mobilizing technology for compliance integration, Baker & McKenzie, November 2020, https://bakermckenzie.turtl.co/story/cc2020/
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The pandemic has seen a reported increase in the number of
inquiries to the compliance team.
Covid
Impacts
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The pandemic has seen a reported increase in the number of
inquiries to the compliance team.
Covid
Impacts
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OFAC refers to the US Department of Treasury Office of Foreign
The Asset Control. Generally, these sanctions include:
Long
Arm of • No direct exports of goods or services to any embargoed
the Law country or Specially Designated National (SDN)
• No re‐exports to embargoed country or SDN with knowledge of
final end‐user location
• No imports of or dealings in goods or services from embargoed
countries or persons
US • No evasion, avoidance, “facilitation” of barred transactions
• No dealings in “blocked property” or with “blocked person”
U.S. Sanctions Laws: Dangers Ahead For Foreign Companies (Part I), 25 February 2019, Williams Mullin, https://www.williamsmullen.com/news/us‐sanctions‐laws‐dangers‐ahead‐foreign‐companies
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To date there are four principal categories in which non‐U.S.
The parties have been subject to U.S. sanctions:
Long
Arm of
(i) where the foreign party has a requisite level of contacts with the
the Law U.S.;
(ii) where the foreign party has been designated itself for sanctions
and listed on the SDN List or other restricted party lists;
(iii) under “secondary sanctions” (ie., sanctions that specifically apply
to non‐U.S. persons); and
US (iv) for providing material support or assistance to or facilitating a
significant transaction with certain parties that are subject to
sanctions.
U.S. Sanctions Laws: Dangers Ahead For Foreign Companies (Part I), 25 February 2019, Williams Mullin, https://www.williamsmullen.com/news/us‐sanctions‐laws‐dangers‐ahead‐foreign‐companies
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• If a non‐U.S. company engages in a transaction involving
The U.S. persons or U.S. ‐ origin products, technology or
Long services, or has a presence in the U.S., the transaction can
Arm of become subject to OFAC jurisdiction.
the Law • Foreign firms can be found to have “contacts” with the U.S.
even if they only have a limited presence in the U.S. and
there are no U.S. persons, products, technologies or
services involved.
• The question of what constitutes a sufficient nexus to U.S.
US jurisdiction is an evolving theory of law and is expanding
over time as new OFAC enforcement cases are
announced.
U.S. Sanctions Laws: Dangers Ahead For Foreign Companies (Part I), 25 February 2019, Williams Mullin, https://www.williamsmullen.com/news/us‐sanctions‐laws‐dangers‐ahead‐foreign‐companies
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• CSE TransTel Pte. Ltd. (“TransTel”), a wholly owned subsidiary of the
The international technology group CSE Global Limited (“CSE Global”),
both of which are located in Singapore,
Long
• agreed to pay $12,027,066 to settle its potential civil liability for 104 apparent
Arm of violations of the International Emergency Economic Powers Act (IEEPA) and
the Law the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR)
• ZTE Corporation
• plead guilty and pay over $430.4 million for violating U.S. Sanctions by vending
U.S.‐Origin items to Iran.
• A combined penalty of $1.19 Billion with Department of Commerce and
Department of Treasury was ultimately paid.
Examples
• It is alleged ZTE obtained U.S.‐origin items – including controlled dual‐use
goods on the Department of Commerce’s Commerce Control List (CCL) –
incorporated some of those items into ZTE equipment and shipped the ZTE
equipment and U.S.‐origin items to customers in Iran. There are many other
allegations within this case.
U.S. Sanctions Laws: Dangers Ahead For Foreign Companies (Part I), 25 February 2019, Williams Mullin, https://www.williamsmullen.com/news/us‐sanctions‐laws‐dangers‐ahead‐foreign‐companies
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• Evaluate your risks often, much more than you would
Risk ordinarily to determine how the pandemic is the
Assessments organization and prioritize critical risk areas
in a Virtual
World • Use tools like videoconferencing with screen‐sharing
Record meetings so you can focus on the conversation
and not on notetaking can help to break down the
distance between you and the business (make sure you
disclose recording)
Tips
&
• Videoconferencing is not only valuable for interviews
Tricks but for collaborative reviews of policies and procedures
– make these your new “conference room” and work
just as you would in person
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Risk • Automate the standard surveys and questionnaires to
Assessments free up more time for 1:1 conversations and discussion
in a Virtual
World
• Expand the scope of your interviewees, capturing staff
at all levels
Tips • Be prepared.
In these circumstances you want to be
& more prepared than ever. Dig deep, deeper than you
Tricks may have normally in preparing for an assessment.
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Swiss Mining tycoon
– 5 years in jail….
The
Long Samsung – Vice
Arm of Chair & Heir to
empire sent to
the Law prison
Rossen G.
Iossifov sentenced to 10
Examples years in prison for money
laundering
Payment24 CEO: Criminal in the
(CTRL + Vatican bank's US, service provider to Iran
**Aljazeera link
click me) former chief guilty
of money
laundering, 9 years
in prison Italian national: attempting to
evade U.S. national security trade
sanction
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Updating Applicable Laws
New
Regulations
& Risk
Assessment
• In all matters covered by Compliance
• In all Applicable Countries
• Be proactive
Stay informed of the new trends
Participate in Professional Associations
Make your voice heard: lobbying
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New Brexit
Regulations
& Risk • Data Protection – intermediary regime
Assessment
• International Sanctions – new UK Regime
• Exportation and Customs
• Product Safety – UK marking
Influencing
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Anti‐Corruption Laws
New
Regulations
& Risk • Development of stronger Anti‐Corruption laws in
Assessment
several jurisdictions
• More stringent enfoncement. Personal & Business
• Additional territorial powers of the authorities
• Limits of Legal Privilege
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103/1/2021
Sustainable corporate governance
New
Regulations Modern Slavery Laws
& Risk
Assessment
Ctrl+ Click
me
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The Power of the NGOs
New • In France ‐ Application of the
Environment
& Risk Duty of Care
Assessment
• Lobbying for a Corporate
Les Amis de la Terre
Governance Directive
• Name & Shame NYTimes
CTRL + Click • Financial institutions
Duty of Vigilance Radar
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113/1/2021
The Power of the Media
New • OpenLux
Environment
& Risk • Panama Papers
Assessment • Consultancy white papers
• Specialty press
• Wikipedia
• Local press
• OECD
CTRL + Click • Facebook
• Instagram
• Twitter……………………….
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The Power of the Shareholders
New • Government Influence (UK)
Environment
& Risk • BlackRock
Assessment
• Total
• Unilever exbulletin
Reuters
Unilever to put its climate change
plans to a shareholder vote
CTRL + Click World’s Biggest Investor Tells C.E.O.s Purpose Is the
‘Animating Force’ for Profits
Reclaimfinance ……..growing availability and affordability of sustainable investment options
Total’s shareholders file a Read the letter
climate resolution ahead of
Total’s AGM
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123/1/2021
• It’s NOT business as usual
• Risk has moved and evolved – Reassess yourselves
Conclusion • New social parameters and influencers
• EU Directives
• Asia coalition
• US State Imperatives
• The ‘IGen’ (next generation influencers)
• New Modelling
• Behavior & Culture counts
• Communication is key
• Don’t try and ‘Boil the Ocean’
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Click
me
Great Links
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133/1/2021
1. https://www.bloomberg.com/news/articles/2021‐01‐22/steinmetz‐sentenced‐to‐five‐years‐in‐jail‐in‐swiss‐bribery‐case
2. https://deadline.com/2021/01/samsung‐vice‐chair‐heir‐sentenced‐prison‐for‐bribery‐1234675629/
3. https://www.justice.gov/opa/pr/owner‐bitcoin‐exchange‐sentenced‐prison‐money‐laundering
Great 4. https://www.cnn.com/2021/01/21/europe/vatican‐bank‐money‐laundering‐intl/index.html
Links 5.
6.
https://apnews.com/article/business‐iran‐financial‐services‐conspiracy‐united‐states‐6aeb71c30cd8e7b1c053c2f8cb8c743b
https://www.justice.gov/usao‐sdga/pr/italian‐national‐sentenced‐federal‐prison‐attempting‐evade‐us‐national‐security‐trade
7. https://hubblecontent.osi.office.net/contentsvc/videohostpage/video?lcid=1036&syslcid=1036&uilcid=1036&app=3&ver=16&
build=16.0.13628&platform=Win32&streamsso=true&appCorrelation=84CDC62A‐EE32‐4F32‐9741‐
7B5E09C775A4&url=https%3A%2F%2Fwww.youtube.com%2Fembed%2F2gdI1xe1lrk%3Ffeature%3Doembed
8. https://www.bsr.org/reports/BSR‐HERproject‐Human‐Cost‐Pandemic‐Report.pdf
9. 2021 Edelman Trust Barometer | Edelman
Examples 10. Shareholders requiring Total to reduce CO2 emissions (reclaimfinance.org)
11. McDonald’s France, Yves Rocher, Nestlé France, France Télévisions, Primark France… 27% of companies would have failed to
(direct comply with the French Law on the Duty of Vigilance – list of companies subject to the duty of vigilance (vigilance‐plan.org)
links) 12. Court Faults France Over ‘Ecological Damage’ From Its Emissions Levels ‐ The New York Times (nytimes.com)
13. Larry Fink CEO Letter | BlackRock
14. Unilever to put its climate change plans to a shareholder vote | Reuters
15. The UK urged the AGM to introduce a mandatory climate vote. | ExBulletin
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