If serious trivia seems like a contradiction, maybe you need to be more quizzical when it comes to anti-corruption compliance. January 4 is the one day of the year when there’s an excuse to be trivial—even in an area as serious as compliance in anti-bribery and corruption, anti-money laundering and terrorist financing, and the avoidance of forced labor in supply chains. This is because, all over the world, January 4 is Trivia Day.

As trivia goes, it’s ironic that how this day came about is lost in the comparatively recent mists of time. The meaning of ‘trivia’ as we understand it today—facts that are of little value or importance beyond their own peculiarly interesting novelty— dates to the early 20th century and use of the word as it pertains to quizzes emerged in the 1960s.

Then came Trivial Pursuit, which turned useless knowledge into a full-blown craze. It even gave trivia its own trivia: the board game was created in 1979 by two Canadian blokes who mapped out its structure in an hour, over a round of beers. Annual sales peaked in 1984 at around US$800 million. (If you’re old enough, these facts are in the small but irksome category of trivia known as “wish I’d thought of it first”.) Some years later, someone in the United States decreed that January 4 will henceforth be National Trivia Day. It caught on, and the internet did the rest in making the concept global.

Bribery and snakes

In the area of bribery, corruption, money laundering and the like, it’s natural to assume there’s no scope for fun trivia, right? Well, not quite. While it may not constitute the proverbial barrel of laughs, it does lend itself to a bag of snakes. Three of them, actually.

In northern India in 2011, a couple of farmers became so fed up with the bribes demanded to access their own tax records, they upended three sacks containing 40 snakes, including several deadly cobras, on the floor of their local tax office. Apparently, a new world record was set for in-office sprinting, although uncertainty remains as to which staff member set it.

Okay, so one snake protest doesn’t make a quiz. But how about this for a question: Which country recently elected as its president a former TV comedian who campaigned on the slogan “neither corrupt, nor a crook”? He was elected in 2015 and is still incumbent, despite several close relatives and advisers being embroiled in corruption allegations and prosecutions. If you don’t know the answer, see the * below.

If you’re still not convinced there’s a quiz in this, visit the ProProfs Quiz Maker website. It has more than a million quizzes to choose from, ranging from the Ultimate Taylor Swift Quiz, to the Are You the Type of Person Who Cheats in a Relationship? quiz, to… wait for it... the excitement is mounting... the First Quiz For Training On Anti-money Laundering the Anti-money Laundering Policy Quiz and several others in a similar vein. The multichoice questions focus on U.S. legislation and corporate practice, but you could use them as templates for writing your own anti-money laundering/anti-corruption quiz for employees and associates in any other country, to partake in as a training and awareness-raising exercise.

Conventional statistics

Statistics constitute a sizeable continent in the world of trivia, and there’s no shortage of stats in compliance. As a case in point, let’s look at the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (commonly known as the Anti-Bribery Convention) because—trivia alert!—2019 marks the 20th anniversary of its introduction.

Party to the convention are the 36 OECD members and eight other nations. Together they constitute 81 percent of the world’s outbound foreign direct investment and 66 percent of the world’s exports. They are also home to 95 of the 100 largest non-financial multinational enterprises and all of the top 50 financial multinationals. I mean, this thing has impressive reach. And you get one guess as to which superpower is now being wooed on the edge of inclusion (**).

A few months ago, the OECD Working Group on Bribery published a report, Fighting the Crime of Foreign Bribery, in which it explained: “Parties to the Anti-Bribery Convention agree to establish the bribery of foreign public officials as a criminal offence under their laws and to investigate, prosecute and sanction the offence. The convention is the first and only international anti-corruption instrument focused on the ‘supply side’ of the bribery transaction—the person or entity offering, promising or giving a bribe.”

In its graphic summary of the convention’s achievements, the report notes that bribery is now a crime in all of its 44 member countries; and all 44 have strengthened or created corporate liability laws in compliance with commitments made under the convention, allowing them to hold companies, and not just individuals, liable for foreign bribery. Eighteen countries have introduced or strengthened whistleblower protection in response to peer evaluation reports and recommendations.

Between signing the convention in 1999 and up until the end of 2017, in a total of 20 of the countries, 560 individuals and 184 entities have been sanctioned under criminal proceedings for foreign bribery. At least 102 individuals and 247 entities in 11 countries have been sanctioned for other offences related to foreign bribery, such as money laundering or accounting. The fact that 21 of the countries were yet to conclude any foreign bribery enforcement action is an indication of the uneven spread of activity. But in a total of 30 countries, another 500 investigations are ongoing.

Laboring the point

It’s drawing a dubious bow to claim that the statistics on forced labor could constitute anything resembling trivia. But how about this: Which country’s population most closely equates to the estimated number of people in forced labor around the world?

It’s Australia, with a population of 25 million.

Similarly (and also according to the International Labor Organisation’s 2016 estimate): Which country’s population is closest to the number of children, aged 5 to 17, who are subject to child labor around the world?

At a staggering 152 million, it’s Russia. Almost one in 10 of the world’s children; 64 million girls and 88 million boys. Almost one third of these children aged 5 to 14 are excluded from any education system, and 38% of those in that age bracket are involved in hazardous work.

It makes you think, doesn’t it? And isn’t that what trivia is all about?

Next Steps:

1. Download our eBook on ISO 37001 to learn how this anti-bribery and corruption compliance standard can help your organization avoid becoming a risk statistic.
2. Learn how Lexis Diligence and LexisNexis Entity Insight empower enhanced risk management.
3. Share this article with your colleagues and connections on LinkedIn.

Regulatory technology (RegTech) refers to technology that assists companies to meet growing regulatory requirements. Banks are set to invest more in RegTech in 2019, because they see it as a cost-effective and efficient way to respond to growing regulatory complexity around AML and KYC requirements.

More investment in RegTech

Banks are investing more in RegTech year on year and this is likely to continue in 2019. Bloomberg predicts global investment in regulatory, compliance and governance software will reach nearly $120 billion by 2020. While G2 estimates a 500 percent increase in RegTech investment in the financial services sector between 2017 and 2020. RegTech’s rise is also reflected in the number of start-up companies who have formed to offer these services. A report by Alvarez and Marsal documented a recent “rapid increase” in RegTech start-ups, noting that many focus on specialist products for a single regulatory area, including regulatory reporting, KYC and market monitoring. “We believe that targeting cost reduction will continue to be a key driver of innovation in RegTech,” they wrote.

Growing regulatory attention

As more banks adopt RegTech, we can expect global financial authorities to pay more attention to the technology in 2019. The UK’s Financial Conduct Authority (FCA) and the Monetary Authority of

Singapore have already provided guidance to banks around the development of new technologies. We will see more regulators actively working with RegTech companies and banks to ensure the technology is helping them to meet regulatory requirements. The Australian Securities and Investments Commission have launched an innovation hub to engage with companies, and regulators in Singapore and Hong Kong have made similar moves. As Christopher Woolard, Director of Strategy and Competition at the FCA, said: “We will look to encourage innovation and adoption in technology through our RegTech work, working collaboratively to unlock the complexities and costs of regulation in new and creative ways”.

The drivers

A major driver of the rise of RegTech is that regulatory requirements on financial services firms have grown since the 2008 financial crisis, leading to significant enforcement actions. The world’s 20 largest banks paid more than $235 billion in fines between 2008 and 2015. Banks were met with another layer of complexity in 2018 when the General Data Protection Regulation imposed new rules on managing customer data. In response to this trend, banks have invested more and more in compliance – JP Morgan and HSBC employed 7,000 extra compliance staff between them in 2013. But RegTech offers a more efficient way to respond to sprawling regulation.
The UK’s impending departure from the European Union in 2019 could add another layer of regulatory complexity for banks operating in the UK and Europe. If the UK does introduce new rules affecting regulatory compliance in the banking sector, it is likely that more banks will turn to RegTech to streamline their processes. It is therefore unsurprising that UK RegTech companies occupied 30 places in this year’s RegTech 100 ranking of the top 100 most innovative RegTech companies in the world.

Another increasingly important factor driving the adoption of RegTech is the growing evidence that it offers an impressive return on investment. RegTech firms have shared case studies which demonstrate the cost-cutting power of technology. When FinTech firm Fenergo was engaged by a global investment bank, it found that the bank’s KYC client review process was done manually, taking thousands of hours of staff time to complete. When RegTech software was embedded in the KYC process, it led to a 37 percent improvement on case handling time and efficiencies. IBM had a similar result for HypoVereinsbank, delivering efficiency savings of 33 percent after automating its risk and control reporting processes. The Dutch bank Rabobank has used a RegTech risk management solution that reduced 15-minute compliance checks to only three minutes.
As these case studies are more widely shared, we should expect more banks to follow. But efficiency savings are not the only benefit of RegTech. Automating processes and supplementing internal data with key compliance-related datasets, such as Sanctions and Watchlists, enables companies to gain new insights into risks, proactively manage threats and respond to regulators’ requests for information more easily. Will your organization be joining the RegTech crowd in 2019?

Next Steps

1. See how Data as a Service complements RegTech to strengthen compliance efforts.

2. Explore the CORE advantage of Nexis® Data as a Service.

3. Share this post with your colleagues and connections to keep the conversation going.

January may be hot or cold, rainy or snowy—it just depends on where you live. But whether you sport a windbreaker or a parka when you head back to work after the holiday season, January is the same everywhere when it comes to making resolutions. It marks a new year and a clean slate—which got us thinking. Why shouldn’t companies take part in this fine goal-setting tradition—especially if the goals can have a positive impact on the world AND mitigate reputational, regulatory, financial and strategic risk at the same time? That’s where programs aligned to Corporate Social Responsibility (CSR) or Environmental, Social and Governance (ESG) standards come in. 

The rise of CSR

Corporate social responsibility isn’t new. Well-known for its grassroots initiatives, iconic ice cream label Ben & Jerry’s commits nearly $2 million a year to fund initiatives designed to uplift communities, push social change or support environmental sustainability. Google met its 100 percent renewable energy target in 2017 and continues to provide grants for social impact initiatives. Unilever, which counts Dove and Lipton among its many brands, has consistently achieved a high ranking on the Dow Jones Sustainability Index since it was launched in 1999.

What’s different now? Sustainable Brands highlights the CSR opportunity that Unilever seized, and other companies are beginning to recognize, noting “Brands could become, in fact, an aspirational force for social good and address some of the world’s most pressing economic, social and environmental problems.” And evidence suggests that such CSR and ESG commitments can attract prospective employees, consumers and investors. “The bottom line for businesses large and small is that you get a competitive advantage regarding sales and talent recruitment by not only claiming that you support positive social outcomes but also by walking the walk and demonstrating it,” writes Wayne Elsey in Forbes

• 63 percent of American consumers want businesses to take the lead on social and environmental change
• 92 percent of Gen-Z’ers and 76 percent of Millennials say a company’s CSR engagement influences their decision to work for that organization.
• Sustainable investment has climbed 38 percent since 2016 and now amounts to $1-in-$4 of total U.S. assets—$12 trillion total

“More than 90 million Americans own our public companies through their investments in mutual funds, and millions more do so through their participation in corporate, public and union pension plans. These owners include veterans, retirees, teachers, nurses, firemen, and city, state and federal workers. We owe it to all of them – and to all our shareholders and investors who have entrusted us with their savings – to get this right.”

How resolutions can make a difference

When you stick with them, New Year’s Resolutions can have a profound impact. By committing to CSR and/or ESG, companies can realize risk management advantages too. Globalization has made it possible for procurement professionals to build a cost-effective supply chain but has decreased visibility into the many links across that chain. The result is increased risk exposure. By auditing supply chains based on CSR or ESG standards, companies can improve visibility into emerging risks and proactively manage those risks.

• Commit to environmental sustainability to protect the planet and local communities to mitigate risks associated with pollution, wasted resources, and worker safety.
• Commit to social responsibility that supports the U.N. Sustainable Development Goals and justice for all people and mitigate risks associated with child labor, forced labor and human trafficking.
• Commit to good governance to meet the ethical expectations of employees, consumers and investors and mitigate risks associated with bribery, corruption, money laundering, and terrorist financing.

Along with the regulatory, financial and strategic risks associated with poor performance when it comes to the environment or social justice, the reputational damage that arises from media scandals can exact a heavy toll on companies. Plus, investors and consumers can weigh in with class-action lawsuits that seek to recoup losses when a company gets caught up in an FCPA investigation or forced labor is uncovered in the supply chain.

What three resolutions should you start with?

1. Develop CSR and ESG initiatives to support your local community for immediate impact and U.N. Sustainable Development Goals for long-term impact. With 17 SDGs to choose from, you are sure to find goals that align with your organization’s own.
2. Put words into action. A public CSR agenda may set the tone, but the proof, so to speak, is in the pudding. Everyone in your organization—from the top, down—needs to actively engage in moving the company forward with the commitment. For the procurement team, this could be realized through enhanced due diligence and ongoing risk monitoring to ensure that the suppliers and third parties your company relies on adhere to ethical standards.
3. Join others on the CSR/ESG journey. Benchmarking with others in your industry—and outside of it—makes it easier to identify best practices. Collaboration also makes goals easier to achieve. (Just like having a friend or spouse on board for your “healthier choices” resolutions can help you stay on track.)

Next Steps:

1. Access the 2019 Business Resolutions resource kit today!
2. See how Lexis Diligence® and LexisNexis® Entity Insight work together to provide a more complete view of risk.
3. Share this article with your friends and colleagues on LinkedIn to continue the conversation.

2018 has been a record year of penalties issued for breaches of the Foreign Corrupt Practices Act (FCPA). Settlements totaling more than $2.96 billion were agreed by corporations found to be in breach of the Act. The year saw further indications of the FCPA’s global reach, witnessed the first judgments issued under the FCPA Corporate Enforcement Policy and saw that policy extended to cover international mergers and acquisitions activity. All these served to underline the critical importance of robust FCPA compliance programs, effective due diligence and ongoing risk monitoring for multinational corporations.

The global reach of the FCPA

This year provided increasing evidence of the global reach of the FCPA to hold organizations to account, coupled with signs of a trend towards closer cooperation between national authorities in identifying and prosecuting corporate financial crime.

Of the 16 FCPA corporate enforcement actions in 2018, fewer than half involved U.S.-based companies. The remainder affected organizations or individuals based in France, Chile, Brazil, Canada, Israel and Japan. The diversity of sectors involved, from manufacturing to mining and financial services to pharmaceuticals, demonstrates no industry is immune to the risks of regulatory non-compliance.

The Petroleo Brasiliero S.A (Petrobras) settlement of $1.78 billion in September made history as the highest-ever fine issued under the FCPA, as the company resolved violations relating to systematic bribery of politicians and political parties in Brazil.

In June France’s Société Générale (SocGen) agreed to pay a total of $585 million to settle charges related to bribery in Libya during the Qaddaffi regime. This is the fifth highest FCPA settlement and the first coordinated enforcement action by the DOJ and French Authorities in an overseas corruption case. The DOJ received “significant cooperation” from international counterparts the Parquet National Financier, the UK Serious Fraud Office, the Federal Office of Justice in Switzerland, and the Office of the Attorney General in Switzerland.

This strong appetite for cross-border cooperation was underlined in a speech by the US Attorney General Rod J. Rosenstein in November, where he praised successful collaboration with foreign authorities and warned would-be transgressors that “the arm of American law enforcement is long”.

Japan’s Panasonic Corporation, together with its U.S. subsidiary Panasonic Avionics, was the third company in the mega breach category after reaching a settlement of $280 million to resolve FCPA offences relating to payments to consultants in the Middle East.

The FCPA Corporate Enforcement Policy incentivizes disclosure

The Petrobras settlement would have set an even higher record if the company had not qualified for reductions under the terms of the recently implemented FCPA Corporate Enforcement Policy. The policy, introduced in November 2017, incentivises companies to self-disclose potential FCPA violations and cooperate fully with subsequent investigations.

Companies that: 1) voluntarily self-disclose potential violations 2) proactively co-operate in investigations and 3) carry out timely and comprehensive remediation activities qualify for a 50 percent reduction in fine based on the low end of the U.S. sentencing guidelines. Also, if the company has implemented an effective FCPA compliance program it will not generally require the appointment of an ongoing monitor.

Companies that initially fail to self-disclose, but subsequently offer full cooperation and implement an effective compliance program, qualify for a 25 percent fine reduction. This was applied in the Petrobras case, as the company proactively participated in the investigation, providing real-time information and taking robust remedial action.

Companies that fully apply the principles of the FCPA Corporate Enforcement Policy and agree to pay disgorgement, forfeiture or restitution can receive a declination. This means no DOJ prosecution will take place and the investigation will be closed. The two cases to date include UK company Guralp, which received a declination in August following its voluntary disclosure of bribery and money laundering, remedial activity and cooperation with the investigation.

In further evidence of cross-border cooperation, the DOJ’s decision to grant Guralp a declination rests on the fact that the company remains under investigation by the UK’s Serious Fraud Office for the same offences under the UK Bribery Act and has committed to accepting responsibility under the SFO’s jurisdiction.

In all the FCPA cases, the importance of a visible commitment to preventing future violations has been emphasized. By adopting a robust risk monitoring program companies can stay informed of evolving risks in their sector, improve visibility of country-related risks and demonstrate their commitment to achieving compliance with the FCPA.

To qualify for declination or fine reductions, companies must self-disclose well before information about the suspected breach becomes public knowledge. This again highlights the need for a comprehensive compliance and monitoring program that alerts the company to potential violations before they become public.

Extension to Mergers and Acquisitions activity highlights role of due diligence

The importance of robust due diligence and risk monitoring during mergers and acquisitions was underlined in August as the DOJ announced that the FCPA Corporate Enforcement Policy also applies to U.S. companies merging with or acquiring foreign companies. The announcement emphasized companies’ obligations to identify and remedy instances of FCPA violations uncovered within target organizations. This makes a full risk assessment of target companies and applying the appropriate level of due diligence critical to companies’ FCPA compliance efforts.

Companies that identify potential FCPA violations prior to closing a deal are advised to seek DOJ opinion on whether the suspected activity could result in enforcement before proceeding. Companies that discover violations subsequent to M&A are strongly encouraged to disclose them at the earliest opportunity in order to benefit from the possibility of declination or fine reduction that may result.

The FCPA Corporate Enforcement Policy, though still in its infancy, provides a greater degree of certainty for companies who uncover violations. It helps them to assess the impacts of disclosure and puts a solid financial incentive on the table. Its extension to cover M&A activity is recognition that companies may inherit problems, but that they should take a proactive and timely approach to resolving these and implementing the appropriate due diligence and ongoing risk monitoring programs to address weaknesses and reduce regulatory risk.

The policy is an important step towards setting a culture of greater corporate transparency by rewarding companies that do the right thing when they uncover corrupt practices. It is the carrot that should be weighed against the stick of the full force of prosecution under the FCPA.

Next Steps

1. Download our ISO 37001 eBook for guidance on establishing an effective process for mitigating regulatory compliance risk.
2. Learn how our due diligence and risk monitoring solutions can enhance your current risk mitigation workflow.
3. Share this blog with your colleagues on LinkedIn to keep the conversation going.

Are you nervous about the imminent Fourth Industrial Revolution?  After all, each industrial revolution has resulted in the displacement of workers through automated or industrialized processes. But history shows that short-term displacements were balanced by economic advances, proving that industries—and their workers—can adapt and evolve to succeed. How will AI in all its variations—from customer-facing chatbots to ROI-driving predictive analytics[—influence and transform the Communications Industry? Download “The Rise of AI and How it Will Impact Communications Professionals: A LexisNexis Media Intelligence eBook” to find out.

Gaining Strategic Insights from AI

 Earlier this year, Anthony Petrucci, Senior Director of Corporate Communications & Public Affairs at technology company HID Global, laid out a challenge to others in Communications professions in an article published on Forbes. He wrote, “I challenge my colleagues in this field to embrace the opportunities AI presents to augment our communications function in the long term, rather than being defensive, reactionary or ignorant that change will happen.”  

Petrucci contends that Artificial Intelligence—in its many forms—has the potential for “enhancing, supporting and amplifying human truth, human experience and, ultimately, human freedom.” Sounds like a tall order, but we agree that AI represents untapped potential within corporate communications.

1. With predictive analytics, the digital landscape can be mapped and evaluated in real time for up-to-the-minute trend assessments, allowing companies to make informed, strategic decisions about anything from marketing campaigns to product development.
2. Machine learning combined with media monitoring, as well as social analytics, already enable faster crisis response by surfacing potential threats sooner. And that’s just the beginning. In the future, Petrucci wrote, “AI bots will be programmed to assist crisis communication leaders—and they won’t be swayed by emotions in heated crisis situations.”
3. Marketing automation—which only scratches the surface of AI’s potential—already delivers better metrics related to the ROI of corporate communications, PR and marketing. Imagine the insights you can unlock when those metrics are informed through deep learning algorithms.
4. AI will power micro-targeting and hyper-personalization, enabling communications leaders to improve content relevance in all types of outreach.

We’ve all experienced the challenge of having to “do more with less.”  Rather than seeing AI as a threat to your job, it should be recognized as a time-saver, freeing you up to focus on the message instead of the metrics.

Are you curious about AI applications for Corporate Communications? 

Check out our eBook, “The Rise of AI and How it Will Impact Communications Professionals: A LexisNexis Media Intelligence eBook,” to learn more about different types of AI already driving insight and what the future may hold.