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Last week, Mark Dunn, the due diligence segment leader for Risk and Compliance at LexisNexis, offered his insights during an ISM Webinar entitled “Mitigating Risks and Impact of Sanctions Regimes on Your Supply Chain.” It’s a growing area of concern, but as Kelly Barner noted in the Buyers Meeting Point blog, the risks “… are outside of the norm for most supply chain and procurement professionals: money laundering, bribery, corruption and diplomatic or economic sanctions.” Yet, as organizations – and their supplier networks – become more global, these considerations pose a tremendous financial and reputational threat.
You hear about sanctions in the news quite often. Just in the last few weeks, in fact, sanctions against Cuba and Iran have dominated headlines as the current U.S. administration considers easing its regulations in the light of changing relationships with these countries. The list of sanctions regimes, however is much longer and more complicated than just these two nations.
Governments publish lists of sanctions, which adds to the complexity of managing risk because you must verify against fragmented sources of information including U.N Security Council Sanctions Committees, the U.S. Office of Foreign Assets Control (OFAC), the European Union’s Common Foreign and Security Policy (CFSP), and the U.K. HM Treasury. OFAC alone has 28 sanctions programs covering everything from rough diamond trade and cyber-related sanctions to sanctions in response to on-going conflicts around the world. How can you ensure that your organization – and the suppliers you rely on – rigorously adhere to sanctions?
During the Webinar, Mark pointed out that while financial services organizations have been the primary target of enforcement actions, agencies like the U.S. Department of Justice (DOJ) are stepping up their actions against corporate entities.
The cost goes beyond fines. Most deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs) come with other costly strings attached-from probation, restrictions on operations in certain countries, more rigorous regulatory compliance reporting and independent audits for sanctions compliance. Plus, organizations face untold reputational damage.
Are you ready to manage supplier risk wherever it may occur?