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Alleged compliance breaches have led to combined fines and settlements worth hundreds of millions of dollars in Q2 of 2023. Regulators have taken enforcement action against companies over their activities in jurisdictions spanning four continents.
In this blog, we look at some of the most significant regulatory interventions in recent months and suggest how companies should retool their compliance approach to mitigate growing legal, financial, reputational, and strategic risks.
Regulators continue to proactively enforce ever-stronger anti-bribery and corruption legislation. The latest major fines and settlements include:
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The cases above reinforce the need for companies to constantly review and strengthen their due diligence and compliance processes.
Each of these alleged failures of due diligence and compliance not only carried significant financial and legal implications for the companies involved, but they also inflicted reputational damage through widespread media coverage and strategic costs of dealing with the investigation and applying remediation.
Three trends stand out from these recent regulatory actions, which should inform how companies approach compliance:
It is no surprise that some of the major enforcement actions in recent months took place in the extractive sector and medical/pharma industry. These carry higher risks of bribery and corruption, especially where firms are seeking to expand or win contracts internationally.
Firms should review sector-specific risks for their current and prospective third parties and apply enhanced due diligence where relevant.
All the cases above involved a regulator taking enforcement action against a company based on alleged actions which happened outside its home jurisdiction. Companies’ due diligence must therefore cover global data, regardless of where they are based.
The rise of global sanctions against Russian entities over the last year is well-documented, but the US OFAC’s enforcement against alleged sanctions breaches in North Korea shows that sanctions risks are much broader.
In relation to the sanctions case involving North Korea, the US Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson, issued a stark warning to companies. Nelson said: “Companies that seek to profit from circumventing sanctions by obscuring their involvement will be discovered and will pay a price … Firms that deal with blocked persons, even indirectly, will be penalized when their schemes implicate the U.S. financial system.”
Firms must therefore regularly review sanctions lists at national and supra-national level for potential exposures.
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In response to growing regulatory interventions, companies must make it a priority to mitigate the financial, legal, reputational, and strategic risks of a compliance failure. The best way to do that is to leverage data and technology to strengthen your due diligence process
This will help you to better detect any indication of wrongdoing happening within your business or by a customer, supplier or other third party
Programs like Nexis Diligence+™ and Nexis® Data as a Service help firms to implement a more efficient and effective due diligence process to identify and mitigate third party risk by providing companies with authoritative data from the most relevant sources, including:
Get started exploring solutions for due diligence with our “Due Diligence Checklist” to ensure you maintain compliance and mitigate risk.