- Must take into account risk/cultural aspects of every country and have a proportionate global program.
- Must be able to demonstrate compliance program works effectively and has been tested: Prevent-Detect-Respond.
- Materiality does not matter, issue is whether your internal control system works effectively to detect and avoid illegal payments.
2. Unsupervised 3Ps: Largest source of FCPA violations comes from third parties (3Ps): Agents, Distributors, Business Partners, and Advisors.
- Need to create a “culture of compliance” among 3Ps: Ongoing training and materials in native language.
- Must have ongoing oversight/audit of 3Ps activities.
- Should eliminate 3Ps that provide no legitimate business purpose.
3. In-House Preventive Training: Conducting all training in-house may be seen as not sufficiently comprehensive, independent, or attuned to a country’s culture or risk level.
- Must have ongoing compliance trainings in native language.
- Utilize independent reputable local team cognizant of country risk, culture and your business.
4. No Enhanced Due Diligence: Failure to conduct pre and post closing Due Diligence on new business retention (3Ps), acquisitions, JVs and all business transactions creates a “red flag” for FCPA regulators.
- Must conduct FCPA due diligence prior to closing (FCPA transaction testing, key management interviews, media searches, reputational inquiries)
- Must ensure post closing application of FCPA compliance program on new business (scrutiny level varies depending on business model risk assessment, geography and your company’s level of control)
5. Overlooking Foreign Regulator: Compliance with US law alone is not sufficient. Other anti-corruption regulations (i.e., UK Bribery Act, Canada’s CFPOA, OECD, local country laws and regulations) and coordinated enforcement actions internationally create prospect of double or even multiple jeopardy, as there is an increasing worldwide trend in parallel investigations and penalties.
- Need to stay current on anti-corruption laws, regulations and initiatives in the jurisdictions in which you conduct business.
Please inquire with us for any of the matters referenced above. We can provide preventive and ongoing training, enhanced FCPA due diligence, country and cultural risk assessments; 3P training and oversight. Please visit our FCPA Compliance section for more information.