Corruption Crime & Compliance

This week we are pleased to bring you one of our most popular episodes of 2024. Please enjoy, and we will be back next week with more insights from the Corruption, Crime, and Compliance podcast.How do you manage risk when the vulnerabilities are outside your organization aren’t in your hands? In this episode of Corruption, Crime, and Compliance, we delve into the world of third-party risk management with our guest, Natalie Druckman, from Certa. As we discuss the regulatory landscape in EMEA and the US, Natalie highlights the higher regulatory burden faced by companies in EMEA, and how Certa uses AI to streamline workflows, provide intuitive data visualization, and enhance risk forecasting capabilities. AI is the future of third-party risk management, now and in the future.Cybersecurity has become one of the top concerns for organizations. In 2012, Target worked with a third-party vendor and, as a result, suffered an attack that exposed their customers’ credit data. Since then, compliance departments have started working closely with IT to prevent such vulnerabilities. Unlike the US, EU companies don’t benefit from gaps created between state and federal regulations. EMEA faces a mandatory and substantial regulatory burden, particularly in areas like ESG and compliance. A forced labor scandal can sink a company, so ESG’s importance is on par with cyber security.Global companies are increasingly recognizing the importance of addressing ESG topics alongside cybersecurity and financial risks. ESG considerations, such as diversity, modern slavery, and gender pay gaps, have significant reputational and revenue impacts.AI is changing the world in many ways, including compliance. Certa aims to provide a comprehensive solution for third-party risk management, compliance, and operational risks by streamlining processes and incorporating AI capabilities to enhance efficiency and effectiveness.Certa utilizes various AI capabilities, including design AI, which allows users to create workflows using plain language. They don’t need to know anything about tech; they can simply dictate the process, and AI generates the necessary code and infrastructure for it. This allows the company to remain flexible and able to quickly adapt to change.Insights AI is another capability that collects and analyzes data, making it far more accessible and efficient in managing up-to-the-minute risks and developments. This technology also uses design AI, allowing for plain language inputs to immediately create actionable, detailed reports.Recall AI allows companies to guarantee rapid and consistent responses from suppliers and customers by recalling past interactions to create surveys, forms, workflows, and processes. This removes the back-and-forth burden on all parties while still retaining the human touch.Smaller and midsize companies should prioritize their risk management processes and consider automated solutions like Certa. These companies can benefit from the efficiency and effectiveness of an automated platform, regardless of their industry or size.ResourcesMichael Volkov on LinkedIn | TwitterThe Volkov Law GroupNatalie Druckman on LinkedInCertaEmail Natalie: nat@certa.ai

This week, we bring you a replay of one of our most impactful podcasts from last year, featuring Alex Cotoia and Daniela Melendez. Listen in as we discuss the EU Whistleblower Directive of October 2019. We'll return next week with one of our regular updates.Directive 2019/1937 of the European Parliament and Council dated 23 October 2019 on the “protection of persons who report breaches of Union law” (the “Directive”) is currently being implemented by EU Member States. The directive has broad applicability to organizations operating in the EU internal market and applies to both public and private sector organizations alike. Whistleblowers are guaranteed legal protection to the extent: (1) they have reasonable grounds to believe that the information reported was true at the time of the report; and (2) the whistleblower reported either internally to the organization, externally to a competent authority, or publicly. Private sector organizations with 50 or more workers are legally required to establish channels and procedures for internal reporting of EU law breaches and conduct appropriate follow-up. In this episode, Mike Volkov is joined by Daniela Melendez and Alex Cotoia from the Volkov Law Group, who bring their expertise to the table as they delve into the EU Directive and its implementation by several member states. Listen to this discussion to understand and navigate the complexities of the EU Whistleblowing Directive.The EU Whistleblower Directive shifts the burden of proof on retaliatory actions to the person taking the detrimental action, requiring them to demonstrate it was not linked to reporting concerns.Global companies are taking a proactive stance by increasingly focusing on robust ethics and compliance programs. This strategic move is aimed at mitigating risks and promoting positive corporate citizenship in today's economy, where adherence to legal and ethical standards is paramount.France signed the EU Directive into law on March 21, 2022, outlining protocols for gathering and handling whistleblower reports, including a two-month deadline for imposing disciplinary sanctions.Germany enacted the EU Directive on May 12, 2023, allowing anonymous reports and setting a three-month investigation deadline after receiving the report.Spain addressed the EU Directive on February 2023 by covering additional topics like occupational health and safety breaches. The directive established a three-month deadline for investigations and allowed anonymous reports.Italy transposed the EU Directive on August 4, 2022, including administrative, financial, civil, and criminal offenses not covered by the Directive, with a 30-day deadline to conduct investigations upon receipt of reports.Companies are advised to make resources available to conduct investigations quickly due to the short timeframes set by various countries' whistleblower protection laws.ResourcesMichael Volkov on LinkedIn | TwitterThe Volkov Law GroupAlex Cotoia on LinkedIn Email: acotoia@volkovlaw.comDaniela Melendez on LinkedInEmail: dmelendez@volkovlaw.com

Companies face a compliance storm with shifting tariffs, aggressive sanctions, and AI risks. Mapping supply chains is now crucial to avoid disruptions. The pause in FCPA enforcement signals global compliance shifts, emphasizing the need for robust anti-corruption programs. Upcoming U.S. sanctions could impact international trade, especially concerning dual-use technologies. Businesses must manage AI risks carefully, integrating them into their compliance strategies to maintain trust and resilience in a changing landscape.

Corporate risks are evolving, necessitating a new approach for boards and compliance teams. With a shift in regulatory focus, businesses must reassess priorities, especially concerning anti-corruption and antitrust enforcement. The pause in FCPA enforcement highlights the importance of maintaining anti-corruption programs. As the DOJ targets criminal cartels, companies operating in high-risk areas must adapt. The discussion also emphasizes the changing landscape of trade compliance and the impact of tariffs on import-reliant firms, underscoring the need for diligent monitoring.

The Trump administration's decision to pause FCPA enforcement raises concerns about corporate accountability. This shift aims to boost U.S. competitiveness but may harm global anti-corruption efforts. The podcast explores how businesses might adapt their compliance strategies amidst this uncertainty. It also highlights a focus change within the DOJ, shifting from corporate bribery cases to targeting cartels and transnational organizations. As other countries intensify their enforcement, the implications for international business practices are significant.

Sanctioned Russian oligarchs are cleverly maneuvering around international restrictions through complex real estate schemes. A recent settlement highlights how shell companies and non-sanctioned family members were used to hide ownership of luxury properties. Key gatekeepers like real estate professionals and lawyers played a crucial role in these evasive tactics. Text messages emerged as vital evidence of intent, shedding light on the intricate techniques employed to transfer property ownership. The real estate sector faces increasing scrutiny as a hotbed for financial crime.

Explore the potential of AI to revolutionize the economy while navigating its inherent risks. The discussion highlights Goldman Sachs' forecast of a $7 trillion GDP boost and the staggering investments needed for AI infrastructure. Delve into how generative AI creates human-like content, alongside the looming threats of misinformation and fraud. The conversation emphasizes the importance of compliance programs to manage the legal and ethical challenges that come with AI adoption, ensuring businesses can innovate responsibly.

The podcast dives into the evolving landscape of FCPA enforcement, with a significant rise in penalties and a focus on individual prosecutions. Key cases featuring major corporations like Raytheon and SAP are discussed, alongside the DOJ's new whistleblower program. Emerging technologies, particularly AI, pose new compliance challenges. The return of traditional bribery tactics like travel and gifts raises questions about corporate ethics. Amidst this, updates on compliance initiatives signal a shift in how companies approach legal obligations.

Dive into the current landscape of aggressive sanctions enforcement and discover how companies can keep up with the DOJ's evolving priorities. Learn about record-breaking prosecutions, including 70 individuals in 2024, and insights into OFAC's innovative enforcement strategies. Hear key lessons from high-profile compliance failures and the critical importance of sanctions adherence, especially during mergers and acquisitions. Get predictions on heightened scrutiny of trade with China and insights on navigating the complexities of international sanctions.

Discover the riveting details of how a bribery scheme toppled a major aviation company. Learn about the insider deals and secret payments orchestrated by the company's CEO, impacting contracts in Nepal and South Africa. The discussion illuminates the role of third-party agents in facilitating corruption. Also highlighted are the consequences of FCPA violations and the company's attempts at remediation. This cautionary tale reveals the ongoing corruption risks in high-stakes industries, emphasizing the need for strict compliance measures.