The Foreign Corrupt Practices Act (FCPA) was a major compliance focus of 2016 and will continue to be a major initiative in 2017 for global corporations.
Many leading corporations are looking for new ways to leverage compliance requirements and looking for methods to combine supplier onboarding processes, screening, checklists, and internal controls to remove the “silos” that occur in many companies with the ultimate goal of avoiding fines, managing risk, and maintaining a positive corporate reputation.
According to the Financial Action Task Force on Money Laundering (FATF), the term beneficial owner refers to the natural person who ultimately owns or controls a legal entity. The beneficial owner should not be a politically exposed person (PEP).
Companies will need to focus on their sourcing procedures within their supplier chain to ensure they do not engage in unethical sourcing practices. These unethical sourcing practices include dealing with companies that have engaged in such practices that include modern slavery or human trafficking. This is a requirement of the UK’s 2015 Modern Slavery Act for companies and their UK subsidiaries with an annual turnover of £36 million or more.
Cobalt is considered the next conflict mineral and companies will require comprehensive tracking processes and internal control programs within their supply chain.
These kinds of regulations are focused on the respect for human rights. The process makes it essential for companies to implement due diligence and compile a plan so that they can avoid legal and reputational risks as well as significant fines.
According to LexisNexis, the pace of progress in technology will increase in 2017, which will create even more opportunities for companies to realize efficiencies in their due diligence and monitoring process through automation. This includes the development of Blockchain technology in helping to address compliance tasks. Blockchain allows companies to provide a secure network between third parties to help facilitate transparent and safe transactions and automate document creation.
ISO 37001 is an anti-bribery management system which can be used by any organization, large or small, public or private. This standard is a series of policies, procedures, and training material that is helpful to any organization in the implementation of anti-bribery controls.
Your compliance requirements for 2017 and beyond continue to be challenging. Here are some recommendations to help you stay on top of things.
Make sure to assign this task to a compliance officer or internal controls director since this knowledge will help establish the foundation for your compliance efforts.
Take a look at your supplier onboarding processes and see if you can combine your upfront compliance screening requirements into a single onboarding process. Also, ensure that you are screening your supplier master on a period basis as part of an ongoing internal controls program.
Identify and prioritize all your compliance requirements. Then merge your requirements with your internal controls programs to avoid those compliance “silos.” Finally, look for ways to automate your screening, due diligence, and continuous monitoring efforts into a single program.