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April FCPA Compliance Digest | BONUS: Major Changes to Global Anti-Corruption and Anti-Money Laundering Legislation

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April FCPA Compliance Digest | BONUS: Major Changes to Global Anti-Corruption and Anti-Money Laundering Legislation

Generally my second digest focuses heavily on FCPA compliance-related news, but so many interesting stories took place in April that I just really couldn’t limit myself. The FCPA news stories are right up front, but read on to learn about a new anti-money laundering law in Panama and changes to anti-money laundering laws in Singapore, as well as an overview of the new anti-corruption laws passed in Italy and Ukraine.

Anheuser-Busch InBev Exits Indian Venture Under FCPA Scrutiny

Anheuser-Busch InBev NV said it exited a joint venture in India that was under scrutiny in the US for potential FCPA violations. The brewer said in a securities filing that it ended ties in February with a joint venture in India due to potential FCPA violations. US authorities are investigating its Indian affiliates, including the joint venture, and whether relationships of agents and employees complied with the FCPA. In the filing, AB InBev said it’s also investigating the conduct in question, and that it’s cooperating with US authorities. It had disclosed in March 2013 that the SEC told the firm it was investigating its affiliates in India, and the DOJ joined the investigation months later. Representatives of the SEC and the DOJ declined to comment. AB InBev said in the filing it will operate independently in the country following a transition period that will extend into the middle of the year. AB InBev also disclosed in the filing that authorities in Brazil are investigating consulting services provided by a firm partly owned by a former government official who has been subject to prosecution. The company said its subsidiary has, in the past, hired the services of the firm, but determined there wasn’t any evidence of misconduct after a review of internal controls and compliance procedures.

Wal-Mart Issues New Global Compliance Report: Spent $612M since 2013 on FCPA Case and Compliance Restructuring

Wal-Mart’s FCPA violations have cost the company more than $612M in legal fees and compliance restructuring costs over the past 3 years – and it hasn’t even been fined yet. Wal-Mart’s Global Compliance report, one of 3 reports Wal-Mart issued last month, came about last year by a mandate from the board’s audit committee in the wake of expanded allegations of bribery around the globe. In fiscal 2015 (which ended January 31), Wal-Mart said it spent $173M on FCPA compliance-related costs. The majority of that, $121M, was spent on legal costs associated with the investigation. The remaining $52M was spent on Wal-Mart’s own internal compliance overhaul. In the prior 2 years, FCPA costs totaled $439M. Wal-Mart said in the 2014 Compliance report it expected to spend more than $100M on compliance systems enhancements around the globe over the course of the next several years.

In the 2015 report, Wal-Mart did not mention the FCPA investigations by name, but instead attempted to highlight compliance progress. The board’s audit committee established a set of compliance objectives they wanted to see accomplished by Jan. 31, 2015. In an effort to demonstrate Wal-Mart’s commitment to compliance, a portion of executive compensation could be withheld should the executives fail to achieve their compliance objectives. CEO Doug McMillon notes in the recent compliance report that senior management worked with the audit committee in fiscal year 2015 to accomplish 70 of the 72 compliance objectives outlined by the board the previous year. McMillon said some progress was made on the remaining 2 goals which have been carried over into the current year resulting in no reduction of executive compensation for fiscal 2015. These compliance objectives can be grouped into 3 areas: people, systems, and policies and processes, and were set in collaboration between the audit committee and its counsel and top management. The company employs more than 2,000 people in its formal compliance program and continues to develop its own internal anti-corruption resources.

United Technology Corporation Gets 2nd SEC Subpoena in FCPA Probe

United Technologies Corp. said it received a second subpoena from the SEC seeking information about potential FCPA violations by its aerospace and commercial businesses, including its work in China. United Technologies said the SEC told the company in April 2014 it was conducting a formal investigation, and it issued its first subpoena at that time. The company said it made voluntary disclosures in December 2013 and January 2014 to the SEC and the DOJ, as well as the UK. Serious Fraud Office, regarding a sales representative retained by a subsidiary to sell products in China. The industrial conglomerate said that sales fell 1% in the first quarter, citing the slowing Chinese economy, oil sector retrenchment and a stronger dollar. The corporation’s chief executive abruptly stepped down last year, apparently stunning employees in the process.

Updates on Global Anti-Corruption Laws

Italy: Senate Approves Anti-Corruption Law

Many countries are passing or modifying anti-bribery or anti-corruption laws, and now we are adding Italy to the list. Italy’s Senate has approved an anti-corruption bill amid a rash of kickback and bribery scandals. Following passage at the end of March in Parliament’s upper chamber, the bill goes to the Chamber of Deputies. Premier Matteo Renzi has publicly pledged to crack down on corruption, following the resignation of his infrastructure minister, which came after the arrest of a former top official in a probe of public works projects. Antonio Di Pietro, an ex-prosecutor, said the anti-corruption measures aren’t as strong as they could be, but after two years in the making, the bill is “better than doing nothing.” Current investigations involve construction in Rome’s subway system and the Italian pavilion for the world’s fair opening soon in Milan.

Compliance Officers Required Under New Ukraine Anti-Corruption Law

A new law requiring companies to have compliance programs came into effect in Ukraine. It applies to almost all companies participating in public tenders and to state-owned enterprises over a certain size. Among other things, it requires companies to appoint a compliance officer with responsibility for implementing the compliance program and reporting to shareholders. The law also encourages companies to:

  • conduct regular risk assessments
  • establish mechanisms for monitoring implementation of the compliance program
  • draft and implement an employee code of conduct
  • define the responsibilities of shareholders and employees with respect to anti-corruption compliance
  • establish procedures for reporting misconduct and protecting whistleblowers
  • develop programs to raise employee awareness about anti-corruption
  • establish mechanisms for holding employees liable for violations
  • include compliance provisions in contracts with third parties

While the law does not include penalties for failure to have a compliance program, law enforcement agencies may consider the existence [or absence] of a compliance program in deciding whether to pursue a case. Thus, a compliance program will provide a company with some defense (though not an absolute defense as under the UK Bribery Act) in the event of an investigation. Conversely, the absence of a program may be considered some evidence of guilt.

Panama Passes Law Against Money Laundering

Panama’s president, Juan Carlos Varela Rodríguez, signed a law adopting measures against money laundering, financing of terrorism and the financing of weapons of mass destruction. With the new legislation, the government seeks to protect important sectors of the Panamanian economy that are not used by criminals trying to clean capital products of criminal acts. Additionally the law safeguards companies and workers in key sectors for the country, both financial and nonfinancial, and helps the country “make its way to a new era of transparency in Panama and international cooperation in the fight against money laundering, financing of terrorism and proliferation of weapons of mass destruction.” The law also moves the country closer to Financial Action Task Force (FATF) standards and off of the FATF “gray list.”

Proposal to Strengthen Anti-Money Laundering Law in Singapore’s Parliament

Proposed changes to the Monetary Authority of Singapore (MAS) Act, intended to strengthen anti-money laundering and terrorism financing defenses have been introduced in Singapore’s Parliament. If approved, these will give the banking regulator the authority to inspect a wider range of financial institutions for money laundering and terrorism financing breaches – including non-bank credit card and charge card issuers. The move comes as money laundering cases involving the abuse of such cards are emerging internationally, and non-bank issuers are seen as warranting closer scrutiny. The proposed changes will also allow MAS to share information related to the policing of money laundering and terrorism financing with foreign supervisory bodies, and will set out requirements for financial institutions to conduct customer due diligence and retain the records. These enhancements will align Singapore’s regime with international standards set by the Financial Action Task Force, the global standard-setter for anti-money laundering and counter-terrorism financing.

What Now?

Is anti-money laundering training part of your annual training program? If not, we have a number of different options to help you. For companies in vulnerable industries such as banking, insurance and securities, we offer a complete course, “Anti-Money Laundering: Combating Financial Crimes.” This course covers the warning signs of money laundering, knowing your customer and customer identification programs, risk-based due diligence for screening and reporting suspicious activities.

If your employees have already taken a full course, and you’d like offer a shorter treatment of the topic, we also offer an Anti-Money Laundering Learning Block, which provides a high-level overview of anti-money laundering measures common to susceptible industries in less than seven minutes. Even shorter and more targeted, our Spot-On-Ethics Vignettes are about three minutes long, with anti-money laundering options for the banking and insurance industries.

Compliance Meme

In a conversation with a classmate in my MBA program the other day, he remarked to me, “Everybody always thinks their corporate culture is special and unique, and it rarely is.” Grumpy Cat disagrees.


Source: Compliance Week’s Daily Compliance Meme on Twitter

Share Your Thoughts with Us

We’d love to hear from you! What effect do you think Panama’s new anti-money laundering law will have on global companies? What challenges do you think Ukraine will face as it implements its anti-corruption law? What did you think of the Wal-Mart Global Compliance Report?

You can share your thoughts with us by commenting on the blog, messaging us on JDSupra or messaging me directly on LinkedIn. We look forward to hearing from you!

For More Information About FCPA Compliance, Check Out These Resources:

About the Author

Pia Adolphsen, Associate Manager of Marketing Content Strategy. Pia leads content strategy at The Network. Previously, she led client advocacy and marketing initiatives in the competitive intelligence industry. She is strongly in favor of lattes, 1.0mm pens, and her Georgia Bulldogs. Connect with Pia on LinkedIn
Awards & Certifications 2013 GRC 20/20 Technology Innovation Award 2013 TAG Top 40 Innovative Company 2012 IABC Gold Quill Award 2012 MarCom Award We self-certify compliance Safe Harbor Safe Harbor Certification SOC 2 Certification