Letter from the Editor, July 2016

This issue, we have two extremely practical and helpful articles. The first is by Jim Mintz from Mintz Group, and provides guidance on selecting and managing outside investigators.  When a firm is in trouble and facing prosecution, it can avoid criminal sanction by mending its ways under the watchful eye of a corporate compliance monitor. In our second article, Nigel Coles of Exiger looks at how to manage this highly nuanced relationship.

We also have an article from Steven Nelson, Michael Robbins and Janet Wong from Dorsey on protecting against email wire fraud scams and recovering funds wired to Hong Kong.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us.

We’re also delighted to offer AFN members and newsletter readers a 15% discount on C5’s 5th Miami Forum on Fraud, Asset Tracing & Recovery on 17 and 18 October in Miami. This year, Fraud Miami will attract over 140 senior fraud litigation and asset recovery professionals from Canada, the Caribbean, Europe, Latin America, the UK and the US. The event is an excellent platform for benchmarking, learning, networking and exploring the very latest tools and techniques for asset recovery. For more information, email Nathan Denham at n.denham@c5-online.com, or to book your place, click here and use discount code TAFND17.

Nick Burkill

Posted in From The Editor | Tagged , , |

Top tips for selecting and managing outside investigators

JimMintzThe work that top investigative services firms do for their clients is important and valuable; it can, must and will continue. But in too many instances, and for far too long, some investigators have been presenting their work as a mysterious, “dark art”, and their clients have sometimes been too willing to accept it. In reality, investigative services must be carried out according to an appropriate and approved set of ground rules, within the law, and with a high degree of transparency and accountability.
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Posted in 2016 Newsletter, 2016-07, Newsletter | Tagged , |

He’s watching for a sign*: Working effectively with a Corporate Compliance Monitor

Nigel Coles 2016In the UK, a deferred prosecution agreement (DPA) is an agreement between a prosecutor and a company–but not an individual–which the prosecutor is considering prosecuting for any one, or more, of a number of offences of financial crime as defined in the Crime and Courts Act by Parliament in 2013. Whilst designated offences include theft, conspiracy to defraud, customs and excise offences, forgery, fraud, and contraventions of the Financial Services and Markets Act, those most likely to feature in DPAs are offences of bribery and corruption, or of money laundering.
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Posted in 2016 Newsletter, 2016-07, Newsletter | Tagged , , |

Letter from the Editor, June 2016

In this issue, Rebecca Palser from the Risk Advisory Group explains how technology can help minimise risk in the compliance process, and what compliance professionals should look out for when selecting a platform.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us.

Nick Burkill

We would also like to invite all members and newsletter recipients to contribute a review of any of the following Routledge titles: The Changing Face of Compliance, Confronting Corruption in Business, Corporate Social Irresponsibility, Cyber Security, Fraud and Corruption in Public Services, In Pursuit of Foresight, The Origins of Ethical Failures, Security Culture, and The Tone from the Top.

If you are interested in reviewing any of these books, please contact us. Click here and enter discount code AFN16 at checkout for Routledge’s 20% discount on anti-fraud titles.

Posted in From The Editor | Tagged , |

How technology can help minimise risk in the compliance process

Rebecca-Palser-avatarIt will be no surprise to anyone reading this that compliance is becoming increasingly complex. Research conducted by The Risk Advisory Group in late 2015 reveals just how complex, and the impact this is having on compliance professionals. Of those we spoke to, 78% agreed that the sheer complexity of compliance represented a risk in itself. Worryingly, 69 % of respondents said that, as a result, they felt their business was more exposed to risk than it was two years ago.

Part of this risk stems from the way regulatory compliance has evolved. With the appointment of Hui Chen as Compliance Counsel Expert by the Department of Justice late last year, corporates are under even greater pressure to demonstrate in ever-more granular detail that they are meeting their obligations. This requires huge amounts of data collection, organising that data efficiently, and the ability to access it instantly.

One solution is to take advantage of the technology that exists to remove the burden from the compliance teams. A good compliance management tool should alleviate the pressure of day-to-day, routine tasks to give compliance professionals time to think more strategically, and protect their organisation’s reputation more effectively.
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Posted in 2016-06, Newsletter | Tagged , , , |

Letter from the Editor, May 2016

In this issue, Aidan Colclough explains why the possibility of facing huge fines or prosecution as a result of falling foul of the UK Bribery Act or the FCPA, should not dissuade small and medium sized enterprises from taking advantage of the potential for high growth in emerging markets overseas.

The AFN has recently teamed up with Routledge to offer AFN members and readers a 20% discount on fraud books. To obtain your discount on titles such as The Changing Face of Compliance, Confronting Corruption in Business, Corporate Social Irresponsibility, Cyber Security, Fraud and Corruption in Public Services, In Pursuit of Foresight, The Origins of Ethical Failures, Security Culture, and The Tone from the Top, click here and use code AFN16 at the checkout.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in From The Editor | Tagged , |

Risk-based due diligence: SMEs and low risk engagements

AidanColclough2016Small and medium-sized enterprises (SMEs) are increasingly trading outside their local regions to access the opportunity and potential for high growth in emerging markets overseas. In Europe, for example, a survey authorised by the European Commission highlights that about half of SMEs in the European Union have been involved in international business outside the European Internal Market over the last three years.

A direct consequence of this internationalisation of commerce is that SMEs are often finding themselves engaging with third parties around the globe to facilitate their business operations.  In the wake of the UK Bribery Act 2000 (Bribery Act), and under the extensive reach of the US Foreign Corrupt Practices Act 1977 (FCPA), liability for corruption can be triggered when a bribe is paid indirectly through a third party. This opens up significant risks, and SMEs, unlike their blue chip counterparts, may not be so well versed with anti-corruption procedure and may lack dedicated compliance teams.

The vast fines consistently levied by the US Department of Justice (DoJ) and Securities Exchange Commission (SEC), and those imposed by the United Kingdom’s Serious Fraud Office are a clear reminder that the importance of effective third-party due diligence cannot be understated. Indeed, following a recent prosecution, the chief of the SEC Enforcement Division’s FCPA Unit noted that

This is a wake-up call for small and medium-size businesses … when a company makes the strategic decision to sell its products overseas, it must ensure that the right internal controls are in place and operating.

Although recent enforcements and media attention may dissuade SMEs from participating in international commerce and establishing valuable relationships with third parties in overseas territories, such a response would be an overreaction; with appropriate measures in place, there is a way forward.

What is effective due diligence?

Both the United Kingdom and the United States recognise that, to be effective, due diligence does not always require a “kitchen-sink” approach; the extent of corruption risks will vary and, accordingly, so will the level of due diligence required.

Under the Bribery Act, a company will not be guilty of failing to prevent an act of bribery carried out by a third party on their behalf if they have “adequate procedures” in place to prevent such conduct. To demonstrate the presence of these adequate procedures, guidance from the Ministry of Justice recommends that the level of due diligence should be proportionate to the risk of corruption faced by the company and conducted using a risk-based approach.

DoJ and the SEC, through enforcement policies and Opinion Releases, have provided guidance on the FCPA, stating that the degree of due diligence necessary may vary depending on a number of factors, such as the industry, location, size and nature of a transaction, and the historical relationship with the third party.

Identifying risk

The engagement by a company of any third party agent poses a risk, but the level of that risk will vary.

For example, a UK company contracting with a distributor based in Denmark to resell products to Denmark-based retailers does not present the same level of risk as a UK company engaging a business consultant in Kazakhstan chosen by an official of the contracting company, for the sale of equipment to a large state-owned oil company.

These contrasting scenarios highlight that risk factors such as industry, geographical location and the nature of the third party relationship are all relevant in assessing what will be required for due diligence to be effective.
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Posted in 2016-05, Newsletter | Tagged , , |

Letter from the Editor, April 2016

In this issue, Elif Morgenroth completes a two part article by explaining how to identify patterns of financial crime and examining the importance of knowing your enemy, utilising IT effectively, and turning compliance burdens into business opportunities.

In addition, Andrew Vaughan Winterbottom provides insight into the Chinese anti-corruption watchdog’s reporting on state-owned enterprises (SOEs), which is essential for companies conducting due diligence with a view to partnering with an SOE.

The AFN has recently teamed up with Routledge to offer AFN members and readers a 20% discount on fraud books. To obtain your discount on titles such as The Changing Face of Compliance, Confronting Corruption in Business, Corporate Social Irresponsibility, Cyber Security, Fraud and Corruption in Public Services, In Pursuit of Foresight, The Origins of Ethical Failures, Security Culture, and The Tone from the Top, click here and use code AFN16 at the checkout.

We are also delighted to offer readers a discounted opportunity to attend a major industry conference.

The Canadian Institute’s 15th Annual Forum on Anti-Money Laundering will be held on 26 to 27 April 2016 at the Hyatt Regency Toronto. Attendees will gain critical updates on anti-money laundering regulations, guidelines and best practices. The Anti-Forum Network is a proud supporter of this event and we’ve arranged a 10% discount off the conference fee for AFN readers interested in attending.

Registrations are filling up quickly. Reserve your place by calling +1 877 927 7936 or register online. Mention your AFN member code: D10-319-319CX03 to save 10% off your registration fee, at the time of registration. This special rate cannot be combined with any other offer or group discounts.

We are always interested in articles and book reviews written by AFN members and readers. If you would like to contribute to the AFN newsletter or the website, please contact us at info@antifraudnetwork.com.

Nick Burkill

Posted in From The Editor | Tagged , |

Preventing fraud and financial crime: Part 2

Eli MorgenrothIn our last issue, Dr Stefanie Rummel took a practical look at what impact communication has in preventing fraud and financial crime. This issue, Elif Morgenroth explains how to identify patterns of financial crime and examines the importance of knowing you enemy, utilising IT effectively, and turning compliance burdens into business opportunities.

New types of crime, such as cybercrime, are a major concern for financial institutions and companies. Just one type of cybercrime, online fraud, costs over US$600 billion a year in the United States alone.
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Posted in 2016-04 | Tagged |

Decoding the Chinese anti-corruption watchdog’s reporting on state-owned enterprises

Andrew Vaughan Winterbottom 2016Crime or punishment?

President Xi Jinping initiated a wide-ranging anti-corruption campaign soon after he was appointed general secretary of China’s communist party in 2012. The main targets of this campaign have been government officials and state-owned enterprises (SOEs). The campaign’s focus has shifted over time, and at present the financial services sector is being targeted. Chinese media indicate that over a dozen industry executives have been investigated for alleged corruption since mid-2015.
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Posted in 2016-04, Newsletter | Tagged , , , , , , , |