In today’s complex regulatory environment, the importance of a holistic approach to risk analysis and compliance cannot be overly emphasised. Failure to consider the complete regulatory picture can result in compliance oversights and inefficiencies as well as unanticipated consequences of guilty pleas or settlement agreements.

Companies with global footprints must navigate a minefield of laws and regulations governing international trade and business – economic sanctions and asset freezes, export controls and customs and anti-corruption laws, to name just a few. Laws of multiple jurisdictions may apply to a single transaction, and even within the same country, businesses must contend with various separate regulatory regimes and government agencies. The compliance challenges are even greater for government contractors, whose operations are subject to additional regulations and restrictions.

In the face of such complexity, many global enterprises have succumbed to the temptation to ‘stovepipe’ compliance programs by assigning separate compliance personnel with specialised expertise to oversee each area of regulation within each country in which operations are based. This approach results in higher costs of developing and implementing compliance plans, a proliferation of policies and procedures applicable to a particular transaction, and lack of coordination and communication during internal investigations and plea negotiations.

Staggering fines and the threat of criminal prosecution have caused most companies to identify anti-corruption compliance as a top priority. However, in many cases a targeted focus on anti-corruption risk has resulted in the development and implementation of compliance strategies without regard for other applicable risks. For example, background check procedures for third party due diligence may require name-screening of potential agents and representatives without ensuring that sufficient information is collected to assess whether the ownership structure of the third party might attract asset freezing or other economic sanctions.

Apr-Jun 2015 Issue

Miller & Chevalier Chartered