Assessing Your Financial Crime Compliance Risk and Controls

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Is your Financial Crime Compliance program effective in mitigating risks?

What is financial crime?

  • Sanctioned entities
  • Money laundering
  • Bribery and corruption
  • Third-parties 

The Office of Foreign Assets Control (OFAC) administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. The sanctions can be either comprehensive or selective, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goal.

The Foreign Corrupt Practices Act* (FCPA) generally prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business. The FCPA also requires issuers to maintain accurate books and records and have a system of internal controls sufficient to, among other things, provide reasonable assurances that transactions are executed and assets are accessed and accounted for in accordance with management's authorization. The SEC and the Department of Justice are jointly responsible for enforcing the FCPA.

Why Should You Care About Financial Crime?

Reputation Risk

  • Damage to your company’s reputation and brand
  • Lost revenue and shareholder value
  • Increased operating or regulatory costs
  • Legal fees (even if found not guilty)
Corporate Citizenship
  • A culture of ethical and legal responsibility for the benefit of society
  • Brand and company loyalty from customers, employees, and shareholders

Individual Accountability

  • Potential damage to personal reputation and career (guilty or not guilty)
  • Substantial fines and penalties

Money Laundering

  • Companies, especially small businesses, are often unwitting victims used in money laundering schemes
Penalties for Non-Compliance - OFAC
 
The fines for violations can be substantial. In many cases, civil and criminal penalties can exceed several million dollars. Civil penalties vary by sanctions program and the law requires OFAC to adjust civil monetary penalty amounts annually.  For current penalty amounts, see section V.B.2.a of Appendix A to OFAC’s Economic Sanctions Enforcement Guidelines at 31 C.F.R. Part 501. 
 
Penalties for Non-Compliance - FCPA
 
Companies and individuals may have to disgorge their ill-gotten gains plus pay prejudgment interest and substantial civil penalties. Companies may also be subject to oversight by an independent consultant. Employees may be sentenced to personal jail time.

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