Featured Articles:

OFAC’s New §501.604 Reporting Requirement: A Small Change with a Big Impact

Matt Stankiewicz, Senior Associate, and Jessica Sanderson, Of Counsel, both at The Volkov Law Group, rejoin us for an interesting posting on a new OFAC reporting requirement. Matt can be contacted at mstankiewicz@volkovlaw.com, and Jessica can be contacted at jsanderson@volkovlaw.com. On June 21, 2019, OFAC changed its requirements for reporting on blocked or rejected transactions under 31 C.F.R. §501.604.  With little fanfare, the interim rule...

Episode 102 — The Future of Compliance

Compliance has come a long way over the last 10 years. But it still has a ways to go until it is firmly embedded into the corporate governance landscape. In this episode, Michael Volkov examines current issues surrounding compliance programs, including the state of the compliance profession, technology and new frameworks; government enforcement trends and predictions; and congressional mandates for compliance.  

Digging into High-Risk Distributors (Part II of II)

Compliance professionals are implementing their own monitoring and auditing strategies.  Internal audit does not have the resources nor the time to assume responsibility for this function.  If possible, internal audit may support, advise and assist in the monitoring and auditing functions.  Frankly, a partnership between compliance and internal audit in this area is ideal but compliance cannot wait for internal audit to join the mission. ...

Managing High-Risk Distributor Risks (Part I of II)

Companies will often rely on a network of distributors to help sell their products in emerging markets.  From a business economics standpoint, engaging a distributor is often more cost efficient than investing in a sales force in a new market.  As a result, companies may enter a new market by relying on distributors, and if successful, may invest in the future by establishing its own...

Five Common Weaknesses in OFAC Sanctions Compliance Programs

As companies elevate their “game” in sanctions compliance, it is important that compliance officers critically examine the strengths and weaknesses of their compliance programs.  Many companies already have a screening technology but little else beyond a basic screening process. From my vantage point, I have observed some common weaknesses: Segregation of Duties and Control Process:  Many companies maintain a screening program and assign the responsibility...

Corrupt Intent and Bribery

In my showcase of profound but obvious points, let me add to my collection – an illegal bribe often turns on the actor’s state of mind.  Did he or she act with corrupt intent? The actor’s state of mind is a common element to many criminal offenses.  In most cases, the government has strong evidence of such corrupt intent.  In some cases, the government is...

Five Lessons for Third-Party Distributor Risk Management from Microsoft FCPA Settlement (Part III of III)

The Microsoft FCPA settlement, while not significant in the total penalty of approximately $25 million, provides some important instructions concerning distributor and re-seller risks and mitigation strategies.  Here are five important lessons learned:  Discount Controls and Customer/End User Pricing: Microsoft agreed to provide significant discounts based on false justifications.  Microsoft failed to confirm the justification for the discounts that permitted the bad actors to create...

Episode 101 — The Antitrust Division Announces New Credit for Compliance Programs

In yet another major compliance development, the Justice Department announced the adoption of a new policy to credit effective compliance programs in resolving criminal cartel prosecutions against corporations. Since the 1990s, the Antitrust Division’s policy regarding corporate compliance programs was generally fixed given the ability of companies to seek benefits under the leniency program. As part of its new policy, the Antitrust Division released its own...

Microsoft FCPA Settlement Underscores Third-Party Risks (Part II of III)

Microsoft’s bribery and controls violations reflect significant risks facing companies that rely on distributor and reseller networks to sell their products.  Companies often enter and operate in emerging markets through complex networks of third parties.  Such distribution systems create significant anti-corruption risks that have to be managed and mitigated. It is worth taking the time to examine the precise outlines of the conduct at issue...

Microsoft Pays DOJ and SEC $25 Million to Resolve FCPA Violations (Part I of III)

Microsoft finally resolved its FCPA enforcement action with a whimper.  Notwithstanding prior suggestions that Microsoft’s investigation uncovered global conduct, Microsoft’s liability focused primarily on Microsoft’s conduct in Hungary.  Even with the tailored settlement agreement,  DOJ and the SEC reiterated robust expectations surrounding third-party distributor networks, particularly in the software industry. To resolve a lengthy six and one-half year investigation, Microsoft entered into a non-prosecution agreement...