Industry - Business
Many international jurisdictions take their
cues from the U.S. to form their own similar version. The policy of knowing your customer is becoming more important on a global scale, to prevent identity theft fraud, money laundering and terrorist financing. It’s important to implement these types of procedures in your company to ensure you, your agents, consultants or distributors are in anti-bribery compliance.
Who to look out for
So how does one make the connection between knowing the customers they do business with and bribery? Although they are called slightly varying names in different countries, there are prominent public figures generally known as a Politically Exposed Person (PEP) or Foreign Official. These people,
due to their position and influence, are a higher risk for possible bribery and corruption. The Financial Action Task Force on Money Laundering (FATF) also includes the immediate family members or publically known individuals that are close personal or professional associates of the PEP in their definitions. While there is no global definition for the term, most countries have based their own definitions of the FATF. The anti-bribery provision of the Foreign Corrupt Practices Act (FCPA) “makes it unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person.” The penalties for violation are severe. Criminal penalties could include fines up to $2,000,000, and individuals including officers, directors, stockholders, employees or agents could be fined up to $100,000 and imprisonment up to 5 years. Without proper screening procedures, it is possible to engage in business with someone who is considered a PEP, putting you and your company at risk of violating the law.
What to look out for/Money Laundering
Without participating in due diligence practices, it could be possibly to accidently bribe a PEP or Foreign Official when engaging in business with a new country, or a new company. The bribing of public officials is considered money laundering under the expanded definition in the USA PATRIOT Act. An approximation by the
Usually when we think of globally exporting items, we visualize shipping docks loaded with containers ready to be sent across the ocean. However many companies may be currently exporting items without even realizing they are violating export controls.
International Monetary Fund estimates between 2% and 5% of global gross domestic product as laundered money, financing criminal enterprises and terrorism. Money laundering has been a criminal offense in the U.S. since the Money Laundering Control Act of 1986, however anti money laundering (AML) guidelines came into prominence after the September 11, 2001 attacks. Many countries worldwide have initiated their own Money Laundering legislation. The United Kingdom, and many other European countries have based their regulations direct on the EU directive 91/308/EEC, 2001/97/EC and 2005/60/EC, preventing the use of financial institutions for the purpose of money laundering and terrorist financing. The easiest way to ensure you company doesn’t contribute to money laundering is to Know Your Customer by screening potential companies and individuals to do business with.
Export Controls
Usually when we think of globally exporting items, we visualize shipping docks loaded with containers ready to be sent across the ocean. However many companies may be currently exporting items without even realizing they are violating export controls. The U.S. holds strict export regulations under the Export Administration Regulations (EAR), which regulate export and re-export of commercial items. Under the EAR, many forms of
communication such as a set of schematics sent via e-mail, or software downloaded from an internet site are both considered an export. Even if the item is only leaving temporarily, or is a gift, it is still considered an export. To confuse
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