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The Morning Risk Report: Corporate Compliance Programs Hit Refresh With Data-Analytics Tools
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The Justice Department in June instructed its prosecutors to ask companies that come under investigation whether their compliance teams have access to data, if it is being used to monitor for risks.
PHOTO: ANDREW KELLY/REUTERS
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Good morning. The slow shift toward data-driven corporate compliance programs has a new accelerant: the government. Now, companies are scrambling to figure out how to meet the latest expectations, Risk & Compliance Journal’s Dylan Tokar reports.
The U.S. Justice Department in June instructed its prosecutors to ask companies that come under investigation whether their compliance teams have access to data, if it is being used to monitor for risks, and test policies and procedures. Authorities also have shown in recent settlements a willingness to cut penalties for companies that have put data analytics or monitoring tools into their compliance programs.
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The push is incentivizing compliance officers to find ways to access financial and operational data, and adopt technology to better screen for risks such as bribery, which can lead to enormous fines if undetected. Businesses have long used data to drive decision-making in other areas of the enterprise, but adoption of analytics tools in compliance has been slow in part due to budget constraints, cultural hurdles and a lack of one-size-fits-all third-party solutions, compliance officers say.
The market for off-the-shelf solutions has been slow to develop as companies look for specific tools to suit their risk profiles and compliance needs. Bespoke analytics and monitoring services, meanwhile, can be pricey, a difficult pitch for a corporate function largely viewed as a cost center—especially in the middle of a recession. “There is no magic formula to this,” said Piyush Sharma, a deputy chief compliance officer at Alexion Pharmaceuticals Inc. “Everyone’s coming from different companies with different risk profiles.”
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From Risk & Compliance Journal
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Leaked SARs Prompt Fresh Calls for Updated AML Regulations
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A leak of U.S. Treasury Department records on red-flagged financial transactions underscores a message national security officials, banks and regulators have been sending for more than a decade: Anti-money-laundering rules need to be updated to better disrupt illicit cash flows.
Government and industry officials, concerned that existing laws fail to address the evolution of the financial system, have been gaining political traction for an overhaul of regulations meant to fight terror finance and money-laundering used by drug traffickers, arms proliferators and a host of other bad actors.
Thousands of leaked suspicious activity reports, or SARs, filed by banks to the Treasury Department’s Financial Crimes Enforcement Network highlighted long-known ways that criminals use the financial system to move money. BuzzFeed News, the International Consortium of Investigative Journalists and other media organizations published reports over the weekend citing the leaked documents.
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Two New York men are accused of making more than $900,000 in an insider-trading scheme, using confidential information on publicly traded companies from the S&P Dow Jones Indices, the company that manages the S&P 500 benchmark and other indexes.
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Huawei rival Cisco Systems is among the U.S. companies seen as likely to be included in a blacklist of American entities Beijing officials are drawing up.
PHOTO: ELIJAH NOUVELAGE/REUTERS
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Beijing has sped up development of a blacklist that could be used to punish American technology firms, but officials say leaders are hesitating to pull the trigger, with some arguing a decision on the list should wait till after the U.S. election. The debate highlights Beijing’s continued grappling with how to respond to the Trump administration without driving the relationship closer to collapse.
So far, the Chinese leadership has tried to respond in kind to Washington’s actions, but has tried to avoid measures that go beyond those of the U.S. A well-timed strike can sometimes work in Beijing’s and Chinese companies’ favor. After President Trump’s campaign for a U.S. company to take over video-sharing app TikTok, Chinese regulators rolled out new export-control rules that have helped TikTok parent ByteDance set terms that could help it avoid losing control of the platform’s U.S. operations or crucial technology.
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A Republican-led Senate probe of the work Democratic presidential nominee Joe Biden and his son did in Ukraine is nearing completion, with the report set to renew a battle over an issue central to President Trump’s impeachment.
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Republicans on the involved committees say the investigation is a justified re-examination of corruption allegations advanced by Mr. Trump and his allies about the Biden family’s activities related to Ukraine. Democrats say there is no evidence of wrongdoing and that the panels’ findings may spread Kremlin-backed disinformation at a time U.S. intelligence agencies have issued heightened warnings about Russian efforts to interfere in the presidential election.
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Support is growing in Europe for targeting Belarusian President Alexander Lukashenko with sanctions, as the European Union looks to toughen its response to the political crisis in the former Soviet republic.
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Electric-truck maker Nikola is turning to an outside supplier to provide batteries for its first semi-truck model, according to people familiar with the matter, a contrast to the company’s earlier statements that it has developed its own battery technology. Nikola has come under scrutiny recently after a short-seller’s report accused the startup of misleading investors about its technology.
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The Federal Reserve, following an earlier split between banking regulators, took an initial step to rewrite rules for hundreds of billions of dollars in lending and investment in lower-income neighborhoods.
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The entrance to an apparel factory in Hotan in China’s Xinjiang region in 2018.
PHOTO: NG HAN GUAN/ASSOCIATED PRESS
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At least five organizations say they won’t help companies audit their supply chains in China’s Xinjiang region, where human-rights activists say a police-state atmosphere and government controls make it too difficult to determine whether factories and farms are relying on forced labor.
The withdrawal of some of these auditing groups adds to the difficulty for brands to work with Xinjiang-based suppliers, bolstering a campaign by rights groups—and Washington—to cut Xinjiang off from global supply chains following Beijing’s repression of Turkic-speaking minorities in the region.
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Large cruise operators haven’t sailed in the U.S. for about half a year.
PHOTO: GERARD BOTTINO/SOPA IMAGES/ZUMA PRESS
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The cruise industry outlined the steps it would take to protect people on board its ships amid the Covid-19 pandemic as it seeks regulatory permission to resume sailings in the U.S.
The Cruise Lines International Association released a plan that calls for implementing tighter controls to keep infected people from boarding ships, reducing transmission through air management, as well as steps for addressing positive infections aboard. The proposed measures would also apply to CLIA members’ sailings in the Caribbean, Mexico and Central America, it said.
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The U.S. economy is likely to grow more slowly in coming decades and the public debt burden will increase more than previously forecast, due in large part to the coronavirus-induced recession, the Congressional Budget Office said.
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The U.S. Centers for Disease Control and Prevention pulled new guidelines acknowledging the new coronavirus could be transmitted by tiny particles that linger in the air, saying a draft version of proposed changes was posted in error on the agency’s website.
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A distancing General Assembly at U.N. headquarters in New York. A group of finance chiefs put forward a sustainability framework as the mostly virtual gathering began Monday.
PHOTO: ESKINDER DEBEBE/UNITED NATIONS/EPA/SHUTTERSTOCK
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Chief financial officers are calling on other executives to make sure their businesses help fight poverty and climate change. A group of CFOs published a framework to help guide companies’ decision-making in areas such as corporate finance and investing to support the United Nations’ Sustainable Development Goals. These goals, adopted in 2015, include ending poverty by 2030, taking action against climate change and improving access to clean water.
The CFOs are urging other finance executives to allocate their companies’ resources to projects that support the development goals and expand their set of funding instruments to include green bonds and other sustainability-oriented tools, executives said.
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