Welcome to this ACT webinar

Transcription

1 Welcome to this ACT webinar Know your third party compliance 22 October BST Sponsored by

2 Introduction Stephen Baseby Associate Policy & Technical Director ACT

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4 Agenda Introduction Stephen Baseby Associate Policy & Technical Director, ACT Presentation James Swenson, Head of Operations and Delivery for Thomson Reuters Enhanced Due Diligence, Thomson Reuters Discussion and Q&A

5 Presentation James Swenson Head of Operations and Delivery for Thomson Reuters Enhanced Due Diligence Thomson Reuters

6 Accelus Enhanced Due Diligence Know your Third Party Compliance James Swenson October 2015

7 Key Areas of Risk in the Supply Chain Customer & 3rd Party Risk Identify an individual/entity Understand if you can and should do business with the individual / entity Monitor for suspicious activity Report and disclose to regulators and board Compliance Risk Stay current on all regulations Anticipate how regulations might change and how they could impact your organisation Link changing regulations to policies Report and disclose to regulators and board Enterprise Risk Measure and monitor risks related to events and the breakdown of internal procedures, people and systems Report and disclose to board Financial Risk Understand and optimise exposure to credit, liquidity and market risk Comply with financial regulations Deliver accurate reporting Corporate Governance and Controls Build rules, practices and processes for operational effectiveness Monitor and test rules, practices and processes to ensure compliance

8 KY3P Risk Management Review Monitor Educate Develop Build Identify In order to prevent, detect and investigate supplier and third party risk, organisations need to implement a simple framework : 1. Develop your program 2. Build and operate controls 3. Identify the risks 4. Assess the results Assess 5. Monitor and report 6. Review and align 7. Train and educate

9 Pillars of a ABC Compliance Programme Proportionate Procedures Monitoring & Review Top-Level Commitment Training Risk Assessment Due Diligence

10 KY3P Risk Management Third-parties or business associates include: 1. Clients/Customers 2. Joint Venture/Consortium Partners 3. Contractors/Suppliers/Vendors/Distributors 4. Agents/Introducers/Intermediaries/Consultants

11 Risk Variables Jurisdictions Exposure to Gov t Officials Business Sector Relationship Type

12 Risk-Based Approach Location Business Sector Exposure to Public Officials? Relationship Type Risk Rating Low Risk Norway/Canada Medium Risk Malaysia/Poland High Risk Venezuela/ Ukraine Low Risk Consumer Services, Retail Medium Risk Pharmaceuticals/ Telecoms High Risk Oil & Gas, Extraction, Defense Are the principals behind the company Foreign Public Figures? Will the business involve gov t or public contracts? Is a gov t license required for the operation? Are the third party goods and services missioncritical? Does the supplier deal with proprietary info, IT systems, security services? HIGH RISK MEDIUM RISK LOW RISK

13 Risk-Based Approach Location Business Sector Exposure to Public Officials? Relationship Type Risk Rating Low Risk Norway/Canada Medium Risk Malaysia/Poland High Risk Venezuela/ Ukraine Low Risk Consumer Services, Retail Medium Risk Pharmaceuticals/ Telecoms High Risk Oil & Gas, Extraction, Defense Are the principals behind the company Foreign Public Figures? Will the business involve gov t or public contracts? Is a gov t license required for the operation? Are the third party goods and services missioncritical? Does the supplier deal with proprietary info, IT systems, security services? HIGH RISK MEDIUM RISK LOW RISK

14 Risk-Based Approach Location Business Sector Exposure to Public Officials? Relationship Type Risk Rating Low Risk Norway/Canada Medium Risk Malaysia/Poland High Risk Venezuela/ Ukraine Low Risk Consumer Services, Retail Medium Risk Pharmaceuticals/ Telecoms High Risk Oil & Gas, Extraction, Defense Are the principals behind the company Foreign Public Figures? Will the business involve gov t or public contracts? Is a gov t license required for the operation? Are the third party goods and services missioncritical? Does the supplier deal with proprietary info, IT systems, security services? HIGH RISK MEDIUM RISK LOW RISK

15 KY3P Risk Management Lower Risk Medium Risk Higher Risk Sanctions Screening Sanctions Screening Sanctions Screening Black & Watch Lists Black & Watch Lists Black & Watch Lists PEPs/Heightened Risk PEPs/Heightened Risk PEPs/Heightened Risk Adverse Media Search Adverse Media Search Adverse Media Search Company status verification Directors/Shareholders In-country database and local language media check Company status verification Directors/Shareholders In-country database and local language media check In-depth reputational assessment Source interviews and reference checks

16 Drivers for Due Diligence Foreign Corrupt Practices Act (FCPA) UK Bribery Act (UKBA) OECD Good Practices Guidance US Patriot Act EU Money Laundering Directives Reputation Ethical Business Practices Sanctions Compliance Ultimate Beneficial Ownership Obligations

17 Drivers for Due Diligence Does the company exist? Who owns it? Where is the office and who manages it? Physical office location? Is it well established? Is it owned or managed by entities connected to political figures? Is it newly incorporated? Is it established offshore? Who are the Ultimate Beneficial Owners (UBOs)? Are the principals criminals or money launderers? Are they a risk to your reputation and your business? What is their track record? Do they pay or accept bribes?

18 Sources of Information Open Sources Internet/News Aggregators/Foreign Press/Social media Company Registrars/Tax Bureaus/Gov t Ministries Public Records/Official Gov t Sites Media Monitoring Court Records PEP/Sanctions/Blacklists Commercial Information Databases Databases Litigation/Regulatory /Bankruptcy Databases

19 EMERGING RISKS IN THE SUPPLY CHAIN Forced Labour Bonded Labour Supply Web Modern-Day Slavery Child Labour Direct Supplier Supply Web

20 HOW SIGNIFICANT IS THE PROBLEM? Forced/Bonded/Child Labour in the Private Sector generates an estimated USD 150 million in profits. More than 21 million people worldwide are currently in conditions of forced or bonded labour. Most common industries: cottons, tobacco, sugarcane, cattle and coffee Also prevalent in garments, electronics and construction. Controversial issue in Qatar.

21 RECENT EXAMPLES Electronics Section in Malaysia Recruitment firms in Nepal/Myanmar Confiscation of Travel Documents Conditions of Indentured Servitude Seafood Industry and Thailand Family Members Forced to Sign Agreements Living Wages Market Backlash

22 DRIVERS California Supply Chain Transparency CA Companies with Revenues over USD 100 million Must Disclose Efforts Though These are not Regulated Conditions of Indentured Servitude US Federal Government Executive Order Modern Slavery Bill 2014/2015 (UK) Committee Stage in the House of Lords Similar to the California Legislation

23 Any Questions?

24 The panel Chair Stephen Baseby Associate Policy & Technical Director, ACT Speaker James Swenson Head of Operations and Delivery for Thomson Reuters Enhanced Due Diligence, Thomson Reuters

25 Chair s closing remarks Stephen Baseby Associate Policy & Director ACT

26 FORTHCOMING EVENTS ACT Corporate Funding Conference 28 October 2015 London ACT video webinar: demystifying repos 04 November 2015 ACT Annual Dinner 11 November 2015 London ACT Middle East Annual Conference November 2015 Dubai ACT Cash Management Conference February 2016 London ACT Annual Conference May 2016 Liverpool treasurers.org/events

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