31 Days to a More Effective Compliance Program -Ongoing monitoring of third-parties

Thomas Fox
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One of the key themes from the 2020 Update was the use of data and data analytics in a best practices compliance program. This has specific application to third-parties. In the section entitled, Risk-Tailored Resource Allocation, the following question was posed, Does the company devote a disproportionate amount of time to policing low-risk areas instead of high-risk areas, such as questionable payments to third-party consultants, suspicious trading activity, or excessive discounts to resellers and distributors? Under the section See more +
One of the key themes from the 2020 Update was the use of data and data analytics in a best practices compliance program. This has specific application to third-parties. In the section entitled, Risk-Tailored Resource Allocation, the following question was posed, Does the company devote a disproportionate amount of time to policing low-risk areas instead of high-risk areas, such as questionable payments to third-party consultants, suspicious trading activity, or excessive discounts to resellers and distributors? Under the section entitled, Control Testing, the following question was posed, Has the company reviewed and audited its compliance program in the area relating to the misconduct? More generally, what testing of controls, collection and analysis of compliance data, and interviews of employees and third parties does the company undertake? Finally, under the section entitled, Payment Systems was the following query, How was the misconduct in question funded (e.g., purchase orders, employee reimbursements, discounts, petty cash)? What processes could have prevented or detected improper access to these funds? Have those processes been improved?

Three key takeaways:

Always remember to follow the money to see where a pot of money could be created to fund a bribe.

Transaction monitoring techniques around fraud monitoring translate to data analysis for compliance.

Do not forget to check names against known PEP and SDN lists. See less -

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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