Now that the Foreign Corrupt Practices Act (FCPA) has been around for many years, the expectations from the DOJ have become clearer. Having compliance polices in place is a great start, but as the legislation has matured and companies have had time to adjust, they are expected to have an operationalized compliance program.
I read a recent article from the FCPA Blog titled “How Perverse Incentives Cause Companies to Abandon Controls” that outlined the cause and effect of companies ignoring the necessity of these types of controls. The authors state that, knowingly or unknowingly, abandoning controls creates non-compliant behavior that can lead to reputational risk. These controls serve to not only demonstrate compliance, but also to create a culture of good and ethical behavior that ultimately resonates throughout the organization, including customer confidence in products or services.
A highly publicized example is the recent Wells Fargo incentive program for customer accounts. Business leaders at the financial institution informed middle management that they needed to sell eight accounts per customer at their branches. No matter whether this was achievable or not, the goal was set to promote more cross-selling activities and increase profitability. The controversy began when management’s bonuses/incentives were then dependent on this goal, which slowly but surely created unhealthy pressure on everyone. In this situation, it’s no wonder that ethics eroded and compliance/controls were ignored to meet the goal. At the end of the day, the goal and subsequent incentivizing created bad behavior that led to illegal activities, and damaged Wells Fargo’s reputation in the process.
Wells Fargo is an extreme example of these consequences, but it highlights the fact that business goals can sometimes take a compliance program off the rails. It’s easy to grasp that sales culture and incentives need to complement compliance expectations. But it’s also easy to see how real-world instances—where the competition is intense, where the monetary stakes are high, and where opportunities to cheat are present and alluring—can drive business users to violate anti-bribery and corruption laws.
Ultimately, ensuring an organization remains FCPA compliant requires buy in from all parts of the company. Experience has shown that Artificial Intelligence based technology can remove some gray areas from the process of making this happen.
To keep FCPA programs in line with the DOJ’s expectations, organizations must implement comprehensive transaction monitoring to prevent, detect, and remediate potential violations. Monitoring travel and entertainment expenses, reimbursements, and purchases that pose FCPA risk is a struggle for many organizations simply because of the sheer volume of transactions that occur every day.
The solution lies in the use of automation technology that provides compliance professionals with a centralized system that automatically inspects all transactions in a consistent manner.
To learn how an Artificial Intelligence solution can help your organization operationalize compliance, sign-up for a demo of Oversight Insights On Demand.