This is part 5 of a five-part series with Tom Fox and the FCPA Compliance Report on what to expect concerning regulatory and enforcement issues with the incoming Biden administration. Listen to the series from the beginning by clicking here.
How can companies prepare for what is coming down the road in 2021 and beyond?
With the pandemic—and the global economic downturn that it created—continuing to influence events, experts expect an uptick in enforcement of key U.S. regulations. The new leadership at the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), and other regulators will lead with changes in priorities, consistent with those associated with prior Democratic administrations. For example, the Obama administration instituted high levels of regulation, investigations, and M&A scrutiny in the wake of the worldwide financial crisis of 2008. A similar reaction is expected from the Biden administration.
This oversight and enforcement will in all likelihood translate into enhanced focus on five key areas.
- The investigation and prosecution of COVID-relief-related fraud.
- The investigation and prosecution of financial and corporate fraud occurring as a by-product of the economic downturn caused by the pandemic.
- The investigation and enforcement of Foreign Corrupt Practices Act (FCPA) violations. Expect to see cross border collaboration with various other jurisdictions around the world.
- The use of trade and economic sanctions, likely with a more robust, multilateral approach, particularly as it comes to enforcement.
- Environment, social, and governance (ESG) issues.
However, companies should not fear this rapid uptick in an overall corporate enforcement actions. Rather, they should remain attuned to the shifts in enforcement priorities that will accompany the new administration and recalibrate risk assessment and management as necessary. Companies should also continue to prioritize the maintenance of their compliance programs during the pandemic, as both the DOJ and SEC have over the last year emphasized very clearly that the focus remains on maintaining robust compliance programs. This means routinely conducting an assessment or review of the existing compliance program and ensuring that it is updated through pressure testing.
Compliance professionals should also be monitoring a few additional risks:
- Third-party risk management: This is still the highest risk under the FCPA, making it important that corporations take a very pragmatic and systematic approach to managing their relationships with third parties.
- The new whistleblower program under the National Defense Authorization Act (NDAA): Companies must make sure that they not only maintain, but also strengthen, their internal whistleblower programs. This is especially important in the remote working environment many corporations have adopted in reaction to the global pandemic.
- Training: The government wants to see both targeted and effective training. It is important that compliance team members and senior management receive appropriate training, and that this training and knowledge is cascaded down through the rest of the organization. In addition, gatekeepers, senior management, and control functionaries need to receive targeted training for their roles in effecting or supporting a corporate compliance program.
For more information, go to the K2 Integrity website.
