Best Practices, Common Pitfalls of Working in High-Risk Countries | Article

Session speakers included Charlie Reed, Vice President of Corporate Compliance at Flex; Tyler Hand, compliance officer at Western Union; Fabricio Nunes, Global Chief Compliance Officer at Linde; and Ralph Carter, general manager of regulatory affairs at FedEx.

Panelists highlighted that issues related to working in high-risk regions have always existed, but recent dynamic events and circumstances have added unique challenges.

Modern risk landscape

“There are new OFAC rules for places like Russia and Ukraine; the volatility of cryptocurrencies which makes it difficult to use and process them in transactions; and a pandemic that has changed consumer ordering habits,” Hand said. OFAC, the Treasury’s Office of Foreign Assets Control, is the primary sanctions regulator in the United States.

“You can’t get it right if your risk assessment is ‘wrong’ at all. The management team should be made aware of the specific risks posed by these regions and act accordingly.

Fabricio Nunes, Global Chief Compliance Officer, Linde

Hand said Western Union needed to be dexterous in its communications with its offices to keep up with these developments and new obligations and pivot accordingly.

Nunes agreed and spoke about the challenges facing Linde, a company producing and selling gas locally in 80 countries.

“You can’t get it right if your risk assessment is ‘wrong’ at all,” he said. “The management team must be made aware of the specific risks posed by these regions and act accordingly. We decided we couldn’t operate safely in Russia and walked out.

Carter pointed to FedEx’s challenge as a shipping company maintaining a large fleet of aircraft that had to follow export control rules, and have interception techniques to ensure that any goods destined for a targeted country could be quickly intercepted, if necessary.

“We have aligned our training among our various branches around the world specifically to deal with export controls and these interception techniques that we have created,” he said.

Nunes said his company has done the same with training, in addition to involving its middle managers more in working with employees on the ground so they have a better view of street-level risks.

“We organize anti-corruption training and other types of training twice a year for certain employees and certain offices. And we adjust them as needed,” he added.

Risk Assessments…and the Risk of Russia

Hand said Western Union’s risk assessment process takes into account the company’s level of confidence in operating risk in certain areas, which sometimes leads to decisions to avoid certain types of risk. activities, although the company may obtain an exception to OFAC’s restrictions.

“We need to see if we can sufficiently mitigate the risks for our customers,” he said. “The federal government often wants us to keep sending funds, but we as a company – and our business partners – need to feel good.”

Hand said the bank had no business in Russia rooted strictly in humanitarian efforts, so Western Union pulled out of the country.

Nunes pointed out that leaving Russia altogether is not always the right strategy for a company. For Linde, the company was able to pivot and provide some humanitarian services – offering oxygen to healthcare facilities – and it was important that the company remained operational for that purpose.

Carter noted that employees and customers in these high-risk countries might see things differently than senior executives and need more explanation about why business there is interrupted.

“I spend a lot of time with [communications] teams to describe these issues and our decisions about how and why we respond to them,” he said.

Using DOJ’s Data Tips and Tools

In closing, Reed reminded attendees to consult the Foreign Corrupt Practices Act Resource Guide, published by the Securities and Exchange Commission and the Department of Justice, for guidance in this area.

Panelists said they relied on data and intelligence to map transaction patterns, monitor changing consumer behavior and track regulatory changes. Make sure you have enough intelligence on the ground, so you don’t rely solely on technology and get trapped by false positives, they advised.

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