In a two part RegTech podcast, MassPoint's Hdeel Abdelhady talked with Accuity about issues of financial crime, due diligence, and related issues around lawyers as gatekeepers of the financial system.
In the second part of her Q&A with Accuity, Hdeel Abdelhady shared her thoughts on the current and potential impacts of the COVID-19 pandemic on global supply chains, sanctions, and financial crime
Ms. Abdelhady addressed how the CFTC's current investigation of Glencore and its broader anti-corruption plans might fit with the Trump Administration's wider anti-corruption strategy targeting the extractives industry globally, as well as the how the CFTC, which lacks direct FCPA enforcement authority, might take a page from the NYDFS' playbook and indirectly enforce an anti-corruption agenda under the Commodities Exchange Act.
As anti-corruption standards and enforcement practices become more uniform, cooperation among enforcement authorities will increase in frequency and effectiveness. In the FCPA enforcement context and in others, authorities have imposed record-setting fines, and likely will continue to do so with greater frequency, particularly where violations are egregious, widespread, or have broad impact. In such an environment, monetary penalties for avoidable violations may no longer be absorbable as the cost of doing business. As a matter of good business practice, companies of all sizes should take steps to strengthen compliance programs appropriately for their industries, organizational structures, home obligations, and the jurisdictions in which they do business.
The Trump Administration's newly released Africa Strategy is likely to bring greater anti-corruption enforcement, particularly against Chinese state-owned and private firms, as well as against African officials, and African and third country private parties. Extractives industries, particularly involving nonfuel minerals like cobalt, are likely to be of particular interest.
The Global Magnitsky Sanctions apply worldwide, without any requirement of a jurisdictional nexus with the United States. They define corruption broadly enough to capture a wide range of conduct and persons. The sanctions target “serious human rights abuse,” but do not define the term. Moreover, the sanctions are readily deployable. No tailored legislation, executive order, or other administrative process—other than a sanctions determination by the Secretary of Treasury in consultation with the Secretary of State—is required to impose sanctions anywhere, anytime. Given their global reach, substantive breadth, and wide applicability, the Global Magnitsky Sanctions have distinct utility value as they can be readily employed for multiple legal, policy and strategic objectives. They are the Swiss Army Knife of sanctions. To date, 78 individuals and entities have been sanctioned for corruption and human rights abuses. The most recent of these sanctions actions, against Turkey, has triggered speculation as to its motives and objectives. This is discussed below, as are some of the provisions that suggest the Global Magnitsky Sanctions were formulated for sweeping applicability and enforcement latitude.
Today the United States took the extraordinary step of imposing sanctions on Turkey's Minister of Justice Abdulhamit Gul and Minister of Interior Suleyman Soylu. The sanctions were imposed under the Global Magnitsky Sanctions program, promulgated by Executive Order 13818 pursuant to the Global Magnitsky Act of 2016 and the International Emergency Economic Powers Act, among other legal authorities.
The meeting in Helsinki between the U.S. and Russian presidents has (as presumably everyone knows) sparked strong reactions in the United States, particularly in response to the U.S. President's performance. Beyond the politics of the moment and its aftermath, the Helsinki meeting could have legal consequences, should Congress move to insert itself, beyond its standard law-making and oversight role, in sanctions and trade matters. And not just with respect to Russia. There are a number of ways that Congress can play a greater role in sanctions and trade. Such Congressional involvement, if it materializes, would likely be designed to constrain the President, such as by restricting his ability to lift, not impose or modify sanctions through Executive action.
The U.S. arm of Glencore, the global commodities trading and mining giant, has been served a subpoena by the U.S. Department of Justice, according to news accounts. The DOJ's subpoena reportedly seeks documents and information pertaining Glencore's business in the Democratic Republic of Congo (DRC), Nigeria and Venezuela to assess potential violations of U.S. anti-money laundering laws and the Foreign Corrupt Practices Act (FCPA), the principal U.S. law essentially prohibiting the bribery of foreign officials for business gain by U.S. companies and others subject to United States' jurisdiction (broadly construed and applied).The Glencore subpoena may not be a one-off and it should be viewed-- at least for risk assessment and compliance improvement purposes-- as potentially part of a larger U.S. strategy to proactively target corruption and, by extension, money laundering, in Africa and Africa's extractives industries. (The wider context is that the Trump Administration views U.S. anti-corruption, anti-money laundering and sanctions laws and their enforcement as "tools of economic diplomacy", including to advance trade and other policy objectives).
U.S. multinational companies/entities as well as dual citizens/nationals should understand their heightened sanctions exposure under the Global Magnitsky Act, EO 13,818 and the GloMag Regulations. Multinational companies/entities would be well-advised to update their risk-based compliance programs and educate their relevant personnel to make compliance more likely, including by avoiding inadvertent violations of the Global Magnitsky Act, EO 13,818 and the GloMag Regs.