GCSG issues Malaysia compliance risk profile

Global Compliance Solutions Group LLC (GCSG) issues Malaysia country compliance risk profile

GCSG distributes Malaysia, our fourth country compliance risk profile – our risk profiles provide business, compliance, and risk professionals with a snapshot of relevant governance, trade compliance, and anti-bribery and corruption risks

PRAIRIEVILLE, LA – GCSG, a professional compliance management consulting company, today issues Malaysia our fourth country compliance risk profile (“risk profiles”).  The risk profiles are intended for business, compliance and risk professionals concerned with governance, trade compliance, and anti-bribery and corruption compliance risks in countries in which they do business. 

Each risk profile is designed to provide a snapshot of a targeted set of compliance risks within each country to assist the user with understanding the risks in that country as they look to diversify their supply chains, acquire a new business, or improve their knowledge of a country they currently operate within. 

We are excited to build on our client focused services with the launch of our free country compliance risk profiles because we believe they will bring value to the user,” said Jonathan Mellard, Founder, GCSG. 

Each risk profile provides a concise view of relevant legislation, risks, and the current environment.  Every risk profile incorporates a risk ranking for each category and for the country overall.  The risk ranking is determined using our Compliance Risk Index (CRI), a tool that analyzes a combination of publicly available factors and then calculates and assigns a score for potential risk at the country level.   

Our first three profiles were Vietnam, Myanmar, and Indonesia. Interested parties should periodically check our country risk profiles web page as we continue, over time, to add more profiles.

This Malaysia risk profile was written in collaboration with the Malaysian office of Rahmat Lim & Partners.

Access the Malaysia risk profile: http://www.globalcompliancesg.com/s/Malaysia-Country-Risk-Profile-ee42.pdf

Access our country risk profiles web page: http://www.globalcompliancesg.com/country-risk-profiles

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Global Compliance Solutions Group LLC

Global Compliance Solutions Group LLC (GCSG) is headquartered in Louisiana, USA.  We provide international Advisory, Audit, and Due Diligence products and services wherever our clients are located across a range of industries in the areas of Anti-Bribery and Corruption, Import, Export, and Customs Compliance, Drug Precursor, and Distilled Spirits Plant Compliance. We reduce risk and help protect our client’s business by guiding and partnering with them to solve challenging compliance issues. 

For more information about GCSG: http://www.globalcompliancesg.com/about-us

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Costa Rica's New Anti-Corruption Law

On June 6, 2019 the Costa Rican Legislative Assembly approved a new anti-corruption law(1). The law is the result of efforts(2) by Costa Rica to join the Organization for Economic Cooperation and Development (OECD)(3). To further their efforts, Costa Rica approved the adoption of the OECD “Convention on Combating Bribery of Foreign Public Officials in International Business Transactions” on May 10, 2017(4,5).

Highlights of the new law:

  • Allows for holding domestic (private or state owned) or foreign corporations (conducting business in Costa Rica), trusts, associations, and foundations criminally responsible for domestic or transnational bribery

  • Allows for sanctioning a parent company for the actions of their subsidiaries and affiliates

  • Establishes large potential financial penalties for corporations found guilty of corruption

  • Allows for the potential reduction of penalties (up to 40%) if certain “mitigating circumstances” are met by the corporation

Mitigating Circumstances include:

  • Having in place an effective anti-corruption program

  • Having in place an independent compliance officer

  • Reporting potential non-compliance

  • Cooperation with authorities investigating the potential non-compliance

Costa Rica Corruption Rankings

  • 2018 TRACE Bribery Risk Matrix Rank(6): 48 out of 200 countries (1 Best)

  • 2018 Corruption Perceptions Index Rank(7): 48 out of 180 countries (1 Best)

  • 2019 GCSG Country Compliance “Corruption” Risk Rating(8): Moderate

Contact us to learn more about this development in Costa Rica.

References

  1. Legislative Assembly of the Republic of Costa Rica - “Liability of Legal Persons in Domestic Bribery, Transnational Bribery and Other Crimes” - Legislative Decree No. 9699, Record No. 21,248 | Approved 06/06/2019

  2. OECD - “OECD establishes roadmap for membership with Costa Rica” - 15/07/2015

  3. OECD Home page - “Organization for Economic Cooperation and Development

  4. FCPAmericas Blog - “Costa Rica Adopts the OECD Anti-Bribery Convention” - 06/06/2017

  5. OECD - “Costa Rica to join the OECD Anti-Bribery Convention” - 31/05/2017

  6. Trace International, Inc. - “2018 TRACE Bribery Risk Matrix

  7. Transparency International - “2018 Corruption Perceptions Index

  8. Global Compliance Solutions Group LLC (GCSG) - “Country Risk Ranking - Sources & Methodology

OFAC Publishes a Framework for Compliance

On May 2, 2019 the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC)(1) published “A Framework for OFAC Compliance Commitments”(2). The publication is intended to provide OFAC’s perspective, to entities subject to US jurisdiction, on what are essential components of an effective sanctions compliance program.

OFAC developed this framework in our continuing effort to strengthen sanctions compliance practices across the boardThis underlines our commitment to engage with the private sector to further promote understanding of, and compliance with, sanction requirements.” - Andrea M. Gacki, Director of the Office of Foreign Assets Control (3)

Summary

  • OFAC continues to emphasize and “strongly encourage” entities subject to U.S. jurisdiction to take a risk-based approach to sanctions compliance by “developing, implementing, and routinely updating a sanctions compliance program (“SCP”).

  • Regardless of company size, sophistication, products/services, geographic locations, etc…each SCP should incorporate at least these five (5) components: management commitment, risk assessment, internal controls, testing and auditing, and training.

  • In enforcement cases, OFAC will evaluate an entities SCP against the Economic Sanctions Enforcement Guidelines (the “Guidelines”)(4) and when applying the Guidelines will favorably consider an entity that had an effective SCP in place at the time a violation occurred.

A Few Key Points

  • Management Commitment

    • Effective senior management commitment, among others, includes providing adequate resources for compliance and support for the authority of compliance personnel within the organization.

    • Adequate resources includes ensuring there are enough personnel with sufficient expertise dedicated to compliance, and adequate information technology, and other resources, as appropriate.

  • Risk Assessment(5)

    • OFAC recommends a risk-based approach to implementation of a SCP and one of the integral components of this approach is to conduct periodic risk assessments.

    • The assessment should include, among others, a review of customers, vendors, products, services, third-party intermediaries, and geographic locations.

  • Internal Controls

    • An effective SCP should include policies and procedures. These policies and procedures should be enforced and updated when weaknesses are detected or requirements change.

    • Sufficient personnel should be appointed to ensure proper integration of the company’s policies and procedures into the daily operation of the company.

    • The organization should clearly communicate their policies and procedures to all relevant staff.

  • Testing and Auditing

    • An effective SCP include’s a comprehensive and objective testing or audit function that identifies program weaknesses and deficiencies.

    • Any deficiencies identified, including software systems, should be addressed.

  • Training

    • An effective training program is considered an integral component of a successful SCP. The training should be provided to all appropriate employees and personnel on a periodic basis (at a minimum, annually).

  • Root Causes of OFAC Compliance Program Breakdowns - OFAC has identified the following common areas where deficiencies resulted in sanctions compliance failures:

    • Lack of a formal OFAC sanctions compliance program;

    • Misinterpreting, or failing to understand the applicability of, OFAC’s regulations;

    • Facilitating transactions by non-US persons (including through or by overseas subsidiaries or affiliates);

    • Exporting or re-exporting US-origin goods, technology, or services to OFAC sanctioned persons or countries;

    • Utilizing the US financial system, or processing payments to or through US financial institutions, for commercial transactions involving OFAC-sanctioned persons or countries;

    • Sanctions screening software or filter failures;

    • Improper due diligence on customers/clients;

    • De-centralized compliance functions and inconsistent application of their SCP; and

    • Utilizing non-standard payment or commercial practices.

Contact us to learn more about OFAC’s guidance and to find out how GCSG’s Advisory and Audit teams can guide and partner with you to reduce your sanctions compliance risk and protect your company’s bottom line and reputation.

References

Monday Compliance News - Around the World

GCSG's Monday Compliance News (published Tuesday the week of Jan 22) is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

The Impact of Retroactive Transfer Pricing Adjustments on the EU Customs Valuation | KPMG Meijburg & Co

"With its judgment of December 20, 2017 in the Hamamatsu Photonics Deutschland case, the Court of Justice of the European Union finally provided some clarity about the impact of retroactive transfer pricing adjustments...." (Click here for the article) - European Union

UK companies will face huge new VAT burden after Brexit | The Guardian

"More than 130,000 UK firms will be forced to pay VAT upfront for the first time on all goods imported from the European Union after Brexit...." (Click here for the article) - UK, European Union

Ban Ki-Moon's Nephew Pleads Guilty in Bribery Case | The Wall Street Journal

"Joo Hyun Bahn, the nephew of former United Nations Secretary-General Ban Ki-Moon, pleaded guilty on Friday to U.S. charges connected to a scheme to bribe a foreign official...." (Click here for the article) - Vietnam, U.S., Global

Canada takes the U.S. to WTO in wide-ranging trade complaint | The Globe and Mail

"The Canadian government is taking the United States to the world's trade court in a wide-ranging complaint that accuses Washington of flouting the rules of commerce." (Click here for the article) - Canada, U.S.

Deferred prosecution agreements proposed to take companies task | The Straits Times

"A new legal framework that can grant companies amnesty for certain corporate offences is being proposed in Singapore." (Click here for the article) - Singapore

Cigarettes and Murky Joint Ventures Help North Korea Evade Crackdown  | The Wall Street Journal

"Global businesses faced a deadline last week to exit joint ventures operating in North Korea, but dozens of them are still there." (Click here for the article) - North Korea, U.S., South Korea, China, Global

US Company Settles Whistleblower Lawsuit, Pays for Importer's Customs Fraud  | Global Trade Magazine

"Federal prosecutors in New York recently announced the settlement of a remarkable lawsuit relating to a scheme to evade import duties." (Click here for the article) - U.S.

SFO opens investigation into Chemring Group PLC and its subsidiary  | U.K. Serious Fraud Office News Release

"The SFO confirms it has opened a criminal investigation into bribery, corruption and money laundering arising from the conduct of business by Chemring Group plc and CTSL..." (Click here for the article) - U.K.