Ensuring compliance with anti-corruption statutes such as the U.S. Foreign Corrupt Practices Act or the U.K. Bribery Act is a complex task. That is all the more true particularly for how organizations oversee the third parties acting on their behalf.
The cornerstones for third-party oversight are due diligence and monitoring — but building those concepts into a credible compliance program requires a multi-pronged effort; one that aligns an organization’s people, processes, and technology to prevent and detect violations.
What’s more, achieving that credible third-party program is an urgent compliance priority. That is spelled out in guidance from the Justice Department and Securities and Exchange Commission, which jointly issued a comprehensive Resource Guide to the U.S. Foreign Corrupt Practices Act in 2012. The guide continues to be a blueprint for effective compliance programs today. One section contained this passage about third-party due diligence:
DOJ’s and SEC’s FCPA enforcement actions demonstrate that third parties, including agents, consultants, and distributors, are commonly used to conceal the payment of bribes to foreign officials in international business transactions. Risk-based due diligence is particularly important with third parties and will also be considered by DOJ and SEC in assessing the effectiveness of a company’s compliance program.
In other words, if a third party violates the law on your behalf, the absence of authorization from your company, combined with a credible and defensible compliance program, will send a strong message to regulators about your company’s commitment to compliance. Those elements cannot guarantee the avoidance of criminal prosecution, but they do firmly tilt the company toward that outcome.
This paper provides an overview of the standards and principles related to the systematic vetting of third parties such as resellers, agents, distributors, sales and marketing representatives, and joint venture partners.
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