DoJ announces new safe harbour for compliance-poor acquisitions
In a speech to the Society of Corporate Compliance and Ethics conference in Washington DC, US Department of Justice Deputy Attorney General Lisa O. Monaco announced a new policy aimed at aiding acquisitive companies to acquire companies that they subsequently learn have poor compliance policies.
The new policy grants acquiring companies the presumption of a declination if they promptly and voluntarily disclose criminal misconduct within a specified Safe Harbor period and then cooperate in any ensuing investigations.
Clear timelines have been established to ensure consistency. Companies must disclose misconduct within six months from the date of closing then have a year to fully remediate it. These timelines are subject to reasonableness analysis, acknowledging the unique circumstances of each transaction. Aggravating factors at the acquired company won’t affect the acquiring company’s ability to receive a declination.
Elsewhere in the speech, Monaco noted that “compliance should no longer be viewed as just a cost center for companies. Good corporate governance and effective compliance programs can shield companies from enormous financial risks and penalties.” She also summed up three key points that are driving policy-making across the division:
- holding corporate and individual wrongdoers accountable,
- incentivising compliance, self-disclosure, remediation, and cooperation, and
- deterring and penalizing repeat bad actors.
She concluded with an encouraging word for the compliance officers in the audience: “your job is to protect your company, but in doing so, by focusing on robust compliance and by investing in good corporate governance, you are also protecting our national security”.
PRA issues new consultation
The UK’s Prudential Regulation Authority has published CP21/23 – The PRA’s approach to the authorisation and supervision of insurance branches which sets out the PRA’s proposals to consolidate and formalise existing policy on overseas insurers that write business in the UK through the establishment of a third-country branch, and to offer more clarity on the expectations of these third-country branches. The proposals in are relevant to all non-UK branch undertakings and any insurance undertaking that is not headquartered in the UK or Gibraltar, that is seeking authorisation to operate as a branch in the UK.
The consultation closes on 12th January 2024.
Project Mandala aims to enhance cross-border compliance and transactions in financial services
In a new initiative, the Bank for International Settlements (BIS) and key central bank partners have unveiled Project Mandala, an attempt to explore the possibility of encoding jurisdiction-specific policy and regulatory requirements into a common protocol. This initiative may have significant implications for cross-border transactions involving foreign direct investment, borrowing, and payments.
The collaboration involves entities such as BIS Innovation Hub (BISIH) Singapore Centre, Reserve Bank of Australia (RBA), Bank of Korea (BOK), Bank Negara Malaysia (BNM), and Monetary Authority of Singapore (MAS), along with various financial institutions.
The overarching objective of Project Mandala is to streamline compliance procedures, enhance real-time transaction monitoring, and bolster transparency concerning country-specific policies.
One of the main challenges in efficient cross-border payments lies in the disparity of policy and regulatory frameworks across different jurisdictions. These inconsistencies not only increase the compliance burden throughout the payment chain but also elongate transaction times and introduce uncertainties among stakeholders.
Project Mandala seeks to alleviate this burden by automating compliance procedures and providing real-time transaction monitoring. The ultimate goal is to enhance visibility and understanding of policies specific to each country.
The initiative aligns seamlessly with the Financial Stability Board’s 2023 priority actions aimed at achieving the G20 targets for enhancing cross-border payments. Notably, it emphasises creating a more efficient legal, regulatory, and supervisory environment for cross-border payments, while ensuring their safety, security, and integrity.
A selected summary of key developments for regulated financial institutions
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