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Home Marine InsuranceCorruption Investigations and enforcement trends: top takeaways for Q2 2024

Investigations and enforcement trends: top takeaways for Q2 2024

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We recently gathered a group of regulatory attorneys from across Reed Smith to provide a rundown of the key trends to watch for in Q2 2024 – if you missed the webinar, you can access the recording on demand.

Please see a short summary of our top takeaways below and look out for an invite to the next installment of this quarterly series – we hope you can join us!
Anti-corruption enforcement in China 

• Tackling corruption remains a top priority for China in 2024, with an increasing emphasis on coordinated action by government agencies. The current anti-corruption drive focuses on strategic sectors, such as health care and finance.
• Consistent with historical trends, China continues to be the country most frequently implicated in Foreign Corrupt Practices Act (FCPA) corporate enforcement actions. Improper payments disguised as gifts, entertainment or travel expenses, as well as schemes involving third-party intermediaries, were prominent features of recent FCPA actions involving conduct in China.
• Companies should proactively identify anti-bribery and corruption risks under both domestic and applicable foreign laws (such as the FCPA) and devote more resources to ensure adequate compliance training and oversight, especially for sensitive business activities.
DOJ pilot program to reward whistleblowers

• Provides financial incentives to individuals to report corporate wrongdoing before company does so or is even able to do so. Companies must weigh the prospect of an employee reporting to the Department of Justice (DOJ) against the need to engage in fact-finding before self-reporting any potential wrongdoing.
• Employees may be less willing to use internal compliance reporting resources, such as anonymous hotlines.
• May be a powerful tool in FCPA cases where significant obstacles often exist in collecting foreign evidence.
UK’s new corporate criminal liability laws 

• UK passed the Economic Crime and Corporate Transparency Act 2023 on October 26, 2023 to tackle economic crime and significantly increase the risk of companies being held criminally liable for economic crimes by their employees.
• The Act introduces a new “senior manager” test, which came into force on December 26, 2023, making companies liable for the financial crimes of their senior managers and a “failure to prevent fraud” offence, which will come into force after the UK government has issued guidance, making companies liable for failing to prevent fraud being committed by their associated persons.
• Organizations should take proactive steps to ensure they avoid liability, such as conducting risk assessments, identifying their senior managers and associated persons, and updating policies, procedures and training.
California attorney general’s focus on data privacy enforcement 

• The California Consumer Privacy Act (CCPA) functionally operates as a nationwide data privacy law.
• The CCPA regulates at a granular level. For example, the CCPA requires that a company give a consumer the ability to “opt out” of having their personal information sold.  The CCPA dictates verbatim the opt-out notice that must be given.
• As such, the CCPA and the aggressive enforcement posture of California’s enforcers portend much risk, even for well-meaning companies.
FEPA: Will new DOJ lead to greater cross-border criminal enforcement?

• The Foreign Extortion Prevention Act (FEPA) attempts to close a statutory gap by targeting foreign officials on the receiving end of a bribe.
• The FEPA has penalties more severe than those of the FCPA anti-bribery provision and expands the definition of government officials who can potentially be violators of the law.
• Enforcement in foreign bribery matters will intensify with the addition of the FEPA to the federal anti-corruption arsenal although questions remain as to how the new law will be enforced.
Update on Commission’s enforcement of the FSR 

• EU Commission is stepping up its Foreign Subsidies Regulation (FSR) enforcement on a systematic basis.
• All industries are on the enforcement radar screen, but electric vehicles, wind power and semiconductor sectors are an area of particular concern.
• Companies with global operations must put in place a tracking mechanism for financial contributions received from non-EU countries.
Regulatory enforcement of vendor management requirements 

• Regulators are increasingly scrutinizing the supervision of third-party vendor relationships.
• Firms may delegate their responsibilities to third parties but firms cannot abrogate their responsibilities.
• Good supervision includes (i) due diligence on the front end, (ii) consistent monitoring during the engagement, and (iii) exiting the relationship in a way that protects the firm.  
Daniel H. Ahn
Los Angeles, Orange County

Calvin Chan

Rosanne Kay

John O. Lukanski

Isabelle Rahman

Rizwan A. Qureshi
Washington, D.C.

Patrick Rappo

Kiran Somashekara

Thomas H. Suddath Jr.

Rafael Szmid
Counsel (IC) 

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