WE’VE JUST BEEN FINED - PowerPoint Presentation

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WE’VE JUST BEEN FINED –WHAT DO WE DO NEXT?

Organizing to Satisfy the Terms of a Settlement Agreement

Scott Nance Compliance Consulting

IntroductionLarge sanctions cases are generally resolved by a settlement agreementThe settlement agreement sets forth what the company must do to avoid further punishmentSatisfying the terms of a settlement agreement requires extensive internal organization and planning2

Overview: The Steps to TakeAnalyze the agreement and the results of internal investigationsForm a teamIdentify the specific measures that need to be implementedSet a schedule 3

Step One: Analyze the AgreementThe settlement agreement will specify what you must do to complyCompliance, Legal, and outside counsel should work together to analyze the agreementThe analysis should include as well the results of any internal investigationsOutcome: A list of specific things the company must do to satisfy the terms of the agreementOutcome: A list of specific things the company should do to respond to deficiencies identified in the Statement of Facts and by internal investigations 4

The ING Settlement AgreementThe settlement agreement between the U.S. federal government, the State of New York, and ING is a good example of a deferred prosecution agreementFine of $619 millionInternal review of sanctions compliance policies and procedures and their implementationPerformed by internal auditSubmitted one year after conclusion of agreementApplication of OFAC sanctions to the same extent as EU and other sanctionsTraining for personnel involved inUSD transactionsTransactions involving countries subject to U.S. sanctionsRequired use of MT202 COV message form for bank-to-bank payments5

The Settlement Agreement: INGProcedures to identify and report attempts to circumvent sanctions screeningMaintain an electronic database of USD funds transfers for a specified period for two yearsNot knowingly process USD-denominated cross-border transfers involving Cuba, Burma, Iran, North Korea, Sudan, or Syria unless permitted by US lawOfficials will not make any public statements justifying ING’s conduct or downplaying the significance of ING’s behavior6

Step Two: Form a TeamCreate a team to oversee complianceComplianceLegalThe businessDepending on the terms of the agreement and internal needs, the team may also includeOutside counselAuditOutside consultantsOther functions, such as Payments and Customer Services, may also need to be involvedReporting to regulators7

Organizing the TeamAppoint at least two coordinatorsOne will typically be from Legal and one from ComplianceEstablish governance procedures for the teamHow decisions are madeHow conflicts are resolvedReporting to upper management8

Step 3: Identify Specific ActionsIdentify what specific actions the settlement agreement requires Map out what other steps the organization needs to take to build a robust compliance functionThe Statement of Facts Internal investigationsInternal reviewSpecify who must be involved to satisfy each requirement, and who is responsible Determine what resources are required to accomplish this9

Examples of Specific ActionsReport on assessment to regulators Specific internal actions required by the agreementUse of MT202 COV messages for inter-bank transactionsMaintenance of a database of US dollar transactionsOrganizational changesCreation of a central sanctions teamNew policies and proceduresGeneral sanctions policies regarding business with sanctioned countriesProcedures for reviewing and approving transactionsTraining10

Internal AuditThe settlement agreement may specify that Internal Audit perform an assessment and prepare a reportEstablish the Terms of Reference for Internal Audit’s assessmentWhat functions/geographic offices will be reviewedWhat the review will coverProvide sanctions training to Internal AuditInternal Audit seldom has the necessary level of sanctions expertiseEstablish governanceThere will always be disagreements, so it is essential to decide in advance who can resolve them11

Step 4: Set a ScheduleEstablish a plan, with a timetable, for addressing each itemIdentify who is responsibleSet a specific date for performanceBuild in lead timeIf the settlement agreement requires a report to regulators, schedule periodic drafts to be circulated well in advanceConduct periodic reviews to confirm progress and identify future action items12

Final ThoughtsA sanctions violation offers an opportunity to put your organization on a solid compliance footingSatisfying the terms of the agreement requires organization, cooperation, and planningThere will be disagreements, and tempers will frayBut someday soon this will all be over13