A World in Crisis: the Impact on Your Compliance Program

From the influx of migrants into Europe to continuing conflict in the Middle East, unrest continues to dominate the headlines around the world.  Compliance officers understand that this means heightened risk for their companies. Blumont’s Lauren Camilli, Vice President & Chief Ethics and Compliance Officer, and Jennifer Hardin, Global Security Manager, discussed emerging issues including human trafficking and counter terrorism financing at Compliance Week 2016.

Trafficking in Persons (TIP) is the second largest criminal activity in the world, following illegal narcotics and preceding illegal arms. TIP is defined as the act of recruiting, harboring, transporting, providing or obtaining a person for labor, services or commercial sex acts through force, fraud or coercion. A number of federal regulations directly address TIP. Contractors are prohibited form engaging in trafficking, prostitution and using forced labor. They also must notify employees that trafficking is prohibited and take disciplinary actions on those who violate these provisions. For work performed abroad that exceeds $500,000, federal contractors and subcontractors must maintain TIP compliance plans appropriate for the nature and scope of the activities performed. Those working under grants and cooperative agreements are also prohibited from engaging in trafficking, prostitution and using forced labor. USAID requires non-governmental organizations to have a policy explicitly opposing prostitution and sex trafficking. Complying with these regulations is ever more arduous and paramount as the number of migrants around the world continues to rise each day – as risk increases, so do the consequences.

Along with risks to human life, there are financial risks that must be addressed. Increasingly, non-profit organizations operating in close proximity to active terrorist threats are at high risk of diversion of funds. Electronic, online and new payment methods, such as crowdfunding, pose a greater risk of financing terrorism as opposed to traditional methods of payment because it is more difficult to identify the actual end-user or beneficiary. To mitigate these risks it is imperative that organizations increase their due diligence. This can be done by staying current with sanctions regulations in areas of operation, ensuring that we do not facilitate trade to sanctioned countries through third parties and properly vetting employees by conducting thorough background checks.

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