Report: Increase in Due Diligence Actions Being Driven by Global Legal Trends
Posted 06 April 2012 | By
A new report published by PricewaterhouseCoopers (PwC) claims an increase in due diligence activities by regulatory professionals is being driven by a huge increase in global legislation aimed at clamping down on corruption and other shady practices.
"Regulators around the world have made it clear that a lack of knowledge about a corrupt act is not a defense; that individual executives will be held criminally liable for the acts of intermediaries; and that hefty fines and penalties will be levied in the event of a regulatory issue where a robust compliance program is not in place," wrote PwC. "There costs, along with the cost of unquantifiable reputational damage, far outweigh the cost of implementing an effective risk-based compliance program."
Legislative drivers of due diligence activities include:
- the Foreign Corrupt Practices Act (FCPA)
- updates to the US Federal Sentencing Guidelines
- the USA PATRIOT Act of 2001
- the Sarbanes-Oxley Act of 2002
- the Department of Treasury's Office of Foreign Asset Control
- the UK Bribery Act
- best practices issued by a host of global organizations, including Transparency International, the World Economic Forum, the World Bank and the Organization for Economic Co-operation and Development.
The report goes on to recommend several ways to mitigate risk through due diligence activities, including undertaking risk assessments, using surveys, identifying problem spots, continuous monitoring and training procedures.
PwC - The Case for Risk-Based Due Diligence: A practical approach to a complex problem