As COVID-19 continues to impact each and every corner of life, finding a way to navigate the “new normal” has required businesses to change and adapt. FCPA compliance may be further down the priority list, but it should not be ignored altogether. Corruption thrives in times of crisis, and compliance professionals need to be prepared to tackle new, and old, anti-bribery and corruption (ABAC) risks. Let’s take a look at current FCPA trends, paying particular attention to managing COVID risks and how to mitigate them. 

FCPA Compliance In the Time of COVID-19

It may feel like a lifetime ago now, but 2019 was a bumper year for FCPA enforcement actions. Fourteen companies paid out a record $2.9 billion in fines last year, making it the third highest number of enforcement actions on record. 2020 has already seen the largest FCPA enforcement action on record with Airbus being fined $4 billion globally by US, UK, and French prosecutors. This blockbuster case reflects a global regulatory appetite to pursue wrongdoings with regulators working together across borders.

In pre-COVID-19 times, compliance professionals struggled to tackle ABAC risks. A recent study highlighted that almost 90 percent of compliance professionals at businesses in North America and Europe felt under pressure to proceed with their growth strategy in Asia, Latin America, and Africa, despite their ABAC concerns. This was most acutely felt in the US with a quarter (23 percent) of compliance leaders feeling “a lot of pressure” to press ahead despite misgivings.

So what is the impact of COVID-19 on FCPA compliance? It’s early days but it is likely that there will be an increase in fraud and corruption as criminals exploit the crisis. Europol’s recent report outlined just how criminals were profiteering from the pandemic by amending their approaches to cybercrime, fraud, and counterfeiting. Combine this with an economic need to make potentially more risky investments, and compliance teams will have significant new challenges on the horizon when it comes to FCPA compliance.

Where Are the Gaps in the Road?

There is no definite end in sight, but businesses will be in a rush to get back on track, potentially by whatever means. Streamlining processes will be essential as they attempt to push through the red tape that could potentially hold them back. But when it comes to FCPA compliance programs, will that be possible? Compliance teams will be under even more pressure to ignore ABAC concerns as it becomes a matter of survival. Compliance pauses are an idea that has been mooted but will that open the floodgates for ABAC risks? At the moment there is no COVID-19 defense to corruption so businesses must continue to do what they can or face future compliance exposure with regulators who are poised for action.

Regulators will be keen to target compliance weaknesses and there are potentially lots of FCPA landmines lurking beneath the surface of the crisis. Third-party intermediaries have been involved with almost 90 percent of all FCPA enforcement actions to date, but the added pressure of COVID-19 may see ABAC risks grow when it comes to using agents: requesting bribes to secure in-demand contracts may become commonplace. Supply chains are under immense strain and businesses may be forced to venture into uncharted territory to secure the goods they require. Working with new partners or in new territories undoubtedly brings with it new ABAC exposure at a time when budgets are under pressure.

Prior to COVID-19, only 41 percent of compliance leaders had seen their ABAC budget grow over the last three years despite growing regulations. Post-crisis, many budgets will be under increased scrutiny as businesses attempt to bring their financials under control with compliance taking a back-seat.

How to Mitigate the Risks

Managing third-party risks today requires an economically-viable approach that is consistent, customizable, and defensible. Maintaining a strong compliance presence through regular screening of suppliers, agents, and distributors will help protect against FCPA violations, despite growing business pressure. Paying particular attention to corruption hotspots, as supply chains explore new viable alternatives, will also defend businesses against ABAC risks.

Right now, businesses need responsive risk management tools to help them through this moment of disruption. IntegrityRisk has the necessary experience, expertise, and access to the appropriate compliance tools to ensure that our clients build and operate screening frameworks that match current FCPA challenges.

Contact us today to talk with an expert about how you can mitigate ABAC risks and continue to grow and expand your business.