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    Sep. 27, 2023

Venezuela Presents High Risk for Foreign Companies

Despite loosening sanctions, expanding oil extraction opportunities and political promises to rid the country of bad actors on the eve of a presidential election in 2024, experts warn that Venezuela continues to be a minefield for international businesses. Five of the last 11 FCPA enforcement actions from the DOJ have been aimed at Venezuela, and it is widely agreed that there is a slim chance of change in the country’s globally distrusted leadership. Ahead of next month’s auction of Venezuela’s largest U.S. asset to repay billions in defaults to creditors, the Anti-Corruption Report sought insights into Venezuela’s business risk from observers at Lowenstein & Sandler, the Center for Strategic and International Studies and Feldman Firm, PLLC. See “DOJ Pursuit of Individuals for Corruption in Venezuela Highlights Risk of Doing Business There” (Sep. 18, 2019).

Compliance Lessons From the Federal Reserve’s $186‑Million Fine Against Recidivist Deutsche Bank

Deutsche Bank and its U.S. affiliates resolved two enforcement actions with the Federal Reserve Board, involving fines over “unsafe and unsound” banking practices and violations of earlier consent orders on sanctions compliance and anti-money laundering controls. According to the Fed, Deutsche Bank “made insufficient remedial progress” and “had deficient anti-money laundering internal controls.” Deutsche Bank also agreed to address “other general deficiencies relating to Deutsche Bank's governance, risk management, and controls.” To ascertain the implications for other companies and their boards, the Anti-Corruption Report obtained insights from Hughes Hubbard & Reed partner Michael DeBernardis and Withersworldwide lawyer Martin Auerbach. See “How to Leverage AML Tools for ABC Programs” (May 1, 2019).

CSRD Elevates Anti-Corruption Programs as Key Element of Corporate Sustainability

The E.U.’s Corporate Sustainability Reporting Directive (CSRD) requires large companies and exchange-listed small and medium enterprises to provide ongoing reports on their environmental and social impact activities that will help investors, consumers, legislators, and others to better understand the companies' non-financial performance, including efforts to prevent bribery and corruption. It extends the scope and reporting requirements of the Non-Financial Reporting Directive, a regulatory framework that has required sizable public interest entities to report on their sustainability performance since 2018. Under the CSRD, which took effect in January 2023, the European Commission defines a common reporting framework for non-financial data for the first time. The Anti-Corruption Report consulted with Wilson Sonsoni partner Jindrich Kloub and Baker McKenzie partner Eva-Maria Ségur-Cabanac to understand more about the directive and how companies should be preparing for compliance, in some cases as soon as January 1, 2025. See “Taking a Measured and Forward-Looking Approach to ESG Compliance” (Dec. 1, 2021).

Measures Against Russia Pose Serious Compliance Challenges

For some companies engaged in business with Russia, it has proven pragmatic to act as if the country were under more wide-ranging U.S. sanctions than is the case. While not comprehensive, U.S. sanctions affect fundamental aspects of the local economy such as the banking system, making any kind of business in Russia effectively difficult to accomplish without violations. Over 1,000 U.S. companies have ceased or curtailed operations in Russia, and business with Russia is likely to become more limited because of regulators’ moves. This article distills insights offered by Davis Polk attorneys during a firm webinar addressing sanctions and similar measures taken against Russia by the U.S. Office of Foreign Assets Control, DOJ, Department of Commerce, Financial Crimes Enforcement Network and Europe, noting compliance challenges and enforcement efforts. See “Russian Trade Under a Microscope: How to Adapt to the Shifting Export Controls and Sanctions Landscape” (Jun. 8, 2022). 

Changes Brewing for Enforceability of Non‑Compete Provisions

Courts in most U.S. jurisdictions uphold reasonable non-competition agreements in employment matters. New York has developed rules that protect employers’ legitimate interests and employees from unreasonable restrictions on their ability to earn a living. New York non-competes are enforceable if necessary to protect employers’ legitimate business interests rather than impose an undue hardship on the employee. Now, the Legislature has passed a bill that would ban virtually all employment-related non-competes and the Federal Trade Commission has announced its intention to promulgate a rule broadly banning non-competes. This is a fundamental shift regarding restrictive covenants in New York. This article analyzes the bill and the proposed rule, raises questions about their implications and explores how they might impact non-compete agreements. See “What Employers Should Know About the FTC’s Proposed Ban on Non Compete Provisions” (Mar. 15, 2023).

Eversheds Sutherland Expands Global Corporate Crime and Investigations Practice

Eversheds Sutherland expanded its global corporate crime and investigations practice with Jeffrey W. Cottle and Patrick Gilman as partners. In addition to joining that practice, Cottle and Gilman will co-lead the firm’s national security practice. For insights from Eversheds Sutherland, see “How to Maintain an Anti-Corruption Reporting Hotline That Complies with Data Privacy Laws” (Apr. 3, 2013).

Womble Bond Dickinson Hires FCPA Expert

Womble Bond Dickinson announced that Carol Lee joined as a partner in the business litigation group. She advises multinationals navigating U.S. legal matters relating to internal and government investigations and commercial litigation. Her specialties include export controls, economic sanctions, Committee on Foreign Investment in the United States, anti-money laundering and the FCPA. For insights from Womble Bond Dickinson, see “DOJ Incentivizes Self-Disclosure Once More With Guidance for U.S. Attorneys’ Offices” (Mar. 15, 2023).

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Quick Take on FARA

https://acuris.wistia.com/medias/wmb5vyeq2f

The Anti-Corruption Report discusses the Foreign Agents Registration Act (FARA) in this short video. For our three-part guide to FARA and the new risk environment, see here.