Be alive to supply chain pressures leading to misconduct

The Russian invasion of Ukraine, and post-pandemic pressures, have led to increased pressure on supply chains. Business pressure to find solutions can inadvertently lead to behaviours that fall foul of laws on bribery and corruption, financial sanctions, terrorism financing, eg for making payment to groups for safe passage of goods in certain territories. Enhanced expectations and, in some countries, specific supply chain due diligence laws mean that such misconduct is less likely to go unnoticed.

How you should respond – Make sure that commercial knowledge on pressure points is shared with those who have responsibility for providing risk-based training and guidance on policies and procedures. To mitigate those risks, identify areas/personnel of higher risk based on current events, geographies, and check the local controls and oversight of those controls.

Some compliance functions have been stretched due to diversion of resource to sanctions‑related matters and budgetary constraints. Check that those who remain have the necessary skills and expertise, and time, to adequately support effective compliance. Both the U.S. Department of Justice and the UK Serious Fraud Office are increasingly focusing on resourcing and capability of the compliance function when evaluating a corporate compliance programme.