1. WE’VE JUST BEEN FINED –WHAT DO WE DO NEXT?
Organizing to Satisfy the Terms of a Settlement Agreement
Scott Nance Compliance Consulting

2. Introduction
Large sanctions cases are generally resolved by a settlement agreement
The settlement agreement sets forth what the company must do to avoid further punishment
Satisfying the terms of a settlement agreement requires extensive internal organization and planning

3. Overview: The Steps to Take
Analyze the agreement and the results of internal investigations
Form a team
Identify the specific measures that need to be implemented
Set a schedule

4. Step One: Analyze the Agreement
The settlement agreement will specify what you must do to comply
Compliance, Legal, and outside counsel should work together to analyze the agreement
The analysis should include as well the results of any internal investigations
Outcome: A list of specific things the company must do to satisfy the terms of the agreement
Outcome: A list of specific things the company should do to respond to deficiencies identified in the Statement of Facts and by internal investigations

5. The ING Settlement Agreement
The settlement agreement between the U.S. federal government, the State of New York, and ING is a good example of a deferred prosecution agreement
Fine of $619 million
Internal review of sanctions compliance policies and procedures and their implementation
Performed by internal audit
Submitted one year after conclusion of agreement
Application of OFAC sanctions to the same extent as EU and other sanctions
Training for personnel involved in
USD transactions
Transactions involving countries subject to U.S. sanctions
Required use of MT202 COV message form for bank-to- bank payments

6. The Settlement Agreement: ING
Procedures to identify and report attempts to circumvent sanctions screening
Maintain an electronic database of USD funds transfers for a specified period for two years
Not knowingly process USD-denominated cross-border transfers involving Cuba, Burma, Iran, North Korea, Sudan, or Syria unless permitted by US law
Officials will not make any public statements justifying ING’s conduct or downplaying the significance of ING’s behavior

7. Step Two: Form a Team Create a team to oversee compliance
Legal
The business
Depending on the terms of the agreement and internal needs, the team may also include
Outside counsel
Audit
Outside consultants
Other functions, such as Payments and Customer Services, may also need to be involved
Reporting to regulators

8. Organizing the Team Appoint at least two coordinators
One will typically be from Legal and one from Compliance
Establish governance procedures for the team
How decisions are made
How conflicts are resolved
Reporting to upper management

9. Step 3: Identify Specific Actions
Identify what specific actions the settlement agreement requires
Map out what other steps the organization needs to take to build a robust compliance function
The Statement of Facts
Internal investigations
Internal review
Specify who must be involved to satisfy each requirement, and who is responsible
Determine what resources are required to accomplish this

10. Examples of Specific Actions
Report on assessment to regulators
Specific internal actions required by the agreement
Use of MT202 COV messages for inter-bank transactions
Maintenance of a database of US dollar transactions
Organizational changes
Creation of a central sanctions team
New policies and procedures
General sanctions policies regarding business with sanctioned countries
Procedures for reviewing and approving transactions
Training

11. Internal Audit
The settlement agreement may specify that Internal Audit perform an assessment and prepare a report
Establish the Terms of Reference for Internal Audit’s assessment
What functions/geographic offices will be reviewed
What the review will cover
Provide sanctions training to Internal Audit
Internal Audit seldom has the necessary level of sanctions expertise
Establish governance
There will always be disagreements, so it is essential to decide in advance who can resolve them

12. Step 4: Set a Schedule
Establish a plan, with a timetable, for addressing each item
Identify who is responsible
Set a specific date for performance
Build in lead time
If the settlement agreement requires a report to regulators, schedule periodic drafts to be circulated well in advance
Conduct periodic reviews to confirm progress and identify future action items

13. Final Thoughts
A sanctions violation offers an opportunity to put your organization on a solid compliance footing
Satisfying the terms of the agreement requires organization, cooperation, and planning
There will be disagreements, and tempers will fray
But someday soon this will all be over