BuckleySandler hosted a webinar, Conducting an Effective Financial Crimes-Related Internal Investigation, on April 23, 2015 as part of their ongoing FinCrimes Webinar Series.  Panelists included John Mackessy, Anti-Money Laundering & Trade Sanctions Officer at MasterCard and Saverio Mirarchi, Senior Director at Treliant Risk Advisors and former Chief Compliance and Ethics Officer at Northern Trust.  The following is a summary of the guided conversation moderated by Jamie Parkinson, partner at BuckleySandler, and key take-aways you can implement in your company. To request a recording of this webinar, please email Nicole Steckman at nsteckman@buckleysandler.com.

Key Tips and Take-Aways:

  1. Make sure that the organization has appropriate policies and procedures in place to quickly and efficiently react when an investigation begins.
  2. Have systems in place to quickly identify the veracity of any allegations and be prepared to begin the internal investigation as soon as possible.
  3. Be prepared for, and understand the impact of having, a compliance monitor as part of any settlement agreement.

Pre-Investigation Preparation

The session began with a discussion of what an organization can do to prepare for an internal investigation.  The panel focused on the benefits of preparation and having established policies and procedures in place before an investigation begins.  Specifically, the panelists noted the importance of having individual roles and responsibilities outlined and understood at the outset, in order to make the response more efficient.  The panelists further noted that with the significant time constraints associated with such an investigation, it is critical that the team be prepared to act immediately.  Finally, the panelists highlighted the significance of having effective routes of communication established in the policies and procedures, to ensure that all parties involved know how to proceed when an investigation is initiated.  All of this can be in place in the absence of a concern triggering an internal investigation, so the panelists emphasized the steps to take before any concerns arise.

Internal Investigation Leadership and Logistics

The panelists then discussed the variety of approaches an organization can take when it comes to who leads the internal investigation.  Specifically, the panelists noted that while there is no one-size fits all approach, the leadership of an internal investigation needs to be transparent from the outset, even if that role is transitioned during the investigation.  The panelists suggested numerous approaches to who should run the investigation, including having either a business unit, outside counsel, or the organization’s general counsel be in charge of the investigation.

Conducting the Internal Investigation

Panelists next shifted to discussing the steps involved in conducting an internal investigation.  The panel noted that the first critical component of running an internal investigation is obtaining the key information related to the problem, and identifying whether there is any information that the organization does not have.  Specifically, the panel highlighted the importance of validating the initial allegations quickly, in order to fully engage with the investigation. The panel also noted the importance of quickly initiating a document hold, especially if the allegation is coming from a reputable source.  The panelists highlighted the fact that putting out a document hold too soon is generally a minor problem, whereas any inadvertent destruction of relevant information could pose significant problems down the line.  Financial crimes investigations are extremely data-analytics-intensive and may involve vast amounts of data covering many years, so the panelists focused on the role of a data analytics team.

Corporate Monitors

The panelists then discussed the importance of being prepared to deal with a monitor.  The panelists noted that with the recent increase in situations where a monitor will be required, it is key for an organization to know how to implement any agreements regarding the monitorship.    Specifically, the panelists noted that the organization needs to make sure that they understand the scope of the monitor’s role and how the organization will be able to interact with the monitor.  The panel suggested that before signing any monitoring agreement, the document needs to be discussed with compliance, operations, information technology, and any other departments that may be impacted by the monitorship, so that all parties are aware of the operational implications of a monitorship.  Finally, the panel added that organizations should make sure to have a contact person or team that handles interactions with the monitor and is able to manage the monitor’s access to documents, in order to establish an effective relationship with the monitor.

Role of Senior Management and the Board

The panel also discussed the role of senior management and the Board of Directors in the internal investigation process.  The panelists noted that in all internal investigations, it is important to make sure senior management and the Board are involved.  Specifically, the panelists noted that senior management and the Board need to know the severity of the allegations, any related risks, the costs associated with the investigation, and that the investigation is being run properly.  Finally, the panelists noted that if the investigation is being run by the general counsel, any communications to senior management and the Board need to be drafted so as to protect privilege.