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When drafting documents for a current or upcoming deal, transactional attorneys need to pull from the best resources available to them. Often, that means reviewing the most effective language used for similar deals. 
But not every document management system is up to the task of a deep search, and the documents containing the best language might not always come from inside an attorney’s own firm or legal department.
Lexis Search Advantage | Transactional offers a solution to time consuming, piecemeal internal and external document searches through algorithms that mark up and search both internal documents and publicly available SEC filings, all within the same secure tabbed interface.
LSA Transactional’s core feature is a thorough search process that utilizes algorithms from Intelligize, a web-based research platform designed specifically for transactions and compliance professionals acquired by LexisNexis in 2016.
LSA Transactional takes the Intelligize algorithms — renowned for their highly effective combing of the SEC’s EDGAR database — and applies them to internal documents as well, returning results from both public SEC filings and the user’s own organization.
Unlike the search procedures for many legal research products, a search conducted in LSA Transactional typically starts with pre-search filters.
In practice, this means starting a search is quite literally as simple as clicking the button labeled, for example, “Merger Agreement,” to generate a list of matching work products.
Approaching the search from this angle ensures that the first pass of a search covers all available documents, and additional post-search filters allow attorneys to drill down to more exact results with the knowledge that they’ve left no stone unturned.
One useful post-search filter limits results by a certain deal point, such as the size of a deal. In all, users can take advantage of 84 different deal points across seven document types to find exactly what they need. 
Another filter is available for 78 of the recognized document types and allows users to narrow their results to only documents containing a specific type of clause. 
The clause filter is a great tool if, for example, an attorney has been asked to draft a warrant agreement and isn’t sure of the best way to phrase the payment of taxes clause. The filter allows them to quickly find and reference examples of what has worked before to get the ball rolling.
In addition to the standard set of filters, LSA Transactional customers can coordinate custom search filters with the Lexis installation team when setting up the program for their own firm or legal department. 
Of course, the option to conduct a boolean or keyword search is still available.
LSA Transactional keeps pace with the results-sharing capabilities featured in many LexisNexis products. 
Users have four options to export their results. First, they can send a link via email that will open the results page in LSA Transactional on the recipient’s device. Alternatively, users can copy and paste a selection of links into an email or other application. A third option allows users to download all their results as a .ZIP file.
Lastly, users can export their results as an Excel spreadsheet. Search results exported to Excel will include the full text of useful content, making this format excellent for finalizing how the results will be used for drafting a new document.
For example, if a user selected six versions of a particular type of clause to reference during their drafting process, they can review their results side-by-side to spot key differences and decide on the best language for the draft at hand.
In addition to its options for sharing search results, LSA Transactional includes a tagging feature that allows users to earmark the most useful documents for a particular purpose. 
While users can take advantage of private tagging for their own reference, organization-wide tags can allow teams to create collections of relevant documents for their own use.
The LSA Transactional installation process is highly tailored to a customer’s needs and is done on a secure server behind the client’s own firewall. This allows for a high level of security against external attempts to access internal information.
From there, LSA Transactional can integrate with popular document management systems like iManage or NetDocuments. The program’s algorithms treat these documents just like SEC filings, converting them into HTML files and marking them up for relevant terms and phrases.
The Lexis software pulls document properties and security from the document management system, meaning that attorneys will only see documents they have clearance for in their search results. 
To keep document security as up to date as possible, customers can choose to have LSA Transactional check for new document versions as often as every 15 minutes.
And, even if one user shares a list of search results with a colleague who doesn’t have access to all the results selected for sharing, LSA Transactional will prompt a security check for those inaccessible documents from the shared list.
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For free software advice, call us now! 855-998-8505
By: Preksha Buttan on June 20, 2022
Picture this: You are an HR manager at a small business and hiring a new employee means creating and sending offer letters, collecting various documents, and sharing company policies. The simple task of hiring a new employee turns into an avalanche of paperwork. Can you imagine doing this on a regular basis along with other HR tasks all involving repetitive processes?
Fortunately, there is human resource software to rescue you from drowning in a sea of paperwork. An HR software solution can automate manual tasks such as sending out offer letters as well as paychecks. You can track your employees’ time on the clock, as well as offer them health benefits. Additionally, this tool will also help you understand and streamline your HR processes better by generating various kinds of reports. All-in-all, HR tools save time in many different ways so that you can focus on other, more important aspects of your business.
This article highlights the ten best human resource management software ranging from systems that deal with employee scheduling and onboarding to employee management and leave management. These products (listed alphabetically) have been selected from our human resource software FrontRunners report, according to our methodology specified here.

4.73 out of 5 stars
876 reviews
7shifts is an employee scheduling and time management software for restaurants. Its task management option helps you create tasks and track employee performance. It lets you keep tabs on your daily operations with a logbook that you can use to store daily notes, files, shift details, and more. Besides, it helps you collect employee feedback by sending out automated feedback surveys after every shift.
This tool’s time clocking feature allows your employees to track their working hours on any device including tablets and smartphones. It also allows you to edit timesheets and record missed punches. Additionally, you get an additional option to enable photo clock-ins which helps to prevent “buddy punching.”
7shifts is a web-based employee scheduling software that also offers iOS and Android mobile applications. It offers support via chat and email.

Schedules in 7shifts (Source)

4.74 out of 5 stars
294 reviews
Agiled is a business management software that helps you manage your teams, tasks, contracts, finances, projects, and time, and also assists with client tracking, employee onboarding, performance, and engagement. You can track attendance, extended leaves, and employee holidays from the dashboard.
This tool comes with a workflow automation feature that helps you automate repetitive HR tasks and processes. You can create workflows to automatically send out invoices, forms, contracts, and emails. These workflows can also be customized to only take an action when certain tasks are completed. For example, the HRM software will send out a contract only when a form is submitted.
Agiled is a web-based application that comes with iOS and Android mobile apps. It offers support via chat and by filling out an online form.

Add invoice in Agiled (Source)

4.76 out of 5 stars
151 reviews
Connecteam is an employee management software solution that helps manage HR operations such as employee scheduling, task management, performance management, and talent management. It lets you organize quizzes and training sessions to build employee engagement, and also allows you to send out company updates, chat one-on-one or in groups, conduct surveys, and create events, such as team meetings and conferences.
This HR management software comes with time clock features that you can use to track the real-time GPS location of your employees. It lets you see who has clocked in, out, when, and where. You can also track absences and approve paid time off (PTO) requests.
Connecteam is a web-based application that has iOS and Android mobile apps. It offers support via email and by filling out an online form.

Scheduling and time tracking in Connecteam (Source)

4.89 out of 5 stars
57 reviews
Flock is an HR management software that helps with the onboarding of employees by digitizing employment documentation, company policies, and other paper forms. It helps you conduct background checks of your candidates and keep the employees engaged by broadcasting messages on the Flock feed, which is the equivalent of a social wall feed.
This HR tool can offer insights into key HR data by generating reports such as enrollment and headcount reports. It visualizes these reports on the dashboard by converting them into charts, graphs, and diagrams.
Flock is a web-based application that also has iOS and Android apps. Its support team is reachable by filling out an online form.

Billing reconciliation in Flock (Source)

4.74 out of 5 stars
47 reviews
GoCo, as an employee management software, assists in the hiring and onboarding of employees by automating onboarding checklists. It has an embedded payroll system that you can use to manage paychecks. You also get the option to integrate the tool with any cloud-based payroll system—for example, ADP, Execupay, and QuickBooks Online.
With this tool, you get access to an HR support center that you can use to connect with HR professionals, leaders, and advisors outside your organization. These advisors can help you with compliance management and understand ways to support employees in times of crisis. The help center also has a self-service portal wherein you can find HR-specific legal resources, job descriptions, and employee training videos.
GoCo is a web-based application that has iOS and Android mobile apps. It offers support via call and email.

Company overview in GoCo (Source)

4.86 out of 5 stars
57 reviews
HR Partner is a human resources software solution that comes with employee management features allowing you to store confidential employee data in its directory. It also helps with recruitment and applicant tracking by allowing you to publish jobs online and track candidates using a Kanban board. Your employees can use this tool to apply for extended leaves.
This HR solution comes with an employee portal. Leveraging this portal, you can allow your employees to upload information about themselves, check the organizational chart, submit expense claims, and access company policies.
HR Partner is a web-based application. Its support team is reachable by filling out an online form.

Employee records in HR Partner (Source)

4.81 out of 5 stars
47 reviews
HRnest is an extended leave management and time tracking software solution that helps you manage employee absences and record working time. It allows your employees to apply for leaves and plan their holidays. The holiday plans can be made visible to other team members so that everyone can plan their holidays accordingly. It also helps you keep documents and employee data such as contracts, medical reports, and safety training materials updated by sending notifications before their expiration dates.
This human resources information system offers different methods to record working times. You can choose from the start/stop system, QR code scanning application, indicate the hours worked, or work according to schedule. You can disable the option to record work time for a past date.
HRnest is a web-based application. It offers support via call and email.

Working time registration in HRnest (Source)

4.76 out of 5 stars
185 reviews
Justworks is a human resources software solution that helps with payroll management by allowing you to automate direct deposits. You can split these direct deposits across multiple accounts and make payments to vendors and contractors. You can also manage leaves and approve PTOs.
This human resources management system gives you access to employee benefits which includes health insurance plans. You can also access services for mental health and primary care. Additionally, it gives your employees the option to invest in retirement plans.
Justworks is a web-based application. It offers support via phone call.

Time-off requests in Justworks (Source)

4.84 out of 5 stars
389 reviews
The OnPay HR tool comes with the features of payroll software and allows you to send out timely paychecks to your team and manage taxes by automating the tax calculation process. It has a built-in HR system that helps you with employee onboarding by sending out e-offer letters. You can use this HR solution to offer your employees benefits such as life insurance, liability insurance, and more.
If your data is spread across various payroll and HR applications, you can integrate OnPay with all of them.
OnPay is a web-based application. It offers support via phone call and email.

Payroll in OnPay (Source)

4.89 out of 5 stars
1531 reviews
Rippling is a human resources information system (HRIS) that makes onboarding and offboarding employees easier by automating tasks, such as sending out offer letters and calculating final paychecks. You can use this application to track the working time of your employees, and they can clock in and out using a tablet kiosk, mobile app, or computer.
This HRIS software comes with the features of a learning management system (LMS). It includes 1,000+ courses that cover topics such as sexual harassment, cybersecurity, and HIPAA (Health Insurance Portability and Accountability Act) training. You can also upload your own custom courses to train your employees.
Rippling is a web-based application that offers iOS and Android mobile apps. It also offers support via a help center.

Dashboard in Rippling (Source)

Here are some points to keep in mind when looking for the best human resource software:

Here are some questions that you should ask software vendors to learn more and find the best human resources software system for your business:

At Software Advice, we consider and verify all our user reviews to recommend the most efficient tools for your business.
Our software recommendations reflect the views and experiences given by your peers. These recommendations are never bought or sold, nor based on the opinion of a single individual.
Methodology
For this article we selected the highest rated products as of May 17, 2022 from our Software Advice Frontrunners report for Top Human Resources Software. Check out the full methodology description for the Frontrunners report.
The selected products needed to meet the following criteria:
The ten products with the highest customer satisfaction and usability scores are featured in this article from the Frontrunners report for Top Human Resources Software.
Disclaimer: We conducted this analysis based on reviews and ratings data as of May 17, 2022. In order to present the most up-to-date information, the product cards show real-time ratings. Please note that this means the ratings value in the product card may not reflect the ratings value at the time of analysis.
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Legal practice management software is the backbone of your firm. So we’re helping you ensure it’s well adapted to your areas of focus. Building on our previous Practice Management Buyer’s Guide, we’re pleased to offer this primer on how the latest software can help you succeed in a variety of practice areas — and how easy an upgrade can be.
For a comprehensive overview of Practice Management solutions,
Check out our Practice Management Buyer’s Guide here »
Full practice management solution with built-in legal accounting. No QuickBooks required.
Learn MoreDownload Buyer’s Guide Now »
Next Generation, Cloud-Based Law Practice Software That Makes Everyone’s Job Easier
Learn MoreDownload Buyer’s Guide Now »
Over 40,000 professionals in the legal business rely on Assembly Software’s products to power their firms. Their flagship, cloud-based platform, Neos, configures precisely to a firm’s needs with its case checklist, document management, and analytics features. Assembly’s brands include Needles, Trialworks, and Neos.
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Build, Manage, and Grow Your Personal Injury Practice. CloudLex handles productivity, communication, collaboration and reporting across your personal injury law firm from case intake to settlement and beyond, including storage and archival.
Learn More
Filevine is the leading cloud-based collaborative work solution for law firms. Powering everything from case management and document management to client communication and business analytics, Filevine’s custom and bespoke tools simplify and elevate practice management and growth.
Learn More
Law Ruler’s mission is to simplify the process of growing your practice. Our comprehensive Legal CRM, Client Intake, and Marketing Automation solutions streamline communications, generate more business, and save you valuable time so you can do more of what matters most… serving your clients.
Learn More
Moxtra powers your OneStop Customer Portal – your digital branch, with continuous collaboration experiences, helping you retain and grow customers, manage your distributed organization, and lower your costs for doing business. Moxtra’s Customer Collaboration Platform can power your branded OneStop Customer Portal as a fluid extension of your existing website, web or mobile app, or as a standalone web and mobile app.
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MyCase is a complete law practice management solution that helps firms run efficiently from anywhere, provide an exceptional client experience, and easily track firm performance so that they can reach their business goals.
Learn More
PracticePanther is a leading cloud-based law practice management software solution that serves tens of thousands of legal professionals in 170 countries. Through its intuitive and user-friendly interface, PracticePanther offers features in case management, time tracking, billing, client intake, built-in payment processing, calendaring, native unlimited eSignature, native 2-way text messaging, and much more to empower lawyers to automate their practices.
Learn More
Legal Practice Management Software Built for Today’s Busy Firms
Learn More
SmartAdvocate is a fully integrated legal case management system made to handle the challenges of today’s fast paced, highly competitive, and technologically demanding world. Initially designed by and for personal injury and mass tort litigation firms, SmartAdvocate is now used by a wide range of practices.
Learn More
At HALF THE COST of other solutions, TimeSolv provides the robust time, billing, and payment needs law firms demand, without the extra features you never use. Store payment information and run hundreds of payments in seconds on YOUR timeline, achieving ZERO AR!
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There has been lots and lots of movement within the legal technology space of late. And law practice management software providers are the ones doing most of the moving — whether they are acquiring or being acquired. 
But every single one of those moves is seismic for a not insignificant number of attorneys who are users of the affected software programs.
So, in this episode of the Non-Eventcast, we brought in a fabulous foursome of guests, who helped us cut through all the noise.
What does law practice management software do?
Law practice management software forms the backbone for the full scope of a firm’s business operations — all the way from client intake to invoicing and future business development. It organizes varied data related to clients and matters into comprehensive files, saving enormous amounts of time and allowing lawyers to focus on high-level legal work instead of administrative tasks. 
How can case management software support my practice area?
From family law to trusts and estates, different practice areas have different emphases. Do you need to track net-worth metrics for a division-of-assets dispute? Manage the sprawling case information related to a general litigation matter? Streamline the intake process critical to a personal injury practice? Today’s practice management software can be adapted to your practice area, dramatically increasing the benefits it provides.  
What are the biggest challenges in upgrading your case management platform? 
Migrating your data to a new system — be it on-premises or in the cloud — will inevitably create challenges for any law firm. However, today’s software providers are experts at this process. They will work with you to create a path that requires the smallest amount of effort. In the end, most firms will find that the effort has been well worth it, as new software provides transformational business benefits. As an added bonus, this process will help you clean out data and systems that are no longer needed at your firm. 
What are the biggest misconceptions about practice management tech? 
These are myriad. Some small firm managers wrongly believe they don’t need a robust practice management platform and that their legacy systems will keep them in business. Others see the costs as too high, or the task of onboarding too onerous. While concerns like these aren’t frivolous, the reality is that practice management software is now table stakes for law firms looking to remain competitive. And the longer you continue to work in your current system, the more difficult an upgrade may become. 
There’s a term for when attorneys use Latin and other arcane languages to describe legal processes to consumers: “legalese.”  
But there’s no similar term for when vendors use technical and other arcane languages to describe their legal software operations to lawyers.
True, this dynamic may seem unfair. But now we have The Legal Tech-to-English Dictionary to help us cope. 
Read on for a crash course in practice management terms. 
Law Practice Management Software
1. A database for managing law firm clients that organizes primary case information under matter files.
2. A platform for systematizing client data collected from integrated systems via software integrations.
3. Client files organized by email subfolders … in 2002.
Lawyer 1: I just bought a new law practice management software, and I’m spending so much less time looking for everything because it’s all in one place now!
Lawyer 2: Yeah, you should see this Excel file I put together. It’s badass.
Lawyer 1: Just … stop.
Cf. Organization porn. 
Relational Database
1. A  software that recognizes relationships between segments of data.
2. A system based on the relational model of data, created by Edgar F. Codd.
Cf. Law practice management software
Cf. The Oracle of (Kevin) Bacon.
Client Portal
1. A software system feature that allows law firms to share certain data with clients via an in-system, encrypted holding container, which clients can access using a unique password or PIN (personal identification number).
2. The means by which unwieldy assignments can seamlessly enter your workflow. 
Lawyer 1: The good news is that my clients can send me stuff via our portal. That’s also the bad news.
Lawyer 2: Ba-dum-cha.
Lawyer 1: Thanks. I’m here till Thursday. Try the veal.
Cf. Online document drives, most of which are de facto customer portals, also allow users to share information with others in a secure format. Google Drive, Microsoft OneDrive, Dropbox, et al. offer such features. These can also be connected to law practice management software via integrations.
Cf. Like how in action movies, there’s always a portal with all these aliens coming in to invade the planet. Honestly, I don’t know which portal is worse: that one, or the one that drops a 90-page contract in your lap for review.
Integration
1. Connecting two softwares via an API (application programming interface) that allows each software system to share data with the other.
2. Connecting two softwares via an intermediary program (like Zapier) so that the two programs can share data without the need of an API.
3. A primary reason modern practice management software can be life-changing, particularly for those currently using a combination of dictation machines, hard-copy markups, and the Logo turtle.  
Cf. Linking a law practice management software to a productivity software (email, calendar) allows users to sync emails, events and tasks with client files within the law practice management software, cementing that program as a holistic solution for law firm data management. Linking an accounting program to a law practice management software allows users to push expense and invoice data into the accounting program.
Business Intelligence
1. A method for collecting and aggregating data into a digestible format that allows software users to make data-driven business decisions.
2. Reports generated from software systems focused on specific business metrics, including key performance indicators.
3. You know, pretty much everything your law school neglected to tell you about. But, hey: You still know what the Rule Against Perpetuities is!
Lawyer 1: How’s your P&L statement looking for the last quarter?
Lawyer 2: Uh. Um. Res Ipsa Loquitur.
Lawyer 1: Say what?
Cf. NOT the Edsel.
Jared Correia is the host of the Non-Eventcast. 
Jared Correia is the host of the Non-Eventcast.

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04 January 2023
Compliance issues are at the heart of the vast majority of financial crime and misconduct investigations, and subsequent criminal and regulatory enforcement action. Accordingly, many international government enforcement bodies have sought to articulate formally what is required for effective compliance. In the United Kingdom, corruption, facilitation of tax evasion and money laundering are among the more evolved areas, with the relevant guidance also offering assistance on other specific areas of legal risk. In the United States, corruption and antitrust are two areas where detailed and extensive guidance is available.
Alongside the available guidance offered by international government enforcement bodies, there is an evolving body of criminal and regulatory enforcement outcomes in the United Kingdom, United States and other jurisdictions that address compliance issues. Investigations practitioners can draw on this material to prepare and promote new policies for a corporate, analyse potential compliance issues within an investigation, prepare for potential future criminal or regulatory proceedings where compliance is a central issue and make timely remediation where compliance failures have occurred.
The international corporate compliance landscape is vast and constantly evolving. It is beyond the scope of this chapter to examine in detail the legal and regulatory requirements across all sectors and jurisdictions. This chapter focuses principally on the UK position concerning offences and defences, and reviews the key areas of risk arising from compliance failures and available corporate defences. It draws on the compliance guidance in the United Kingdom and the United States and analyses the impact of compliance on investigatory outcomes. It explores the interplay between culture and compliance, the merits of the US Foreign Corrupt Practices Act (FCPA) Opinion Procedure and, finally, draws on the compliance lessons arising from a variety of UK and US cases.
Practitioners should be mindful of the breadth of compliance issues that may be engaged in a number of jurisdictions in any single investigation, particularly when dealing with multinational corporates operating in high-risk sectors. The insight provided by the UK and US guidance and the lessons learned from the outcomes to date, may also resonate in other jurisdictions, particularly in cross-border investigations.
The implementation of the section 7 offence in July 2011 represented a move away from corporate criminal liability via ‘the identification principle’ towards liability through ‘failure to prevent’ offences.^[2] By section 7(1) Bribery Act 2010, a ‘relevant commercial organisation’^[3] commits an offence if a person associated with it bribes another person intending to get or keep business, or an advantage in the conduct of business, for the organisation. However, by section 7(2), a company can rely on compliance as a defence to a criminal offence. An organisation that had ‘adequate procedures designed to prevent persons associated with [the organisation] from undertaking such conduct’ will have a defence to the section 7 offence.
The majority of section 7 cases in England have been resolved through deferred prosecution agreement (DPA). The Crown Court has approved DPAs for section 7 offences between the Serious Fraud Office (SFO) and Standard Bank plc,^[4] Sarclad Ltd,^[5] Rolls-Royce plc and Rolls-Royce Energy Systems Inc,^[6] Güralp Systems Ltd,^[7] Airbus SE,^[8] Airline Services Ltd,^[9] Amec Foster Wheeler Energy Ltd^[10] and two other companies (AB Ltd and CD Ltd^[11]). One company, Sweett Group plc,^[12] has pleaded guilty to a section 7 offence. There has been just one contested section 7 prosecution in a Crown Prosecution Service (CPS) case against Skansen Interiors Ltd,^[13] where Skansen pursued an adequate procedures defence but was subsequently convicted.
The Criminal Finances Act 2017 introduced the offences of failure to prevent the facilitation of UK tax evasion and failure to prevent the facilitation of foreign tax evasion. These offences hold a ‘relevant body’^[14] criminally liable when a person associated with it commits either a UK tax evasion facilitation offence (pursuant to section 45) or a foreign tax evasion facilitation offence (pursuant to section 46). In respect of the section 46 offence, one of three alternative jurisdiction conditions^[15] must also be satisfied.
Compliance-based defences are available for both offences^[16] if the corporate defendant can prove that ‘it had in place such reasonable prevention procedures it was reasonable in all the circumstances to have in place’ or ‘that it was not reasonable in all the circumstances to expect [the relevant body] to have any prevention procedures’.
To date there have been no prosecutions for either of these offences. As at 13 May 2022, there were seven live investigations with a further 21 ‘opportunities’ under review across 11 business sectors, including software providers, accountancy, legal services and transport, and embracing a full range of corporate entities from small businesses through to some of the United Kingdom’s largest organisations.^[17]
A distinction between the failure-to-prevent offences in the Bribery Act and Criminal Finance Act, which otherwise follow a similar concept of corporate criminal liability, is found in the description of the standard of prevention procedures governing the availability of the statutory defences, namely ‘adequate procedures’ compared to prevention procedures that are ‘reasonable in all the circumstances’. It has been argued that the ‘adequate procedures’ standard might be considered a stricter standard, with the effect that where an underlying bribery offence is proved, the prevention procedures must of necessity not have been ‘adequate’. This might be the case notwithstanding the presence of procedures that were ‘reasonable in all the circumstances’ but were circumvented on a particular occasion. Given this potential unintended consequence, attempts were made to replace ‘adequate procedures’ with ‘reasonable procedures in all the circumstances’ during the passage of the Bribery Bill through Parliament, but these were unsuccessful. The argument was revisited in post-legislative scrutiny by a House of Lords select committee.^[18] The committee decided that the danger of an overly strict interpretation of ‘adequate procedures’ was unlikely, and statutory amendment of section 7(2) was unnecessary. However, it did recommend changes to the Bribery Act guidance^[19] ‘to draw attention to the different wording in the Criminal Finances Act 2017 and in the HMRC guidance to that Act, and to make clear that “adequate” does not mean, and is not intended to mean, anything more stringent than ‘reasonable in all the circumstances’.
There has been no change to the Bribery Act guidance in this, or any other respect. Another relevant distinction is that the Criminal Finances Act offences specifically contemplate and provide for a defence in circumstances in which it is reasonable for a corporate to have no prevention procedures in place.
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLTF Regulations) target the ‘gatekeepers’ of the UK financial system. These ‘relevant persons’^[20] must have policies, controls and procedures to mitigate the risks of money laundering and terrorist financing.
The MLTF Regulations are deliberately non-prescriptive. They require corporates to tailor their compliance policies according to their individual risk-profile. The requirements extend to ensuring that employees and agents (at group and subsidiary level) are aware of the law relating to money laundering and terrorist financing, are trained appropriately and take proportionate steps to reduce the risks within the ordinary course of their relevant business activities.
Failure to comply with the requirements of the MLTF Regulations is a criminal offence.^[21] In deciding whether a corporate has committed an offence, the court will consider whether it followed any relevant guidance, including from the Financial Conduct Authority (FCA) and other supervisory authorities. No offence is committed where a corporate can demonstrate that it took ‘all reasonable steps’ and ‘exercised all due diligence’ to avoid committing it.^[22]
In December 2021, National Westminster Bank plc (NatWest) pleaded guilty to offences of failure to comply with the MLTF Regulations, in the first prosecution of a bank for these offences. There were two key aspects to the compliance failures that resulted in the convictions. First, an overreliance on relationship managers when considering suspicious activity on a customer account and second a permitted limitation of a particular form of monitoring to ‘where the capability to do so exists’ rather than an adherence to the risk profile.^[23] After a one-third deduction in penalty for guilty pleas, NatWest was fined roughly £265 million.
The FCA Principles^[24] embody the fundamental precepts that regulated businesses are expected to uphold. Firms must conduct their business with integrity (Principle 1) and due skill, care and diligence (Principle 2), and take reasonable care to organise and control their affairs responsibly and effectively, with adequate risk management systems (Principle 3).
In addition to the Principles, the FCA Handbook contains a number of binding rules relevant to corporate compliance. Commentary on the relevant guidance provided by the FCA is set out below.
Under the Financial Services and Markets Act 2000 (FSMA), the FCA has an extensive range of disciplinary, criminal and civil powers to take action against businesses and individuals that fail to meet the required standards. These include withdrawing a firm’s authorisation, suspending a firm from undertaking specified regulated activities, imposing a financial penalty and pursuing a criminal prosecution.
The FCA is principally active in the civil enforcement regime. Three recent examples show keen recent FCA enforcement activity. In June 2022, Ghana International Bank Plc was subject to an approximately £5.8 million fine in respect of breaches of the Money Laundering Regulations 2007 related to financial crime in the corporate banks sector.^[25] Also in June 2022, JLT Speciality Ltd was fined around £7.9 million in respect of breaches of Principle 3 relating to anti-bribery and corruption and financial crime in the general insurance and protection sector.^[26] In the area of cum-ex trading, in July 2022, the FCA imposed a financial penalty of approximately £2 million on TJM Partnership Limited in respect of breaches of Principles 2 and 3 in relation to the risk of financial crime in this trading sector.^[27]
Practitioners should be aware that sector-specific and profession-specific regulators have also taken enforcement action against those they regulate for compliance breaches. These include the Financial Reporting Council, the Solicitors Regulation Authority, the Gambling Commission and the Groceries Code Adjudicator, to name but a few.
There is a wealth of compliance guidance available in the United Kingdom and the United States. The core guidance is summarised below and, as will be seen, there are a number of overlapping principles, with a particular focus on the importance of organisations having proportionate, risk-based procedures in place.
The Ministry of Justice (MOJ) has published statutory guidance^[28] addressing procedures that organisations can implement to prevent bribery.^[29] The guidance aims to assist practitioners to assess or develop a compliance framework but is clear that whether any set of procedures is adequate for the purposes of the section 7 defence is a question of fact that can only be resolved by the courts.
The guidance is aimed at businesses of all sizes operating across all sectors and markets^[30] and is founded on the following six principles, which are intended to be flexible and focused on outcomes.
Underpinning each principle is the need to document all steps taken to ensure that, in the event of an investigation, organisations can demonstrate that clear steps were taken to design and implement robust and appropriate procedures.
Guidance was published in September 2017 in respect of the Criminal Finances Act 2017 offences.^[31] Critically it recognises that ‘any regime that is risk-based and proportionate cannot also be a zero-failure regime. If a relevant body can demonstrate that it has put in place a system of reasonable procedures that identifies and mitigates its tax evasion facilitation risks, then prosecution is unlikely as it will be able to raise a defence’. This offers reassurance that a corporate that produces reasonable procedures proportionate to its own risk will be protected from criminal prosecution and acts as a strong incentive to implement them. However, the emphasis is placed very specifically on accurate self-assessment and addressing of risk. It warns that it is not intended to provide ‘safe-harbour’ and makes clear ‘even strict compliance with this guidance will not necessarily amount to having reasonable procedures, where the relevant body faces particular risks arising from the unique facts of its own business that remain unaddressed’.
The guidance is formulated around the same six guiding principles articulated in the Bribery Act guidance. It puts considerable onus on a corporate to utilise the guidance and apply it meaningfully to its own circumstances, which will be affected by its size, nature and sector of business, and complexity and location of operations. It expressly does not provide a checklist and should ‘be used to inform the creation of bespoke prevention procedures designed to address a relevant body’s particular circumstances and the risks arising from them’.
The guidance is detailed and specific, in part owing to the more complex assessment of criminal liability under sections 45 and 46 of the Criminal Finances Act 2017, and because it builds on some of the more generic articulations of compliance guidance found elsewhere. For example, the articulation of commonly encountered risks from a tax fraud perspective is practical and useful as a starting point to prompt corporates and their advisers in their approach to risk assessment.
The various sources of FCA guidance are another useful tool in this field. A good starting point is Chapter 6 of the Senior Management Arrangements, Systems and Controls Sourcebook.^[32] This provides ‘organisational and systems and control requirements for all firms’. However, the principal detailed source of guidance the FCA provides on this is its Financial Crime Guide.^[33] This comprehensive document draws on the FCA Financial Crime Thematic Reviews^[34] to address risk in the specific areas of money laundering and terrorist financing, fraud, data security, bribery and corruption, sanctions and asset freezing, insider dealing and market manipulation.
The guidance is non-binding, but, where it is obviously appropriate for a corporate to address a particular risk, adherence to FCA guidance is likely to be beneficial generally and may be viewed favourably by UK law enforcement in the event of an investigation.
The thematic reviews are specific to certain business types, sizes or sectors, but are of more general assistance. Any corporate reviewing its compliance and procedures in a particular area of risk is likely to benefit from consulting any thematic review relevant to that risk area, even if its business does not sit in the reviewed sector.^[35]
The Joint Money Laundering Steering Group (JMLSG) guidance^[36] is aimed at firms operating under the auspices of the JMLSG’s 14 UK trade association member bodies, in addition to those regulated by the FCA. It is approved by HM Treasury and, therefore, relevant for the offences under the Proceeds of Crime Act 2002 (regulated sector) and Regulation 86 of the MLTF Regulations.
While it is not legally binding, firms ‘will have to stand prepared to justify departures’ from the guidance, which is split into three parts. Part I contains guidance relevant to all firms operating across the UK financial sector. Parts II and III provide additional sector-specific guidance.
The focal point of the JMLSG guidance is the responsibility of senior managers, including the money laundering reporting officer, to identify, assess and effectively manage money laundering risks across different aspects of their businesses. The JMLSG emphasises that there are many similarities between the strategies adopted by businesses to combat money laundering and other types of financial crime, such as fraud and market abuse, and recommends fostering ‘strong links’ between those responsible for managing and reporting on these various areas of risk.
The JMLSG guidance is clear that there is no one-size-fits-all approach, and policies and procedures should be proportionate to the size and nature of the relevant business. There are strong parallels with the MOJ’s six principles.
The SFO has published its internal guidance on how it will evaluate the effectiveness of an organisation’s compliance programme.^[37] This evaluation will be key in its determination whether a prosecution is in the public interest. Such assessment will be arranged around the MOJ’s six principles, which the SFO recognises represent ‘a good general framework for assessing compliance programmes’.^[38]
In its guidance, the SFO recognises that appropriate compliance arrangements will vary, but states there is an expectation that all organisations, irrespective of size, will have at least some compliance arrangements in place. A compliance programme cannot be a ‘paper exercise’ and, to be effective, must be proportionate, risk-based and regularly reviewed.
The SFO does not state what it will consider adequate, having made clear previously that this is not its role. Each case will be assessed on its facts taking into account the company’s risk profile and the steps taken to mitigate that risk.
Finally, the SFO states that in assessing an organisation’s compliance programme it will look at the past (i.e., what was in place at the time of the alleged offence), the present and, where a DPA is being considered, the future. This emphasises the importance of commencing immediate remediation when potential criminal issues arise. Importantly, the SFO also foreshadows a move towards the use of corporate monitors stating that any DPA that includes terms relating to an organisation’s compliance programme is ‘likely to include a monitor being appointed at the organisation’s expense’.^[39]
In July 2020 the Enforcement Division of the Securities and Exchange Commission (SEC) and the Criminal Division of the US Department of Justice (DOJ) produced an updated (from 2012) version of the Resource Guide to the US Foreign Corrupt Practices Act (FCPA),^[40] describing it as ‘one of the most thorough compilations of information about any criminal statute’.^[41] Chapter 5 ‘Guiding Principles of Enforcement’ includes sections on ‘Hallmarks of Effective Compliance Programs’ and ‘Other Guidance on Compliance and International Best Practice’. Unsurprisingly, given the risk area under consideration, the Guide pays particular attention to ‘Third Party Due Diligence and Payments’ and offers three guiding principles when assessing due diligence in this area:
In addition to a worked-through hypothetical example involving third-party vetting, this Guide also directs corporates to the DOJ Criminal Division guidance on Evaluation of Corporate Compliance Programs, other US government departments’ guidance and well-regarded international guidance such as that provided by the OECD and the World Bank.^[42]
This recently updated guidance issued by the DOJ’s Criminal Division is another useful resource.^[43] It sits as guidance across the whole of the division and is, therefore, applicable to other corporate offences as well as FCPA matters. It is more informative than the SFO’s guidance, although the underlying principles significantly overlap. The DOJ guidance can also assist UK practitioners in discussions with the SFO about compliance-related issues in the course of DPA negotiations. The guidance comprehensively addresses how the DOJ will measure compliance programmes by reference to three key questions (sourced from the DOJ’s Justice Manual) and is a useful reference for practitioners drafting or updating compliance programmes or considering potential outcomes and remediation in an investigation.
The DOJ will consider the quality of a company’s risk assessment, policies and procedures, and training and communication; the existence and effectiveness of a confidential reporting mechanism; the application of risk-based due diligence to third-party relationships; and, where relevant, appropriate procedures to address mergers and acquisitions risk.
The DOJ will focus on whether the compliance programme is well resourced and empowered to function effectively. This will entail a review of senior and middle management commitment and oversight; whether the compliance function can operate autonomously and with suitable resources; a comparison of the seniority and stature of the compliance function with other strategic functions within the company and the existence of incentives for compliance and disincentives for non-compliance.
The DOJ will assess whether the programme has been periodically tested, reviewed and improved, including how the organisation measures its compliance culture. It will evaluate a company’s investigations structure, its ability to conduct a root cause analysis of misconduct and whether root causes have been remedied in an appropriate and timely manner.
This complementary guidance in the antitrust risk area poses the same three questions identified in the Criminal Division’s Guidance and provides specific guidance looked at from context of ‘criminal violations of the Sherman Act such as price fixing, bid rigging and market allocations’.^[44]
In addition to published guidance, the US system also affords companies the ability to request a formal opinion from the DOJ, as to whether a contemplated course of conduct will conform to its current enforcement policy under the FCPA. This mechanism is known as seeking an FCPA opinion.
The applicable regulations are clear that an FCPA opinion may only be sought in respect of ‘prospective – not hypothetical – conduct’.^[45] That is to say, ‘the entire transaction which is the subject of the request must be an actual . . . transaction’.^[46] While it may contain an element of historical conduct ‘in most – if not all – instances, an Opinion request should be made prior to the requester’s commitment’ to proceeding with the transaction in question.^[47]
FCPA opinions are available to ‘issuers and domestic concerns’, which includes individuals who are US citizens, nationals or residents and corporations and partnerships that have their principal place of business in the United States, or which are organised under US law.^[48]
An affirmative FCPA opinion creates a rebuttable presumption in any subsequent action brought by the DOJ under the relevant provisions of the FCPA^[49] that the requester’s conduct, as specified in the request, is in conformity with the DOJ’s enforcement policy and the relevant provisions of the FCPA.^[50] Such a presumption may be rebutted by ‘a preponderance of the evidence’^[51] and does not ‘bind or obligate’ any agency other than the DOJ, nor does it alter the requester’s accountancy obligations.^[52]
In January 2022 the DOJ issued an FCPA opinion of non-violation in respect of a request from a foreign state, via a third party, for a payment to secure the release of the (medically unwell) captain and the crew of a vessel detained by that state, it being alleged that the vessel had violated various laws and treaties.^[53]
The effectiveness of an organisation’s compliance programme is intrinsically linked to its culture. This is recognised in the US Sentencing Commission’s Guidelines Manual, which states that, to have an effective compliance and ethics programme, an organisation shall ‘promote an organisational culture that encourages ethical conduct and a commitment to compliance with the law’.^[54]
Culture, which is defined by the FCA as ‘the habitual behaviours and mindsets that characterise an organisation’,^[55] significantly impacts compliance in several ways. It will influence whether compliance programmes are implemented and applied effectively; in the event of misconduct, it will have a bearing on the availability of a compliance-based defence to the company; and it will ultimately influence the type of resolution available to the organisation and the terms of that resolution.
The rule-based nature of compliance means that it is more likely that those rules will be ignored or circumvented where a defective organisational culture exists. The FCA has found that ‘culture in financial services is widely accepted as a key root cause of the major conduct failings that have occurred within the industry in recent history’.^[56] Similarly, failures in culture have been at the heart of many of the SFO’s DPA resolutions where criticism has been made of corporates who have failed ‘to instil within the wider business a culture of compliance’.^[57] In some cases there has been a culture of pressure to meet targets^[58] and in others a ‘culture of wilful disregard of the commission of offences’^[59] with the consequence that rules were ignored or internal and external compliance procedures deliberately circumvented.^[60] In the case of Airline Services Ltd, the court noted that the company’s senior management failed to implement an effective compliance programme, despite receiving a guide and recommendations.^[61]
As is apparent from all the available guidance, even if misconduct does occur, an organisation that has fostered a culture of integrity is more likely to be successful in demonstrating the adequacy of its procedures, assuming it can evidence its efforts to do so.^[62] The CPS prosecution of Skansen (the only contested adequate procedures case to date) is instructive in this regard. Skansen relied on its culture of honesty and integrity as part of its adequate procedures defence but faced evidential difficulties owing to its failure to document its attempts to implement compliance procedures and instil a culture of compliance.
Finally, culture is an important driver in the outcome of any investigation. Genuine attempts by a corporate to change its culture and focus on compliance are factors the court will consider when determining whether a DPA is in the interests of justice.^[63] Effecting culture change is also key to remediation and ensuring that similar misconduct will not occur again. In the United States, cultural change is a common feature of compliance monitorships, and the DOJ has made plain that changes in culture, particularly where there has been a change in leadership, may be sufficient to guard against future misconduct and may avoid the need for a monitor at all.^[64] This was the case for gold refinery Republic Metals Corporate (RMC) who entered into a non-prosecution agreement (NPA) with the DOJ in 2019 following an investigation into money laundering and violations of the Bank Secrecy Act. RMC avoided the imposition of a monitor with the DOJ citing its ‘significant efforts to create a culture of proper compliance’.^[65]
The available guidance and resolutions to date demonstrate the correlation between effective compliance and the response of enforcement to address alleged corporate offending.
In its compliance guidance, the SFO is clear that its assessment of a corporate’s compliance programme will be a critical consideration in determining whether (1) a prosecution is in the public interest, (2) the organisation should be invited into DPA negotiations, and what conditions the DPA should include, (3) the ‘adequate procedures’ defence is available in the case of a section 7 offence, and (4) it reflects greater or lesser culpability in terms of sentencing.
Similarly, in the United States, the joint DOJ/SEC Resource Guide to the US FCPA directs readers to the US Justice Manual: ‘A prosecutor may also consider other remedial actions, such as improving an existing compliance program or disciplining wrongdoers, in determining whether to charge the corporation and how to resolve corporate criminal cases’.^[66] The issue of the potential impact of a positive corporate culture is again reiterated here in the Justice Manual’s comment: ‘In determining whether or not to prosecute a corporation, the government may consider whether the corporation has taken meaningful remedial measures. A corporation’s response to misconduct says much about its willingness to ensure that such misconduct does not recur.’^[67]
Compliance features in a number of ways in the decision to prosecute. The UK Guidance on Corporate Prosecutions states that it will be a public interest factor tending towards prosecution if, at the time of the alleged offence, an ineffective compliance programme was in place.^[68] Conversely, the existence of a genuinely proactive and effective compliance programme will militate against prosecution. Prosecutors will also undertake a qualitative evaluation of steps taken by a corporate to remediate and enhance its compliance programme. The UK FCA, in its Enforcement Guidance, places similar emphasis on the ability of a firm to demonstrate that it has taken appropriate remedial action, such as addressing any systems and controls issues.^[69]
In considering whether to prosecute failure-to-prevent offences, the prosecutor will evaluate whether an adequate procedures or reasonable procedures defence is available to the corporate and the likelihood of its success at trial.
Unlike the United Kingdom, the United States has a formal and public process of declinations that allows for agreed specific improvements to compliance processes, as well as other remediation terms (such as restitution and disgorgement) as factors on which the decision not to prosecute is based. For example, the declination in respect of World Acceptance Corporation issued in August 2020 cited ‘World’s full remediation, including the additional FCPA training added to World’s compliance program, separation from executives under whom the misconduct took place and discontinuing relationships with third parties in Mexico involved in the misconduct’ as one of the five factors on which the decision was based.^[70]
Whether an organisation had an effective compliance programme is similarly relevant to deciding whether to invite a corporate to enter into a DPA, as is a corporate’s ability to demonstrate that it has willingly taken remedial action to reform and rehabilitate. The likely terms of a DPA are also closely tied to this issue, in particular regarding the appointment of a monitor.
Paragraph 7.11 of the UK DPA Code of Practice^[71] articulates the (sometimes delicate) balance involved in determining whether a monitorship will be appropriate.
Therefore, at the time the terms of a DPA are agreed, a close analysis can be expected of specific remediation undertaken at that point, in the context of the corporate’s overall compliance culture, to determine the most appropriate compliance-related terms of the DPA.
The quality of a compliance programme is also relevant to the determination of any financial penalty, either as a term of a DPA or on sentencing, and will form part of the court’s assessment of the corporate’s culpability. In particular, in the United Kingdom for section 7 offences, evidence of a culture of wilful disregard to the commission of offences by employees or agents, with no effort to put effective preventative systems in place, will indicate high corporate culpability, while some effort to do so may indicate lesser culpability. The level of fine imposed may also be adjusted to avoid any negative impact on the company’s ability to implement an effective compliance programme going forward.
In the United Kingdom, organisations can derive some assistance about what makes for effective compliance from concluded section 7 criminal investigations and FCA regulatory outcomes. However, this is an evolving area and, for example, what constitutes adequate procedures has not been properly tested. The only contested section 7 case is the successful CPS prosecution of Skansen, which provides little insight into the application of the statutory defence except for the importance of documenting compliance efforts. Furthermore, many investigations were resolved by DPA, meaning that the companies accepted that their procedures were not adequate, removing the need for the courts to test the issues.
In the United States, there is a more extensive body of declinations, DPAs and NPAs, in which the principles and guidance in respect of corporate compliance and due diligence have been put into effect.
The compliance deficiencies identified and explained in these cases assist in drawing the following lessons, applicable to all areas of legal risk.
Effective compliance is critical to mitigating the risk of financial crime or misconduct within organisations. While compliance programmes cannot prevent isolated incidents of misconduct, an organisation that has sought to implement robust, risk-appropriate compliance procedures stands a better chance of demonstrating the sufficiency of those procedures and securing a favourable outcome, particularly where it is has done so in the context of a positive culture of corporate integrity. In the event of a suspected breach, as part of the investigation, corporates should be ready to evidence a proportionate and risk-based approach to compliance, driven by senior management, where risk assessments and procedures have been regularly reviewed, staff are adequately trained and the procedures have been fully and properly implemented.
^[1] Alison Pople KC is a barrister at Cloth Fair Chambers. Johanna Walsh is a partner, and Mellissa Curzon-Berners is an associate, at Mishcon de Reya LLP.
^[2] On 10 June 2022 the Law Commission published its long-awaited options paper on corporate criminal liability in respect of economic crime. Among the options put forward for consideration by the UK government is the creation of an offence of ‘failure to prevent fraud by an associated person’ where the associated person (likely an employee or agent) commits an offence of fraud with intent to benefit the corporate or another person or entity to whom the associated person provides services on behalf of the corporate. Should this option be pursued, and the offence enacted the compliance consequences will be considerable. The timescale in respect of any proposed legislative changes remains unknown.
^[3] A ‘relevant commercial organisation’ is defined at s.7(5) Bribery Act as a body or partnership that is incorporated or formed in any part of the United Kingdom irrespective of where it carries on a business, or any other incorporated body or partnership which carries on a business or part of a business in the United Kingdom irrespective of the place of incorporation or formation.
^[4] SFO v. Standard Bank plc (now ICBC Standard Bank plc), Crown Court (Southwark), 30 November 2015 [2016] Lloyd’s Rep FC 102 (Standard Bank).
^[5] SFO v. Sarclad Ltd, Crown Court (Southwark), 8 July 2016, Case No. U20150856 (Sarclad).
^[6] SFO v. Rolls-Royce plc and Rolls-Royce Energy Systems Inc, Crown Court (Southwark), 17 January 2017 [2017] Lloyd’s Rep FC 249 (Rolls-Royce).
^[7] SFO v. Güralp Systems Ltd, Crown Court (Southwark), 22 October 2019 [2020] Lloyd’s Rep FC 90 (Güralp).
^[8] SFO v. Airbus SE, Crown Court (Southwark), 31 January 2020, Case No. U20200108 (Airbus).
^[9] SFO v. Airline Services Limited, 30 October 2020, Case No. U20201913 (Airline Services Ltd).
^[10] SFO v. Amec Foster Wheeler Energy Limited, 1 July 2021 (Amec Foster Wheeler).
^[11] The final hearing was concluded on 19 July 2021 at the Royal Courts of Justice (listed as SFO v. AB Ltd and CD Ltd). Reporting restrictions apply under the Contempt of Court Act 1981 in respect of aspects of these proceedings. The full documentation (deferred prosecution agreements, statements of facts and judgment) will only be published once those restrictions have been lifted.
^[12] R. v. Sweett Group plc (unreported).
^[13] R. v. Skansen Interiors Ltd (unreported) (Skansen).
^[14] A ‘relevant body’ is defined at s.44(2) as a body corporate or partnership (wherever incorporated or formed). Partnership is separately defined at s.44(3).
^[15] As set out in Criminal Finances Act 2017, s.46(2).
^[16] See ibid., ss.45(2) and 46(3).
^[17] See HMRC Freedom of Information Act release dated 30 June 2022 on the number of live corporate criminal offences investigations. The update shows that HMRC has closed a number of investigations without charge in the preceding year.
^[18] House of Lords Select Committee on the Bribery Act 2010, report of Session 2017-19 ‘The Bribery Act 2010: post-legislative scrutiny’.
^[19] Ministry of Justice guidance on the Bribery Act 2010 issued pursuant to s.9 of that Act.
^[20] Regulations 3(1) and 8 – A firm will be a ‘relevant person’ if it falls within the MLTF Regulations’ definitions of (1) credit institutions, (2) financial institutions, (3) auditors, insolvency practitioners, external accountants and tax advisers, (4) independent legal professionals, (5) trust or company service providers, (6) estate agents and lettings agents, (7) high value dealers, (8) casinos, (9) art market participants, (10) cryptoasset exchange providers, and (11) custodian wallet providers.
^[21] Regulation 86.
^[22] Regulation 86(3).
^[23] See sentencing remarks of Mrs Justice Cockerill dated 13 December 2021 at https://www.judiciary.uk/judgments/r-v-national-westminster-bank/.
^[24] FCA Handbook, PRIN 2.
^[25] FCA Decision Notice to Ghana International Bank Plc, Ref. 204471, 23 June 2022.
^[26] FCA Final Notice to JLT Speciality Limited, Ref. 310428, 16 June 2022.
^[27] FCA Final Notice to The TJM Partnership Limited (Formerly known as Neovision Global Capital Limited) (In Liquidation), Ref. 498199, 15 July 2022.
^[28] Bribery Act 2010, s.9(1): ‘The Secretary of State must publish guidance about procedures that relevant commercial organisations can put in place to prevent persons associated with them from bribing as mentioned in s7(1).’
^[29] https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf.
^[30] In post-legislative scrutiny of the Bribery Act, a House of Lords Select Committee concluded that the MOJ Guidance was less helpful in informing and advising small and medium-sized businesses on what would constitute an effective anti-bribery policy and stressed ‘the importance for even the smallest companies of carrying out a properly documented risk assessment’. It recommended amending the Guidance to make this clear and to emphasise that all but the smallest businesses should have appropriately tailored procedures that staff have been trained to understand and follow.
^[31] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/ attachment_data/file/672231/Tackling-tax-evasion-corporate-offences.pdf. The Criminal Finances Act, s.47(1), provides that the Chancellor of the Exchequer must prepare and publish guidance about procedures that relevant bodies can put in place to prevent persons acting in the capacity of an associated person from committing UK tax evasion facilitation offences or foreign tax evasion facilitation offences.
^[32] Compliance, Internal Audit and Financial Crime.
^[33] Financial Crime Guide: A firm’s guide to countering financial crime risks (FCG).
^[34] Sixteen thematic reviews were conducted by the FCA between 2006 and 2014 resulting in ‘general guidance’ as defined in FSMA 2000, s.158.
^[35] For example, managing bribery and corruption risk in commercial insurance broking – update 2014 contains useful guidance about entering and managing third-party introducer relationships, which may be of assistance to corporates in other business sectors required to manage that risk.
^[36] Prevention of money laundering/combating terrorist financing: guidance for the UK financial sector, June 2020 (amended July 2020).
^[37] SFO Operational Handbook: Evaluating a Compliance Programme (January 2020).
^[38] ibid., p. 5.
^[39] This was borne out in SFO v. G4S Care & Justices Services (UK) Ltd, Crown Court (Southwark), 17 July 2020, which was the second DPA to be agreed after the SFO published its guidance and saw the appointment of the first monitor under the DPA regime.
^[40] US Department of Justice and the US Securities and Exchange Commission, A Resource Guide to the US Foreign Corruption Practices Act, Second Edition, July 2020.
^[41] ibid., Foreword, page iii.
^[42] Working Group on Bribery, OECD, Good Practice on Internal Controls, Ethics and Compliance (February 2010); World Bank Group Integrity Compliance Guidelines (2017).
^[43] US Department of Justice, Evaluation of Corporate Compliance Programs (updated June 2020).
^[44] US Department of Justice, Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations (July 2019).
^[45] 28 C.F.R. part 80 (current as of 1 July 1999), § 80.1, Purpose.
^[46] ibid., § 80.3, Transaction.
^[47] ibid., § 80.3, Transaction.
^[48] ibid., § 80.4, Issuer or domestic concern and 15 USC § 78dd-2(h)(1).
^[49] 15 U.S.C. §§ 78dd-1 and 78dd-2.
^[50] 28 C.F.R. part 80 (current as of 1 July 1999), § 80.10.
^[51] Id.
^[52] ibid., §§ 80.11 and 12.
^[53] Foreign Corrupt Practices Act Review Opinion Release, 21 January 2022, No. 22-1.
^[54] US Sentencing Commission, Guidelines Manual, chapter 8 (§ bB2.1) (2018).
^[55] FCA Discussion Paper DP 18/2: Transforming culture in financial services, March 2018, p. 3.
^[56] Id.
^[57] Rolls-Royce judgment, para. 102.
^[58] See SFO v. Tesco Stores Ltd, Crown Court (Southwark), Case No. U20170287 10 April 2017 (Statement of Facts, para. 55).
^[59] Rolls-Royce judgment, para. 104.
^[60] Airbus judgment, para. 65; Amec Foster Wheeler judgment, para. 24 (‘The policies changed, but they never worked because FWEL [Foster Wheeler Energy Limited] did not want them to.’) (per Edis LJ).
^[61] Airline Services Ltd, judgment, para. 49.
^[62] See, for example, Principle 2 of the Bribery Act guidance (pp. 23–24).
^[63] See Sarclad, preliminary judgment, para. 32.
^[64] See the Benczkowski Memorandum, 11 October 2018. ‘Where misconduct occurred under different corporate leadership or within a compliance environment that no longer exists within a company, [prosecutors] should consider whether the changes in corporate culture and/or leadership are adequate to safeguard against a recurrence of misconduct.’ A similar line of reasoning was applied in the UK DPA with Amec Foster Wheeler Energy Limited, where the SFO did ‘not require that a monitor be installed in recognition of the substantial enhancements and modifications to the E&C Programme [multi-year, group wide ethics and compliance policies and procedures] and remediation exercise that have already been undertaken’ (DPA, para. 44).
^[65] Non-Prosecution Agreement between DOJ and RMC, 8 March 2019.
^[66] US Justice Manual § 9-28.1000(A), Restitution and Remediation.
^[67] US Justice Manual § 9-28.1000(B), Restitution and Remediation.
^[68] Crown Prosecution Service Guidance on Corporate Prosecutions.
^[69] The Enforcement Guide, FCA Handbook.
^[70] US Department of Justice, Letter to Womble Bond Dickinson re World Acceptance Corporation, 5 August 2020.
^[71] SFO and CPS joint Deferred Prosecution Agreements Code of Practice (Crime and Courts Act 2013).
^[72] See Tesco. This was not a section 7 case and Tesco Stores Ltd entered into a DPA in respect of one count of false accounting.
^[73] USA v. Siemens Aktiengesellschaft, Information, 12 December 2008.
^[74] See, for example, Rolls-Royce, Tesco, Airbus.
^[75] As a term of their DPAs, Sarclad’s chief operating officer conducted a compliance review while Güralp Systems’ compliance officer conducted a compliance review.
^[76] See US Department of Justice Criminal Division, Evaluation of Corporate Compliance Programs guidance (updated June 2020), Section II.
^[77] Standard Bank and Stanbic Bank Tanzania Ltd.
^[78] US v. Airbus DPA, 31 January 2020.
^[79] The conduct that Sarclad accepted had taken place began some four years after acquisition in 2004 and the acquisition was at a time when compliance programmes were less developed generally and not subject to the same level of scrutiny as today.
^[80] The DOJ Compliance Guidance is helpful on this point.
^[81] Those agreed between the SFO and Standard Bank, Sarclad, Rolls-Royce, Airbus, Airline Services Limited, Amec Foster Wheeler, and AB Ltd and CD Ltd.
^[82] R v. Alstom Network UK Ltd [2019] EWCA Crim 1318. A pre-Bribery Act prosecution that concluded in November 2019 with Alstom Power Ltd having pleaded guilty to one count of conspiracy to corrupt and Alstom Network UK Ltd having been convicted of a further count of conspiracy to corrupt.
^[83] Final Notice, 19 December 2013.
^[84] SFO v. Serco Geografix Ltd, Crown Court (Southwark), 4 July 2019 Case No. U20190413. Serco Geografix Ltd entered into a DPA in respect of five counts of fraud and false accounting.
^[85] Final Notice, 17 March 2014.
^[86] See, for example, US Department of Justice Criminal Division, Letter to K&L Gates dated 3 June 2016 in respect of Nortek, Inc.
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Judith Seddon, Eleanor Davison, Christopher J Morvillo, Luke Tolaini, Celeste Koeleveld, F Joseph Warin and Winston Y Chan
Dechert LLP, Fountain Court Chambers, Clifford Chance and Gibson Dunn & Crutcher
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Dechert LLP, Fountain Court Chambers, Clifford Chance and Gibson Dunn & Crutcher LLP
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Baker McKenzie
Judith Seddon and Andris Ivanovs
Dechert LLP
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Gibson Dunn & Crutcher
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Linklaters
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Latham & Watkins LLP
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Matthew Bruce, Ali Kirby-Harris, Ben Morgan and Ali Sallaway
Freshfields Bruckhaus Deringer LLP
John D Buretta and Megan Y Lew
Cravath Swaine & Moore
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Dechert LLP
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Cooley LLP
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David Mortlock, Britt Mosman, Nikki Cronin and Ahmad El-Gamal
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Cloth Fair Chambers and Mishcon De Reya LLP
Kevin Roberts, Duncan Grieve and Charlotte Glaser
Cadwalader, Wickersham & Taft LLP
Jodi Avergun and Cheryl Risell
Cadwalader, Wickersham & Taft LLP
James Carlton, Sona Ganatra and David Murphy
Fox Williams LLP
Milton L Williams, Avni P Patel and Jacob Gardener
Walden Macht & Haran LLP
Natalie Sherborn, Carl Newman, Perveen Hill, Anthony Hanratty and Sophie Gilford
Withersworldwide
Christopher LaVigne, Martin Auerbach and Georges Lederman
Withersworldwide
Richard Sallybanks, Anoushka Warlow and Greta Barkle
BCL Solicitors LLP
Amanda Raad, Michael McGovern, Meghan Gilligan Palermo, Abraham Lee, Chloe Gordils and Ross MacPherson
Ropes & Gray
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Skadden, Arps, Slate, Meagher & Flom (UK) LLP
Victoria L Weatherford and Tera N Coleman
Baker & Hostetler
Ben Brandon and Aaron Watkins
Mishcon De Reya LLP and Kingsley Napley
Judith Seddon, Eleanor Davison, Christopher J Morvillo, Luke Tolaini, Celeste Koeleveld, F Joseph Warin and Winston Y Chan
Dechert LLP, Fountain Court Chambers, Clifford Chance and Gibson Dunn & Crutcher LLP
Kyle Wombolt and Pamela Kiesselbach
Herbert Smith Freehills
Robert Dalling and Karam Jardaneh
Jenner & Block
María González Calvet
Ropes & Gray
Michael S Diamant
Gibson Dunn & Crutcher LLP
Gustavo Morales Oliver, María Lorena Schiariti and María Agustina Testa
Marval, O’Farrell & Mairal
Tim Grave and Lara Gotti
Clifford Chance
Jonathan D King, Ricardo Caiado Lima, Antonio Tovo, André Sampaio Lacerda Ferraz and Mellina Bulgarini Gerhardt
DLA Piper LLP (US) and Campos Mello Advogados in Cooperation with DLA Piper
Sabrina A Bandali, Emrys Davis, Alan P Gardner, Laura Inglis, Amanda C McLachlan, Ruth E Promislow and Nathan J Shaheen
Bennett Jones
Rafael Collado González, Lucía Álvarez Galvez, Josefa Zamorano Quiroga and Camilo León Millones
FerradaNehme
Kyle Wombolt, Helen Tang and Tracey Cui
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Marcela Cristina Blanco and Marcelo Buendía Vélez
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Matheson
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Fornari e Associati
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Meredith Connell
Dayo Adu, Temiloluwa Dosumu and Esther Randle
Famsville Solicitors
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Medical Document Management Systems
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For various reasons, hotel companies are compelled and required to keep an incredible amount of records about their daily business operations. The night audit pack alone – which includes daily documents such as a Transactions Report, Financial Report, Tax Report, Revenue Report, Departures Report, etc. – can be hundreds of pages.

Federal and state tax laws require hotels to keep these records on file, on location, for various amounts of time (typical retention period is seven years). More recent regulations, in fact, require storage in multiple locations to avoid a “single point of failure.” And having these records on hand is helpful: Should a guest call years after their stay to dispute a charge, for example, the hotel should have access to all related documents for verification.
For these reasons, believe it or not, many hotels still print these documents at the end of each day and file them away in a manilla envelope in a storage area, such as a closet, a back office or an attic. A growing number of hotels have adopted some type of digital storage – whether on a USB drive or a cloud-based shared drive, like Sharepoint or Google Docs – which is a step in the right direction but can create its own set of challenges.
For those who haven’t adopted digital document management, the time is now. However, while moving your night audits and other accounting reports from paper to digital might seem like a no-brainer, there are right and wrong approaches. Choosing the wrong approach could lead to inefficient processes and leave your data open to intrusion.
Below, we’ll identify two critical areas of focus to ensure you’re building the right document management strategy that will serve as the framework for future digital transformation.

1) Digital Doesn’t Always Mean Secure

One would think that any digital approach to storing confidential documents would be safer than printing and storing boxes of reports in a storage closet. But that’s not necessarily the case – adopting digital storage without the proper procedures in place can be equally dangerous.
First, storing documents on a USB drive opens up the likelihood that the device will be lost, and losing important documents is never good. Should an employee accidentally leave a USB drive at the coffee station, for example, someone who is not meant to have access to those files could potentially copy the contents of the drive and return it without anyone noticing. In the end, USB storage provides little more protection than lock-and-key.
Storing daily reports in a Google Drive or Sharepoint environment can be beneficial but has its drawbacks. First, login issues and the ability to share with email addresses outside the company often open up vulnerabilities. Also, cloud drives act only as storage units, and often documents will sit for long periods of time with no action. Should your documents need to go through approval and signature processes and ultimately delivered to a central location, there are more efficient tools available.
At the end of the day, operators must ensure the right employees within their organization – on property and at headquarters – have easy access to these documents, but at the same time access is strictly restricted to outsiders. A Digital Document Management system can be integrated with your enterprise authentication solution, resulting in one secure login controlled by your enterprise controls. For example, when a General Manager logs in, his or her credentials can be verified in your system before access is granted. This allows leaders to grant function-based access; for example, the GM might be authorized to sign the signature pack but cannot delete files, and the night auditor can submit reports but not edit them.
A secure Digital Document Management solution will operate in a virtual private cloud environment, which restricts all ports by default and acts like a blanket firewall that protects the system. At MDO, for example, our server infrastructure is built in an AWS Cloud environment, which utilizes modern security and monitoring tools that comply with industry standards. We take the following steps to ensure we provide maximum protection for the data we store and process within the environment:

• Maximize the use of AWS identity and access management, along with zero-trust security architecture, to reduce possibility of data breach
• Intrusion Prevention System to take action when a potential attack, malicious behavior, or an unauthorized user is detected
• Intrusion Detection System to detect malicious behavior or unauthorized access and alert security teams
• Antivirus protection, including zero-day exploits detection using Machine Learning
• Integrated incident management system that combines alerts from all distributed tools but allows unified monitoring and responding

2) The Key is Compliance

Another reason public drives like Google and Sharepoint aren’t ideal for storing and sharing your daily reports: They’re lacking a compliance component.
Using a Digital Document Management solution ensures your files are indexed properly, with automated naming conventions and deep search functionality, to ensure they’re filed away in the right spot for easy retrieval. The learning algorithm recognizes and categorizes each document appropriately, with little human oversight. This eliminates human error, allowing Digital Document Management solutions to process hundreds of thousands of reports per day without users needing to open and save a single document.
Search functionality is essential. For example, should a guest call with a question about a charge on their folio, agents should be able to find specific details from the correlating daily report within a few clicks. This helps solve guest issues immediately, rather than taking their information, finding a solution, and returning their call in a clearly less efficient manner.

Sharing Secure Data

The COVID pandemic accelerated an oncoming shift in hotel operations: Many organizations are removing accounting and other back-office functions from the property level, instead moving those tasks to a central location at the regional or corporate level. This provides property-level staff the ability to focus solely on serving the guest and providing an exceptional guest experience. Cloud technology is empowering this shift, enabling access to tools and data from anywhere employees can connect to the internet.
Storing your documents centrally is only the first step; a true Digital Document Management solution will provide the necessary workflows to ensure documents are signed and approved, and simple summary sheets and checklists will help keep the entire team accountable. As you navigate the evolving landscape of digital adoption, be sure to choose long-term solutions that place top priority on ensuring your company and guest data is secure.
Join MDO on Wednesday, Nov. 16, to learn how smart hotel companies are improving their data strategy by going paperless. Digital Document Management provides significant and measurable results for your organization, as well as reduces your environmental impact. Register here.
myDigitalOffice (MDO) is the world’s fastest growing hotel data platform, providing customers with centralized, digital access to all of their hotel’s most critical documents and cross-functional performance metrics. The visibility, connectivity, and control delivered by our award-winning cloud-based dashboards, document management software, and integrated data feeds allow teams to reach greater levels of productivity, budget, and forecast, and reduce environmental impact while optimizing profitability. Learn more at mdo.io.
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DUBLIN–(BUSINESS WIRE)–The “EdTech And Smart Classrooms Global Market Report 2022: Ukraine-Russia War Impact” report has been added to ResearchAndMarkets.com’s offering.

The global edtech and smart classroom market is expected to grow from $121.19 billion in 2021 to $141.43 billion in 2022 at a compound annual growth rate (CAGR) of 16.7%. The edtech and smart classroom market is expected to grow to $263.94 billion in 2026 at a compound annual growth rate (CAGR) of 16.8%.
North America was the largest region in the edtech and smart classroom market in 2021. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in edtech and smart classroom market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East and Africa.
The growing investment in eLearning and EdTech is driving the growth of edtech and smart classrooms market going forward. E-learning stands for electronic learning and it allows people to learn via electronic media, typically on the internet. It allows users to take courses online using electronic devices, such as a computer, tablets, and even smartphones. E-learning uses EdTech that is the use of technology and technology processes to facilitate learning and improve performance.
During the covid-19 pandemic in 2019-20, the subsequent lockdowns resulted in schools being shut. Therefore, this has presented an opportunity for e-learning & edtech providers to capture the market thereby prompting increased investments in the sector. For Instance, according to a report by Tracxn an India-based platform for tracking start-ups and private companies, Indian ed-tech companies have raised $248 million in January to July 2022 from different sources. The Indian ed-tech companies raised $101 during January to July in 2021, and $251 million annually in 2021. Global ed-tech investments are worth $1.21 billion in 2022. Therefore, the growing investment in eLearning and EdTech will drive the edtech and smart classrooms market.
Technological advancement is a key trend gaining popularity in the edtech and smart classrooms market. Major players operating in the market are concentrating their efforts on creating innovative technologies like the Virtual Learning Environment (VLE) app that uses AI (Artificial Intelligence).
For instance, in December 2021, Microsoft corporation, a US-based technology company, and the Oliver Group an Ireland-based EdTech company jointly launched a new virtual learning environment app. This app that runs on the Microsoft Teams application is an intuitive software platform that delivers a wide range of interactive digital content and offers the user a more user-centric learning experience. It features a wide range of interactive digital content and currently encompasses 250 million global Microsoft Teams daily active users. This product, therefore, offers its users seamless student-tutor interaction through easy-to-use interactive tools.
Reasons to Purchase
Scope
Markets Covered:
1) By Education System: Learning Management System; Student Information and Administration System; Student Collaboration System; Student Response System; Learning and Gamification; Test Preparation; Classroom Management System; Document Management System; Talent Management System
2) By Deployment Type: Cloud; On-Premises
3) By Hardware: Interactive Displays; Interactive Projectors
4) By Component: Hardware; Software; Services
5) By End-Use: K-12; Higher Education
Key Topics Covered:
1. Executive Summary
2. EdTech And Smart Classrooms Market Characteristics
3. EdTech And Smart Classrooms Market Trends And Strategies
4. EdTech And Smart Classrooms Market – Macro Economic Scenario
5. EdTech And Smart Classrooms Market Size And Growth
6. EdTech And Smart Classrooms Market Segmentation
7. EdTech And Smart Classrooms Market Regional And Country Analysis
8. Asia-Pacific EdTech And Smart Classrooms Market
9. China EdTech And Smart Classrooms Market
10. India EdTech And Smart Classrooms Market
11. Japan EdTech And Smart Classrooms Market
12. Australia EdTech And Smart Classrooms Market
13. Indonesia EdTech And Smart Classrooms Market
14. South Korea EdTech And Smart Classrooms Market
15. Western Europe EdTech And Smart Classrooms Market
16. UK EdTech And Smart Classrooms Market
17. Germany EdTech And Smart Classrooms Market
18. France EdTech And Smart Classrooms Market
19. Eastern Europe EdTech And Smart Classrooms Market
20. Russia EdTech And Smart Classrooms Market
21. North America EdTech And Smart Classrooms Market
22. USA EdTech And Smart Classrooms Market
23. South America EdTech And Smart Classrooms Market
24. Brazil EdTech And Smart Classrooms Market
25. Middle East EdTech And Smart Classrooms Market
26. Africa EdTech And Smart Classrooms Market
27. EdTech And Smart Classrooms Market Competitive Landscape And Company Profiles
28. Key Mergers And Acquisitions In The EdTech And Smart Classrooms Market
29. EdTech And Smart Classrooms Market Future Outlook and Potential Analysis
30. Appendix
Companies Mentioned
For more information about this report visit https://www.researchandmarkets.com/r/cc4emx
ResearchAndMarkets.com
Laura Wood, Senior Press Manager
press@researchandmarkets.com
For E.S.T Office Hours Call 1-917-300-0470
For U.S./ CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900
ResearchAndMarkets.com
Laura Wood, Senior Press Manager
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For E.S.T Office Hours Call 1-917-300-0470
For U.S./ CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900

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04 January 2023
The purpose of this chapter is to explain key concepts and leading practices in investigations from an accounting (and books and records) perspective. The term ‘forensic’, as defined in Webster’s Dictionary, means ‘belonging to, used in or suitable to courts of judicature or to public discussion and debate’. Accordingly, forensic accounting involves the application of specialised knowledge and investigative skills and tools to matters in anticipation of possible litigation or dispute resolution, including in civil, regulatory, administrative and criminal enforcement matters. Forensic accounting skills can be applied to a wide variety of investigations into alleged corporate and individual wrong­doing, including:
In this chapter we may refer to fraud in general terms as well as non-compliance. Non-compliance often lacks the intent of fraud and may manifest itself in the violation of an agreement, policy or otherwise acceptable behaviour. Investigations may focus on allegations of fraud or non-compliance.
The range of specialisations in the field of forensic accounting is diverse, but at the core is a focus on accounting systems, processes, transactions, records, data policies, internal controls and reports. A logical order in which forensic accountants will proceed in a typical investigation is as follows:
Many of the most important steps involved in this process are explained in this chapter.
The US Department of Justice (DOJ) has set forth additional guidance^[2] on how it evaluates corporate compliance programmes for assessment and sentencing purposes. Forensic accountants are well suited to help to develop effective compliance programmes or to evaluate and strengthen the efficacy of existing programmes. The DOJ guidance represents an authoritative road map for the building or enhancement of a programme, and adds detail and emphasis to the April 2019 guidance.^[3] It remains centred on three primary questions: (1) Is the programme well designed? (2) Is the programme adequately resourced and empowered to function effectively? (3) Does the programme work in practice?
The context of the DOJ’s guidance is to assist prosecutors in evaluating a corporation’s compliance programme in determining the form of any resolution or prosecution, monetary penalties and further compliance obligations such as a monitorship. Corporations, however, may use the guidance as a resource for building or enhancing their compliance programme. The DOJ guidance challenges the compliance professional with several hundred questions related to their existing programme. Although forensic accounting professionals collaborate with attorneys, auditors and several departments at the company to assist in-house compliance professionals with practically all aspects of their compliance programme, the DOJ’s revised guidance addresses the following key factors most applicable to forensic accounting:
The DOJ’s additional guidance on how it evaluates corporate compliance programmes demonstrates that there are numerous opportunities for forensic accountants working with legal and compliance teams to add significant value in building and enhancing the corporate compliance function.
Turning to the specific steps where a forensic accountant can assist, an important consideration at the outset of an investigation is to identify the necessary steps to mitigate loss of funds or other assets and to preserve data and relevant records. This may entail closing of bank accounts, freezing of email and other communications, deactivating user passwords and other steps to deny targets of the investigation access. Where the nature of the investigation requires it, financial and accounting information will need to be preserved and stabilised. Physical documents in this category may include a wide variety of records, such as purchase orders, invoices, customer orders, delivery records, etc. Every step of the transaction cycles involved in the scheme under investigation should be considered at this stage to identify all potentially relevant documents and electronic records (including audio).
Owing to the proliferation of electronic data, an increasingly important early step in many investigations is to determine what relevant information exists, in what form (paper or electronic), where it is located (e.g., an on-site data centre, off-site at vendors, in the cloud), what security measures are in place over the data, and what the organisation’s standard record retention and destruction policies and practices are. The process of identifying, taking inventory of and preserving relevant data that may be of use in an investigation is often referred to as e-discovery.
In addition, as soon as it becomes apparent that an investigation in anticipation of litigation is necessary, a litigation or preservation hold notice should be issued. These notices require the suspension of any destruction or deletion of paper or electronic records that could be relevant to the investigation. Proper communication of a litigation or preservation hold to all pertinent individuals and departments, which may include third parties who, for example, are responsible for archiving the organisation’s data off-site, is important to avoid accidental destruction of critical records.
An important part of an investigation is establishing whether the wrongdoing or non-compliance was intentional. Demonstrating that an employee or third party was aware of and violated the code of conduct or a documented, well-established policy or internal control is often a relevant factor. For example, determining how an internal control was circumvented or otherwise violated is also an important part of understanding how fraud or corruption was perpetrated. Establishing that a subject intentionally violated internal controls can be important in connection with criminal prosecution or the regulatory enforcement process. Understanding precisely how internal controls were violated is critical to developing a remediation plan to enhance controls and to prevent future occurrences. In addition, understanding how internal controls were bypassed or overridden will often provide critical insight into who may have been involved in the scheme, who knew or should have known about the scheme and when the scheme took place.
The first step in determining whether policies or procedures were violated is to gain a thorough understanding of the accounting behind the controls as well as the identities of employees responsible for accounting, internal controls and the business activities and processes being investigated. Upon gaining this basic knowledge, we identify the established policies and procedures (the current state). This normally entails reviewing documented policies and procedures, and conducting walkthroughs and fact-gathering interviews with employees to help clarify any ambiguities in the documentation or process. Some considerations include:
It may also be important to review any training programmes that the subject of the investigation received or certifications they approved. Doing so can establish more firmly that the subject had an understanding of the proper method of handling the transactions and policies.
Most accounting cycles, such as procurement, disbursement of funds and payroll, include many steps. Some of these are evidenced manually, such as with written approvals by signature and supporting documents such as invoices and delivery confirmations. Other steps require analysis of electronic records. Examples of critical pieces of electronic evidence related to internal controls include the following:
Physical documents are often important pieces of evidence in an investigation. But electronic evidence associated with a transaction cycle tends to be equally or more important. Proper analysis of this evidence enables an investigator to draw conclusions and gain insight that would be impossible in an entirely paper-based system. For example, a paper copy of a vendor invoice can be analysed to establish whether a subject signed or initialled it, and perhaps whether any alterations were made to the document. But if the organisation’s vendor invoice approval and payment system is electronic, the investigator can also determine with precision the date and time of the approval of the invoice and perhaps even where the subject performed these steps (from home, from a workstation in the office, etc.).
Forensic data science refers to using a scientific method for the identification, collection, analysis and reporting of electronically stored information. This includes both structured data, such as financial records in a database, and unstructured data, such as files on a file server. The most commonly analysed data in forensic accounting investigations is financial, but several non-financial categories of data are also very useful to investigators. Each is explored below.
Data analysis generally has three applications in the investigative process:
Each of these will be explained further. But first, a few important points about data analytics are essential.
Data analytics rarely prove that fraud or non-compliance occurred. Rather, data analysis identifies transactions or activities that have the characteristics of fraud or non-compliance, so that they can be examined further. These are often referred to as anomalies in the data.
If an investigation ultimately leads to employee terminations or legal proceedings to recover losses, it is critical to have properly analysed the anomalies that data mining has identified. Could the anomaly in the data, or an anomaly in a document, while often identified as a characteristic of fraud, also simply indicate a benign deviation? Failing to investigate and rule out non-fraudulent explanations for anomalies can have consequences that many investigators have learned about the hard way.
Identifying and exploring all realistically possible non-fraudulent, non-corrupt explanations for an anomaly is also called reverse proof. Examining and eventually ruling out all of the valid possible non-fraudulent explanations for an anomaly in the data or documentation can prove that the only remaining reasonable explanation is fraud or corruption.
Careful consideration of alternative theories for data and document anomalies is critical to protecting the organisation and the investigator from liability stemming from falsely accusing someone of wrongdoing.
Depending on which application or phase of the investigative process is involved, the nature of forensic data analysis can vary. For example, as an initial detector of fraud or non-compliance through ongoing monitoring, forensic data analytics usually takes one of two broad, but opposite, approaches: identification of any activity that deviates from expectations, or identification of activity that possesses specific characteristics associated with fraudulent or corrupt behaviour or other non-compliant conduct.
The former approach is taken when acceptable behaviour is narrowly defined, such that the slightest deviation warrants investigation. The latter approach is the more common one. It is driven by a risk assessment and is based on what this type of fraud or non-compliance would look like in the data. For example, a shell company scheme might evidence itself by an address in the vendor master file matching an address in the employee master file. Any instances of such a match should be investigated.
In some cases, basing the ‘investigate’ or ‘don’t investigate’ decision on a single characteristic in the data can result in numerous false positives. For this reason, more sophisticated data analytics often rely on the consideration of multiple characteristics in assessing the risk of activity being fraudulent or corrupt. These characteristics can be combined into a singular risk score per transaction that can be aggregated by vendor, geography or other grouping. Risk scoring or risk ranking transactions can be useful for prioritising where to focus in the data.
Regardless of which of these two approaches is taken, data analytics often represents an essential tool for gathering evidence to lay the foundation for substantive examination of books, records and other evidence. Following the reverse-proof concept described above is critical once anomalies indicative of possible wrong­doing are uncovered.
As a method of corroborating an allegation that has been received, data analysis can be of great value. It is a significant advantage to the investigator because, more often than not, it can be performed on electronic data without alerting the subject of the allegation. In this application, the allegation is first assessed in terms of what impact the alleged fraudulent or corrupt act would have on financial or non-financial data. It is important to understand how data flows through the organisation from the point of origination, through multiple hops in different departments, for example how an invoice will flow from a business unit to finance and back to the business unit. The data can change quite a bit throughout different business processes and this will need to be understood for a robust analysis to take place. To illustrate, take the example of an allegation that workers in the shipping department of a warehouse are stealing inventory by short shipping orders to customers. There are numerous sources of data, both financial and non-financial, that could be analysed to assess the validity of this allegation:
This is a simple example, but one that illustrates that for every allegation, there likely exists data associated with either the perpetration or concealment of the fraud or non-compliance. And this data normally exhibits one or more anomalies in comparison with data from similar transactions that do not involve fraud or non-compliance.
The final application of forensic data analysis is performed during the investi­gation itself. Once an anomaly has been found to involve fraud or non-compliance, additional forensic data analysis, along with substantive forensic examination of the evidence, may be performed to:
Determining who is involved in the fraud as well as who possessed knowledge of it is critical to the mitigation and control enhancement objectives. According to a 2022 report by the Association of Certified Fraud Examiners (ACFE), nearly 58 per cent of all fraud and corruption schemes investigated involved multiple perpetrators.^[4] Typically, losses tend to increase with multiple perpetrators, particularly when three or more individuals conspire to commit fraud. This figure has been steadily rising since the ACFE began studying fraud. The 58 per cent includes cases involving multiple internal perpetrators and those involving collusion between insiders and outsiders, such as vendors or customers.
Point 4, above, may also come as a surprise to some. The ACFE report indicates that 35 per cent of occurrences of fraud (especially with respect to asset misappropriations) are perpetrated through multiple methods. The allegation or investigation may have initially focused on only one specific method. Exploring what other activities the subject might have the capability of engaging in is an integral element of the investigation. Investigators and victims attempt to ‘put a fence around the fraud’ as early in the investigative process as possible. Understanding the responsibilities of the subject and the potential for unrelated schemes is essential for erecting the fence. Victims often desire a narrow investigative scope – a sort of wishful thinking. An investigator’s worst-case scenario is missing a scheme perpetrated by a subject despite investigating the subject.
The question of who knew what and when can be particularly important in satisfying auditors in the context of financial reporting fraud. In addition to quantifying the financial statement impact from fraud, auditors rely on representations from management. Knowledge of whether previous representations came from fraudsters and the auditor’s assessment of management’s integrity are often important aspects of financial reporting fraud investigations.
In the next sections, the distinction between financial and non-financial data will be explored, followed by a discussion of internal versus external data.
Most analyses of internal data relevant to an investigation begin with financial data, much of which comes from the organisation’s accounting system. Accounting data can exist in several separate systems, such as:
Performing an investigation often requires the extraction and analysis of data from all these systems to see the big picture or to properly trace the history of a transaction or series of activities. The days of manually maintained books of original entry are gone. The vast majority of organisations now use electronic accounting and financial software, and in larger organisations these systems are included as part of a broader ERP (enterprise resource planning) system.
Some systems are hybrids of financial and non-financial information. Examples of these systems include the following:
Legal and data privacy considerations associated with each of these sources of internal data vary from one jurisdiction to another, particularly with respect to payroll and personnel information. Domestic and foreign data privacy regulations must be considered before embarking on any use of such data in an investigation.
Increasingly, non-financial data is being analysed as a standard element of an investigation. Non-financial data can be classified into two broad categories: structured and unstructured.
Structured data is the type of data that generally conforms to a database format. It is often numeric (e.g., units in inventory, hours worked by an employee, calendar dates), but can involve alpha data as well (e.g., codes associated with types of customers or employees, certain elements of an address).
Structured non-financial data is found in many systems, including those that include financial data mentioned above. Other systems, however, are entirely non-financial, but provide data that can be important to an investigation. Examples of non-financial systems commonly used for investigative purposes include the following:
Unstructured data refers to data that does not readily conform to a database or spreadsheet format. Text associated with messages in emails, explanations for journal entries and other communications are the most common. Unstructured data also includes photographic images, video and audio files.
Emails and text messages of interest to an investigator may involve messages within the organisation, between employees and communications between organisation employees and vendors, customers or other third parties.
Similar to other electronic data, when a user ‘deletes’ this information, a backup or archive version is often left behind and is available to an investigator. Understanding an organisation’s backup, archiving and storage practices is crucial to this part of an investigation.
Careful review of email, instant messaging or text message chains (and, if available, recordings of telephone calls) is vital to most investigations and can provide an investigator with vital clues, such as:
Establishing a timeline can be one of the most important requirements of an investigation. A complete timeline of events can often be established by inte­grating the separate timelines learned from a review of:
Email review is of particular importance in establishing intent. Intent, particularly to a civil standard, may be inferred from communications that indicate an awareness that planned transactions or activities are in conflict with established policies and procedures or treatment of similar transactions. Email, although a rich source of behavioural history, can quickly become overwhelming from a volume standpoint. There are many modern techniques for prioritising and culling this type of information. Sentiment analysis, a form of artificial intelligence (AI), can assist with identifying the writer’s emotional state. Other forms of AI, typically referred to as natural language processing (NLP), can help correct for potential biases that investigators naturally bring to their review. For example, an investigator may select a list of search terms to run against email data to reduce the population for further review and bring the most important messages to the forefront. By creating these search terms, the investigator has leveraged what he or she knows about the case and this inflects a natural bias. By using AI, NLP, predictive analytics and machine learning, coupled with limited manual set-up, analysis and review, the data is allowed to speak for itself, and computer algorithms will cluster statistically relevant information. Typically, a combination of search terms and NLP is used. These types of analyses can identify pressures or rationalisations associated with fraudulent or corrupt behaviour. For example, an employee stating in communications that he or she feels unfairly treated or resentment towards management might be expressing a rationalisation for stealing from an organisation.
One example of the use of both financial and non-financial data is in the investigation of alleged financial statement fraud. When an allegation is made that a company’s financial statements have been intentionally manipulated, any of a large number of schemes come to mind. The most common fraudulent financial reporting schemes involve improper recognition of revenue, inflating sales through fictitious transactions or accelerating the recognition of legitimate transactions. So, a revenue inflation scheme will serve as our example.
To establish that the financial statements improperly reflect sales, electronic data from the sales and accounts receivable systems will need to be analysed in conjunction with physical or electronic records associated with customer orders, inventory, shipping and delivery, among other things. By analysing these records, the investigator may establish that sales recognised by the company failed to conform to applicable accounting standards (e.g., International Financial Reporting Standards).
But accounting mistakes are common. For this scheme to be fraudulent, the subjects’ dishonest intent to violate the accounting rules must be established. This is where analysis of emails and other electronic communications may be valuable. Perhaps email exchanges can be located documenting discussions of revenue shortfalls and methods of meeting budgeted figures. In this case, analysis of unstructured non-financial data may be one of the keys, along with interviews of subjects, to proving that the company intentionally violated its own policies and pertinent accounting principles.
Analysis of both financial and non-financial data is an important step in preparing to interview witnesses and subjects. Reading and analysing email and other communication chains before conducting the interview allows an investigator to plan the order and structure of questions to put the interviewer in the best position to identify conflicting statements and to obtain an admission of wrongdoing.
Other investigation scenarios in which analysis of unstructured data association with communications between individuals include:
Most data and documentation used in an investigation is internally generated – it comes from within the organisation or (in the case of invoices from a vendor) is otherwise readily available within the organisation. Occasionally, however, data or documentation that is only available from external sources becomes essential. External sources of data fall into two broad categories: public and non-public.
Public data and documents are those that are usually available to the general public either by visiting a website or facility or on request from the holder of the records. In many instances, public records are maintained by government agencies. Examples of public records vary significantly from one jurisdiction to another, but some that may be useful to investigators are:
Availability and the extent of these records can differ markedly as an investigator seeks information from different parts of the world.
Increasingly, public records may also include information that an individual voluntarily makes publicly available. For example, when an individual posts photos or makes statements on social media, this information might be readily available to any and all viewers. Once again, investigators should always use caution when accessing this information, especially if the information is only available to ‘friends’ or other contacts that the individual has granted special access to. But when social media information is made fully available to the general public, it can provide a treasure trove of information about a subject, such as:
Another public source of information involves websites that do not require special password or other access privileges. For example, a company’s website, or that of a trade association or other membership group with which a subject might be involved, could provide clues about the subject’s relationships, travels and past.
Even information that is no longer on a website might still be available to an investigator. The Wayback Machine at www.archive.org is an archive of more than 725 billion past pages on the internet (as at August 2022). Simply typing the URL of a website into the Wayback Machine will produce an index by date of prior versions of that website which have been archived and are available for viewing. Accordingly, an investigator may be able to find useful information from past editions of websites long after the information has been deleted.
Non-public records are private and confidential. Holders of these records are under no obligation to produce these records unless they have provided their consent or they are compelled to do so as a result of a legal process, such as a court order or subpoena. Records such as personal bank statements of individuals who may be the subject of an investigation fall into this category. Investigators normally do not have ready access to these records.
Another challenging and practically untraceable medium adopted by cybercriminals is the dark web, a small section of the deep web (content on the internet that is not readily accessible or visible through search engines) designed so it cannot be accessed through standard web browsers.^[5] It allows anonymous private communications for legitimate reasons (e.g., protection of free speech), but also for the distribution of harmful information and purchase of illegal goods and services that law enforcement agencies have difficulty tracing. For example, once an organisation’s network has been breached, the intruder may extract sensitive information such as customer data, logins and passwords, banking details, taxpayer identification and social security numbers, and credit card details, and then sell this confidential information anonymously on dark web marketplace and forum websites to buyers across the world.
There are no anti-money laundering or know-your-customer (KYC)controls on the dark web. Most dark web sites are anonymous and difficult to attribute to an owner because these sites use a ‘.onion’ domain suffix, which can only be accessed via a Tor (The Onion Router) browser. Website traffic is bounced through randomly selected Tor entry, relay and exit nodes using separate embedded layers of data encryption for each hop in the network circuit (hence the term ‘onion’). In addition, perpetrators are increasingly using cryptocurrencies to conduct illicit financial transactions via the dark web while hiding their identities.
Dark web investigations therefore require specialist forensic investigative tools, such as a secure dark web browsing platform with network and malware protection (e.g., firewalls and virus scanning), and secured data storage that maintains a strong custody chain for digital evidence, backed by strict and auditable compliance controls. Such tools can be used to search and monitor dark web communications, capture cryptocurrency information (e.g., blockchain wallet addresses) and attempt to identify and locate cyber fraudsters while capturing and analysing digital evidence in a forensically sound manner.
When assisting counsel with preparing a request for a subpoena or other court-ordered production of private records, an investigator should be as detailed and specific as possible. Overly broad requests are normally either denied or result in potentially lengthy delays. The format of the records and the tools available to the investigator to analyse them should also be considered. For example, if records associated with a bank account are requested, rather than requesting ‘all records associated with the account’, it is normally better to itemise a list of those records, such as by requesting copies of:
A vendor’s internal records would normally be non-public and the vendor may be under no obligation to provide them to an investigator. However, a properly worded right-to-audit or access-to-records provision included in the contract between the organisation and the vendor may provide access to some of the most important records an investigator might need if fraud or corruption involving a vendor is suspected. Well-crafted access-to-records and right-to-audit clauses can enable an investigator to request and view a wide variety of records, including:
If a vendor is suspected of inflating their billings to the organisation in any manner, or there are indications of collusion between an organisation employee and a vendor, one of the first steps an investigator should perform is to carefully review the terms of the contract to assess the organisation’s rights to access or audit these records.
Studying the processes and internal controls involved in the transaction cycle in the investigation and the results from data analytics and email review will result in a population of documents and electronic records that are relevant. For example, in a corruption investigation, several paper documents or records may need to be reviewed:
These records might be reviewed for many different reasons. Among the most common are:
Testing for authenticity of the record itself or of individual signatures on documents normally involves a highly specialised skill, unless an anomaly is obvious. Accordingly, if an investigator suspects that a document on file is fraudulent or has been physically altered, or that a signature is not authentic, the document should be protected until someone with the specialised skills necessary can assess its authenticity. Examples of obvious deficiencies in documentation include:
In a corruption investigation, the authenticity or business purpose of an inter­mediary may be in question. The investigator should determine:
If the subject has misappropriated cash (via intercepting incoming funds intended for the organisation, stealing cash on hand, or fraudulently transferring funds from the organisation in connection with a disbursement fraud) one of the goals of most investigations is to secure the return of the funds. To do so, the investigation team must determine what the subject did with the money. Other sources of recovery may include culpable outside parties, including but not limited to collusive vendors, customers, agents and family members. Coverage for employee dishonesty losses under insurance policies and fidelity bonds may also be possible.
If the subject misappropriates other assets, a similar question must be addressed – where are the assets? Often, when they are stolen, the subject’s goal is a conversion to cash by selling them. In other cases, the stolen asset itself may be of use to the subject.
Depending on how assets were stolen, varying degrees of a trail might be left by the perpetrator, enabling the investigation team to forensically determine the flow of money after it has left the organisation. The trail may begin with the company’s books and records. However, it is usually intentionally made opaque by fraudsters through money laundering techniques such as layering, transfers to shell companies, nominee shareholders and the use of clandestine communication techniques, cryptocurrencies, and tax havens where criminal law enforcement assistance may be less effective. Many of the records necessary to fully trace assets are non-public. But investigators are sometimes surprised to learn that a subject has left a public trail of valuable clues regarding the disposition or location of illegally obtained funds or assets that can be identified through indirect techniques, such as social media and internet due diligence, interviews of people in the know, establishing connections to the fraudster’s other assets in more vulnerable venues and through multinational co-operation of law enforcement agencies.
Cryptocurrencies present unique challenges and new opportunities for investigators seeking to trace them and attempt their recovery. Bitcoin, Ethereum and many other emerging cryptocurrencies are easily accessible and widely accepted to the degree that fraudsters can, with minimal effort and risk, rely on them to move funds for the same purpose fiat currencies have long been used to transfer and conceal the source, nature and ownership of illicit funds. The added advantages of cryptocurrencies not requiring physical contact or interaction with banks has made them the payment method of choice for perpetrators of ransomware attacks and other schemes aimed directly at defrauding victims (e.g., internet-based advanced fee schemes). Therefore, forensic investigators must still follow the money trail and will be doing so more often with cryptocurrencies; however, there is another side to the coin, so to speak. While cryptocurrencies provide a degree of pseudonymity, especially those designed to provide enhanced privacy (e.g., Monero, Zcash), they do not provide complete anonymity. On the contrary, cryptocurrencies by design create an immutable public blockchain record of transactions that investigators can exploit to follow the money to a certain extent, provided they have the right tools and training.
As new cryptocurrencies are developed on different blockchains, investigators must also learn to follow transfers across them because fraudsters are already using cross-chain transfers to launder funds. This also requires the investigative blockchain data analysis tools (e.g., TRM Labs, Chainalysis) to be continually adapted and advanced to enable cross-chain analysis.
Although the on-blockchain transactions in cryptocurrencies can be traced using public blockchain data, for digital asset tracing to be successful for asset recovery or prosecution purposes investigators must be able to trace trans­actions beyond the blockchain to identify the counterparties and the ultimate beneficiaries. This requires identifying and pursuing additional information from virtual asset service providers (VASPs) such as cryptocurrency exchanges, hosted wallet platforms and financial institutions providing custodial services for crypto­currencies – the on-ramps and off-ramps to blockchains. These entry and exit points for cryptocurrencies are essential to fraudsters because for crypto­currencies to be more useful to the ultimate beneficiaries, the digital asset value must still be converted to or from fiat currency, or other tangible assets. Therefore, a key goal of blockchain data analysis is to correlate known blockchain addresses for on-ramps and off-ramps with blockchain data on suspect transactions to develop leads as to where cryptocurrency funds were converted. If this was a legitimate or regulated VASP, KYC information may have been recorded and more traditional investigative steps could be followed, such as the use of subpoenas, search warrants, regulatory inquiry or examination, witness interviews, etc.
A challenge for cryptocurrency-related investigations is the existence of illicit, unlicensed peer-to-peer exchanges that offer a way to convert fiat currencies to and from cryptocurrencies through unregulated entities that do not collect KYC information. There are also providers of cryptocurrency laundering services known as ‘mixers’ that offer a way for money launderers to obfuscate the actual parties to a blockchain transaction by mixing the cryptocurrency value with large numbers of other blockchain transactions going through the mixer. Even transactions flowing in and out of a legitimate exchange can become untraceable using blockchain data (without co-operation from the exchange to obtain internal account data) due to the sheer volume of transactions flowing through a large exchange (e.g., Coinbase).
In summary, investigating financial crimes involving cryptocurrency and digital asset tracing will require specialist blockchain analysis and intelligence tools and services, as described above, to identify leads to follow beyond the public blockchain. This may be easier to do when dealing with cryptocurrency compared to fiat currency that is physically transferred, but it also presents new challenges. Understanding these challenges and how to identify potential sources of additional attribution data for cryptocurrency transactions is essential. This will continue to be a changing landscape for investigators given the continually evolving technology and expanding array of new forms of blockchain-based cryptocurrencies and emerging decentralised finance (DeFi) platforms that promise to offer an even greater variety of financial services based on blockchain technology.
From an investigations perspective, one of the primary issues with reporting on environmental, social and governance (ESG) matters is the prevalence of greenwashing. Also, given there are multiple international standards and frameworks for ESG, without a single universal standard, the potential for errant reporting is an issue.
Increasing regulatory and stakeholder pressure to address and report on ESG factors creates risks of financial reporting fraud since ESG metrics and claims can be challenging to verify given the lack of a standardised reporting framework. In addition, demands are high for companies to demonstrate to their stakeholders – including not just investors, but also customers and vendors – that they are making progress on meeting ESG targets and initiatives. Forensic accountants will play an important role in identifying and addressing both internal and external ESG fraud risks. While it is too soon to ascertain the impact ESG will have on public and private companies, new and existing fraudulent activities are coming to the forefront in this context. ESG-related issues forensic accountants might investigate include the following:
Companies will be looking to forensic accountants to play a critical role in assessing fraud risks and investigating allegations related to ESG.
The rapid conversion of accounting and other records from paper-based systems to electronic systems, coupled with the explosion in the quantity and types of electronic data, has resulted in many changes in the field of forensic accounting and the requirements for investigations. Expertise in the evaluation and handling of electronic evidence is just one way in which forensic accounting has evolved. Focused and efficient use of data analytics as well as the ability to mine a universe of publicly available yet critical information regarding subjects, companies and their relationships are two additional ways in which forensic accounting has matured. On the other hand, operating within a web of global data privacy and other complex regulatory constraints can complicate the job of the forensic accountant. All in all, today’s forensic accountants are significantly more successful in identifying, investigating and mitigating fraud than in the past.
^[1] Glenn Pomerantz and Paul Peterson are partners at BDO USA, LLP.
^[2] U.S. Dep’t of Justice, Criminal Division, Evaluation of Corporate Compliance Programs (Updated June 2020).
^[3] U.S. Dep’t of Justice, Criminal Division, Evaluation of Corporate Compliance Programs (Updated April 2019).
^[4] Occupational Fraud 2022: A Report to the Nations, Association of Certified Fraud Examiners, available at https://acfepublic.s3.us-west-2.amazonaws.com/2022+Report+to+the+Nations.pdf.
^[5] In addition to the dark web as a means to hide tracks, we are seeing an increase in the use of ephemeral messaging apps such as Signal and Telegram. These messaging apps allow users to hide communications and permanently delete messages.
Author | Partner
Author | Partner
Judith Seddon, Eleanor Davison, Christopher J Morvillo, Luke Tolaini, Celeste Koeleveld, F Joseph Warin and Winston Y Chan
Dechert LLP, Fountain Court Chambers, Clifford Chance and Gibson Dunn & Crutcher
Judith Seddon, Eleanor Davison, Christopher J Morvillo, Luke Tolaini, Celeste Koeleveld, F Joseph Warin and Winston Y Chan
Dechert LLP, Fountain Court Chambers, Clifford Chance and Gibson Dunn & Crutcher LLP
William H Devaney, Joanna Ludlam, Mark Banks and Aleesha Fowler
Baker McKenzie
Judith Seddon and Andris Ivanovs
Dechert LLP
F Joseph Warin, Winston Y Chan, Chris Jones and Duncan Taylor
Gibson Dunn & Crutcher
Alison Wilson, Sinead Casey, Elly Proudlock and Nick Marshall
Linklaters
Daniel Silver and Benjamin Berringer
Clifford Chance
Simon Airey and James Dobias
McDermott Will & Emery UK LLP
Bruce E Yannett and David Sarratt
Debevoise & Plimpton LLP
Nichola Peters, Michelle de Kluyver and Jaya Gupta
Addleshaw Goddard LLP
Avi Weitzman, John Nowak, Jena Sold and Amanda Pober
Paul Hastings LLP
Stuart Alford KC, Serrin A Turner, Gail E Crawford, Hayley Pizzey, Mair Williams and Matthew Valenti
Latham & Watkins LLP
Caroline Day and Louise Hodges
Kingsley Napley
John Nathanson, Katherine Stoller and Cáitrín McKiernan
Shearman & Sterling LLP
Glenn Pomerantz and Paul Peterson
BDO LLP
Matthew Bruce, Ali Kirby-Harris, Ben Morgan and Ali Sallaway
Freshfields Bruckhaus Deringer LLP
John D Buretta and Megan Y Lew
Cravath Swaine & Moore
Caroline Black, Clare Putnam Pozos, Chloe Binding and Carla Graff
Dechert LLP
Tamara Oppenheimer KC, Rebecca Loveridge and Samuel Rabinowitz
Fountain Court Chambers
Richard M Strassberg and Meghan K Spillane
Goodwin
Nicholas Purnell KC, Brian Spiro, Jessica Chappatte and Eamon McCarthy-Keen
Herbert Smith Freehills
Nicolas Bourtin
Sullivan & Cromwell LLP
Nichola Peters and Michelle de Kluyver
Addleshaw Goddard LLP
Sam Amir Toossi and Farhad Alavi
Akrivis Law Group, PLLC
Robin Barclay KC, Nico Leslie, Christopher J Morvillo, Celeste Koeleveld, Meredith George and Benjamin Berringer
Fountain Court Chambers and Clifford Chance
Tom Epps, Andrew Love, Julia Maskell and Benjamin Sharrock
Cooley LLP
Matthew Kutcher, Alexandra Eber, Matt K Nguyen, Wazhma Sadat and Kimberley Bishop
Cooley LLP
Jessica Lee and Chloë Kealey
Brown Rudnick LLP
James P Loonam and Ryan J Andreoli
Jones Day
Rita Mitchell, Simon Osborn-King and Yannis Yuen
Willkie Farr & Gallagher LLP
David Mortlock, Britt Mosman, Nikki Cronin and Ahmad El-Gamal
Willkie Farr & Gallagher LLP
Francesca Titus, Andrew Thornton-Dibb, Mehboob Dossa, William Boddy and Oscar Ratcliffe
McGuireWoods
Emily Goddard, Anna Kirkpatrick and Ellen Lake
Clifford Chance
Alison Pople KC, Johanna Walsh and Mellissa Curzon-Berners
Cloth Fair Chambers and Mishcon De Reya LLP
Kevin Roberts, Duncan Grieve and Charlotte Glaser
Cadwalader, Wickersham & Taft LLP
Jodi Avergun and Cheryl Risell
Cadwalader, Wickersham & Taft LLP
James Carlton, Sona Ganatra and David Murphy
Fox Williams LLP
Milton L Williams, Avni P Patel and Jacob Gardener
Walden Macht & Haran LLP
Natalie Sherborn, Carl Newman, Perveen Hill, Anthony Hanratty and Sophie Gilford
Withersworldwide
Christopher LaVigne, Martin Auerbach and Georges Lederman
Withersworldwide
Richard Sallybanks, Anoushka Warlow and Greta Barkle
BCL Solicitors LLP
Amanda Raad, Michael McGovern, Meghan Gilligan Palermo, Abraham Lee, Chloe Gordils and Ross MacPherson
Ropes & Gray
Elizabeth Robertson, Vanessa McGoldrick and Jason Williamson
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
Victoria L Weatherford and Tera N Coleman
Baker & Hostetler
Ben Brandon and Aaron Watkins
Mishcon De Reya LLP and Kingsley Napley
Judith Seddon, Eleanor Davison, Christopher J Morvillo, Luke Tolaini, Celeste Koeleveld, F Joseph Warin and Winston Y Chan
Dechert LLP, Fountain Court Chambers, Clifford Chance and Gibson Dunn & Crutcher LLP
Kyle Wombolt and Pamela Kiesselbach
Herbert Smith Freehills
Robert Dalling and Karam Jardaneh
Jenner & Block
María González Calvet
Ropes & Gray
Michael S Diamant
Gibson Dunn & Crutcher LLP
Gustavo Morales Oliver, María Lorena Schiariti and María Agustina Testa
Marval, O’Farrell & Mairal
Tim Grave and Lara Gotti
Clifford Chance
Jonathan D King, Ricardo Caiado Lima, Antonio Tovo, André Sampaio Lacerda Ferraz and Mellina Bulgarini Gerhardt
DLA Piper LLP (US) and Campos Mello Advogados in Cooperation with DLA Piper
Sabrina A Bandali, Emrys Davis, Alan P Gardner, Laura Inglis, Amanda C McLachlan, Ruth E Promislow and Nathan J Shaheen
Bennett Jones
Rafael Collado González, Lucía Álvarez Galvez, Josefa Zamorano Quiroga and Camilo León Millones
FerradaNehme
Kyle Wombolt, Helen Tang and Tracey Cui
Herbert Smith Freehills
Marcela Cristina Blanco and Marcelo Buendía Vélez
Díaz Reus Abogados
Stéphane de Navacelle, Thomas Lapierre and Julie Zorrilla
Navacelle
Eike W Grunert, Michael Reich, David Stoppelmann and Stephan Appt
Pinsent Masons
Ilias Anagnostopoulos, Jerina Zapanti and Alexandros Tsagkalidis
Anagnostopoulos
Donna Wacker, Jonathan Wong, Anita Lam and Michael Wang
Clifford Chance
Sherbir Panag, Tanya Ganguli and Lavanyaa Chopra
Law Offices of Panag & Babu
Karen Reynolds and Connor Cassidy
Matheson
Giuseppe Fornari, Enrico Di Fiorino, Emanuele Angiuli and Lorena Morrone
Fornari e Associati
Antonio Cárdenas Arriola, Jonathan D King, Daniel González Estrada and Yesica L Garduño Sandoval
DLA Piper
William Fotherby and Caitlin Anyon-Peters
Meredith Connell
Dayo Adu, Temiloluwa Dosumu and Esther Randle
Famsville Solicitors
Alberto Rebaza, Augusto Loli, Héctor Gadea, María Haydée Zegarra and Sergio Mattos
Rebaza, Alcázar & de las Casas
Kabir Singh, Janice Goh and Joey Ng
Clifford Chance LLP
Edward James, Deirdré Simaan, Adam Gunn, Thorne Godinho, Sarah Burford and Jazquelyn Govender
Pinsent Masons
Jaime Alonso Gallo
Uría Menéndez
Flavio Romerio, Claudio Bazzani, Katrin Ivell and Reto Ferrari-Visca
Homburger
Burcu Tuzcu Ersin, E Benan Arseven and Z Ertunç Şirin
Moroğlu Arseven
Simon Airey, James Dobias and William Merry
McDermott Will & Emery UK LLP
Bradley J Bolerjack and Francisca M Mok
Reed Smith LLP
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The White House
1600 Pennsylvania Ave NW
Washington, DC 20500
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
Section 1.  Policy.  It is the policy of my Administration to coordinate a whole-of-government approach to advance biotechnology and biomanufacturing towards innovative solutions in health, climate change, energy, food security, agriculture, supply chain resilience, and national and economic security.  Central to this policy and its outcomes are principles of equity, ethics, safety, and security that enable access to technologies, processes, and products in a manner that benefits all Americans and the global community and that maintains United States technological leadership and economic competitiveness.
Biotechnology harnesses the power of biology to create new services and products, which provide opportunities to grow the United States economy and workforce and improve the quality of our lives and the environment.  The economic activity derived from biotechnology and biomanufacturing is referred to as “the bioeconomy.”  The COVID-19 pandemic has demonstrated the vital role of biotechnology and biomanufacturing in developing and producing life-saving diagnostics, therapeutics, and vaccines that protect Americans and the world.  Although the power of these technologies is most vivid at the moment in the context of human health, biotechnology and biomanufacturing can also be used to achieve our climate and energy goals, improve food security and sustainability, secure our supply chains, and grow the economy across all of America.
For biotechnology and biomanufacturing to help us achieve our societal goals, the United States needs to invest in foundational scientific capabilities.  We need to develop genetic engineering technologies and techniques to be able to write circuitry for cells and predictably program biology in the same way in which we write software and program computers; unlock the power of biological data, including through computing tools and artificial intelligence; and advance the science of scale‑up production while reducing the obstacles for commercialization so that innovative technologies and products can reach markets faster.
Simultaneously, we must take concrete steps to reduce biological risks associated with advances in biotechnology.  We need to invest in and promote biosafety and biosecurity to ensure that biotechnology is developed and deployed in ways that align with United States principles and values and international best practices, and not in ways that lead to accidental or deliberate harm to people, animals, or the environment.  In addition, we must safeguard the United States bioeconomy, as foreign adversaries and strategic competitors alike use legal and illegal means to acquire United States technologies and data, including biological data, and proprietary or precompetitive information, which threatens United States economic competitiveness and national security.
We also must ensure that uses of biotechnology and biomanufacturing are ethical and responsible; are centered on a foundation of equity and public good, consistent with Executive Order 13985 of January 20, 2021 (Advancing Racial Equity and Support for Underserved Communities Through the Federal Government); and are consistent with respect for human rights.  Resources should be invested justly and equitably so that biotechnology and biomanufacturing technologies benefit all Americans, especially those in underserved communities, as well as the broader global community.
To achieve these objectives, it is the policy of my Administration to:
(a)  bolster and coordinate Federal investment in key research and development (R&D) areas of biotechnology and biomanufacturing in order to further societal goals;
(b)  foster a biological data ecosystem that advances biotechnology and biomanufacturing innovation, while adhering to principles of security, privacy, and responsible conduct of research;
(c)  improve and expand domestic biomanufacturing production capacity and processes, while also increasing piloting and prototyping efforts in biotechnology and biomanufacturing to accelerate the translation of basic research results into practice;
(d)  boost sustainable biomass production and create climate-smart incentives for American agricultural producers and forest landowners;
(e)  expand market opportunities for bioenergy and biobased products and services;
(f)  train and support a diverse, skilled workforce and a next generation of leaders from diverse groups to advance biotechnology and biomanufacturing;
(g)  clarify and streamline regulations in service of a science- and risk-based, predictable, efficient, and transparent system to support the safe use of products of biotechnology;
(h)  elevate biological risk management as a cornerstone of the life cycle of biotechnology and biomanufacturing R&D, including by providing for research and investment in applied biosafety and biosecurity innovation;
(i)  promote standards, establish metrics, and develop systems to grow and assess the state of the bioeconomy; to better inform policy, decision-making, and investments in the bioeconomy; and to ensure equitable and ethical development of the bioeconomy;
(j)  secure and protect the United States bioeconomy by adopting a forward‑looking, proactive approach to assessing and anticipating threats, risks, and potential vulnerabilities (including digital intrusion, manipulation, and exfiltration efforts by foreign adversaries), and by partnering with the private sector and other relevant stakeholders to jointly mitigate risks to protect technology leadership and economic competitiveness; and
(k)  engage the international community to enhance biotechnology R&D cooperation in a way that is consistent with United States principles and values and that promotes best practices for safe and secure biotechnology and biomanufacturing research, innovation, and product development and use.
The efforts undertaken pursuant to this order to further these policies shall be referred to collectively as the National Biotechnology and Biomanufacturing Initiative.
Sec. 2.  Coordination.  The Assistant to the President for National Security Affairs (APNSA), in consultation with the Assistant to the President for Economic Policy (APEP) and the Director of the Office of Science and Technology Policy (OSTP), shall coordinate the executive branch actions necessary to implement this order through the interagency process described in National Security Memorandum 2 of February 4, 2021 (Renewing the National Security Council System) (NSM-2 process).  In implementing this order, heads of agencies (as defined in section 13 of this order) shall, as appropriate and consistent with applicable law, consult outside stakeholders, such as those in industry; academia; nongovernmental organizations; communities; labor unions; and State, local, Tribal, and territorial governments to advance the policies described in section 1 of this order.
Sec. 3.  Harnessing Biotechnology and Biomanufacturing R&D to Further Societal Goals.  (a)  Within 180 days of the date of this order, the heads of agencies specified in subsections (a)(i)-(v) of this section shall submit the following reports on biotechnology and biomanufacturing to further societal goals related to health, climate change and energy, food and agricultural innovation, resilient supply chains, and cross-cutting scientific advances.  The reports shall be submitted to the President through the APNSA, in coordination with the Director of the Office of Management and Budget (OMB), the APEP, the Assistant to the President for Domestic Policy (APDP), and the Director of OSTP.
(i)    The Secretary of Health and Human Services (HHS), in consultation with the heads of appropriate agencies as determined by the Secretary, shall submit a report assessing how to use biotechnology and biomanufacturing to achieve medical breakthroughs, reduce the overall burden of disease, and improve health outcomes.
(ii)   The Secretary of Energy, in consultation with the heads of appropriate agencies as determined by the Secretary, shall submit a report assessing how to use biotechnology, biomanufacturing, bioenergy, and biobased products to address the causes and adapt to and mitigate the impacts of climate change, including by sequestering carbon and reducing greenhouse gas emissions.
(iii)  The Secretary of Agriculture, in consultation with the heads of appropriate agencies as determined by the Secretary, shall submit a report assessing how to use biotechnology and biomanufacturing for food and agriculture innovation, including by improving sustainability and land conservation; increasing food quality and nutrition; increasing and protecting agricultural yields; protecting against plant and animal pests and diseases; and cultivating alternative food sources.
(iv)   The Secretary of Commerce, in consultation with the Secretary of Defense, the Secretary of HHS, and the heads of other appropriate agencies as determined by the Secretary of Commerce, shall submit a report assessing how to use biotechnology and biomanufacturing to strengthen the resilience of United States supply chains.
(v)    The Director of the National Science Foundation (NSF), in consultation with the heads of appropriate agencies as determined by the Director, shall submit a report identifying high-priority fundamental and use‑inspired basic research goals to advance biotechnology and biomanufacturing and to address the societal goals identified in this section.
(b)  Each report specified in subsection (a) of this section shall identify high-priority basic research and technology development needs to achieve the overall objectives described in subsection (a) of this section, as well as opportunities for public-private collaboration.  Each of these reports shall also include recommendations for actions to enhance biosafety and biosecurity to reduce risk throughout the biotechnology R&D and biomanufacturing lifecycles.
(c)  Within 100 days of receiving the reports required under subsection (a) of this section, the Director of OSTP, in coordination with the Director of OMB, the APNSA, the APEP, the APDP, and the heads of appropriate agencies as determined through the NSM-2 process, shall develop a plan (implementation plan) to implement the recommendations in the reports.  The development of this implementation plan shall also include the solicitation of input from external experts regarding potential ethical implications or other societal impacts, including environmental sustainability and environmental justice, of the recommendations contained in the reports required under subsection (a) of this section.  The implementation plan shall include assessments and make recommendations regarding any such implications or impacts.
(d)  Within 90 days of the date of this order, the Director of OMB, in consultation with the heads of appropriate agencies as determined through the NSM-2 process, shall perform a budget crosscut to identify existing levels of agency spending on biotechnology- and biomanufacturing-related activities to inform the development of the implementation plan described in subsection (c) of this section.
(e)  The APNSA, in coordination with the Director of OMB, the APEP, the APDP, and the Director of OSTP, shall review the reports required under subsection (a) of this section and shall submit the reports to the President in an unclassified form, but may include a classified annex.
(f)  The APNSA, in coordination with the Director of OMB, the APEP, the APDP, and the Director of OSTP, shall include a cover memorandum for the reports submitted pursuant to subsection (a) of this section, along with the implementation plan required under subsection (c) of this section, in which they make any additional overall recommendations for advancing biotechnology and biomanufacturing.
(g)  Within 2 years of the date of this order, agencies at which recommendations are directed in the implementation plan required under subsection (c) of this section shall report to the Director of OMB, the APNSA, the APEP, the APDP, and the Director of OSTP on measures taken and resources allocated to enhance biotechnology and biomanufacturing, consistent with the implementation plan described in subsection (c) of this section.
(h)  Within 180 days of the date of this order, the President’s Council of Advisors on Science and Technology shall submit to the President and make publicly available a report on the bioeconomy that provides recommendations on how to maintain United States competitiveness in the global bioeconomy.
Sec. 4.  Data for the Bioeconomy.  (a)  In order to facilitate development of the United States bioeconomy, my Administration shall establish a Data for the Bioeconomy Initiative (Data Initiative) that will ensure that high-quality, wide-ranging, easily accessible, and secure biological data sets can drive breakthroughs for the United States bioeconomy.  To assist in the development of the Data Initiative, the Director of OSTP, in coordination with the Director of OMB and the heads of appropriate agencies as determined by the Director of OSTP, and in consultation with external stakeholders, shall issue a report within 240 days of the date of this order that:
(i)    identifies the data types and sources, to include genomic and multiomic information, that are most critical to drive advances in health, climate, energy, food, agriculture, and biomanufacturing, as well as other bioeconomy-related R&D, along with any data gaps;
(ii)   sets forth a plan to fill any data gaps and make new and existing public data findable, accessible, interoperable, and reusable in ways that are equitable, standardized, secure, and transparent, and that are integrated with platforms that enable the use of advanced computing tools;
(iii)  identifies — based on the data types and sources described in subsection (a)(i) of this section — security, privacy, and other risks (such as malicious misuses, manipulation, exfiltration, and deletion), and provides a data-protection plan to mitigate these risks; and
(iv)   outlines the Federal resources, legal authorities, and actions needed to support the Data Initiative and achieve the goals outlined in this subsection, with a timeline for action.
(b)  The Secretary of Homeland Security, in coordination with the Secretary of Defense, the Secretary of Agriculture, the Secretary of Commerce (acting through the Director of the National Institute of Standards and Technology (NIST)), the Secretary of HHS, the Secretary of Energy, and the Director of OMB, shall identify and recommend relevant cybersecurity best practices for biological data stored on Federal Government information systems, consistent with applicable law and Executive Order 14028 of May 12, 2021 (Improving the Nation’s Cybersecurity).
(c)  The Secretary of Commerce, acting through the Director of NIST and in coordination with the Secretary of HHS, shall consider bio-related software, including software for laboratory equipment, instrumentation, and data management, in establishing baseline security standards for the development of software sold to the United States Government, consistent with section 4 of Executive Order 14028.
Sec. 5.  Building a Vibrant Domestic Biomanufacturing Ecosystem.  (a)  Within 180 days of the date of this order, the APNSA and the APEP, in coordination with the Secretary of Defense, the Secretary of Agriculture, the Secretary of Commerce, the Secretary of HHS, the Secretary of Energy, the Director of NSF, and the Administrator of the National Aeronautics and Space Administration (NASA), shall develop a strategy that identifies policy recommendations to expand domestic biomanufacturing capacity for products spanning the health, energy, agriculture, and industrial sectors, with a focus on advancing equity, improving biomanufacturing processes, and connecting relevant infrastructure.  Additionally, this strategy shall identify actions to mitigate risks posed by foreign adversary involvement in the biomanufacturing supply chain and to enhance biosafety, biosecurity, and cybersecurity in new and existing infrastructure.
(b)  Agencies identified in subsections (b)(i)-(iv) of this section shall direct resources, as appropriate and consistent with applicable law, towards the creation or expansion of programs that support a vibrant domestic biomanufacturing ecosystem, as informed by the strategy developed pursuant to subsection (a) of this section:
(i)    the NSF shall expand its existing Regional Innovation Engine program to advance emerging technologies, including biotechnology;
(ii)   the Department of Commerce shall address challenges in biomanufacturing supply chains and related biotechnology development infrastructure;
(iii)  the Department of Defense shall incentivize the expansion of domestic, flexible industrial biomanufacturing capacity for a wide range of materials that can be used to make a diversity of products for the defense supply chain; and
(iv)   the Department of Energy shall support research to accelerate bioenergy and bioproduct science advances, to accelerate biotechnology and bioinformatics tool development, and to reduce the hurdles to commercialization, including through incentivizing the engineering scale-up of promising biotechnologies and the expansion of biomanufacturing capacity.
(c)  Within 1 year of the date of this order, the Secretary of Agriculture, in consultation with the heads of appropriate agencies as determined by the Secretary, shall submit a plan to the President, through the APNSA and the APEP, to support the resilience of the United States biomass supply chain for domestic biomanufacturing and biobased product manufacturing, while also advancing food security, environmental sustainability, and the needs of underserved communities.  This plan shall include programs to encourage climate-smart production and use of domestic biomass, along with budget estimates, including accounting for funds appropriated for Fiscal Year (FY) 2022 and proposed in the President’s FY 2023 Budget.
(d)  Within 180 days of the date of this order, the Secretary of Homeland Security, in coordination with the heads of appropriate agencies as determined by the Secretary, shall:
(i)   provide the APNSA with vulnerability assessments of the critical infrastructure and national critical functions associated with the bioeconomy, including cyber, physical, and systemic risks, and recommendations to secure and make resilient these components of our infrastructure and economy; and
(ii)  enhance coordination with industry on threat information sharing, vulnerability disclosure, and risk mitigation for cybersecurity and infrastructure risks to the United States bioeconomy, including risks to biological data and related physical and digital infrastructure and devices.  This coordination shall be informed in part by the assessments described in subsection (d)(i) of this section.
Sec. 6.  Biobased Products Procurement.  (a)  Consistent with the requirements of 7 U.S.C. 8102, within 1 year of the date of this order, procuring agencies as defined in 7 U.S.C. 8102(a)(1)(A) that have not yet established a biobased procurement program as described in 7 U.S.C. 8102(a)(2) shall establish such a program.
(b)  Procuring agencies shall require that, within 2 years of the date of this order, all appropriate staff (including contracting officers, purchase card managers, and purchase card holders) complete training on biobased product purchasing.  The Office of Federal Procurement Policy, within OMB, in cooperation with the Secretary of Agriculture, shall provide training materials for procuring agencies.
(c)  Within 180 days of the date of this order and annually thereafter, procuring agencies shall report previous fiscal year spending to the Director of OMB on the following:
(i)    the number and dollar value of contracts entered into during the previous fiscal year that include the direct procurement of biobased products;
(ii)   the number of service and construction (including renovations) contracts entered into during the previous fiscal year that include language on the use of biobased products; and
(iii)  the types and dollar values of biobased products actually used by contractors in carrying out service and construction (including renovations) contracts during the previous fiscal year.
(d)  The requirements in subsection (c) of this section shall not apply to purchase card transactions and other “[a]ctions not reported” to the Federal Procurement Data System pursuant to 48 CFR 4.606(c). 
(e)  Within 1 year of the date of this order and annually thereafter, the Director of OMB shall publish information on biobased procurement resulting from the data collected under subsection (c) of this section and information reported under 7 U.S.C. 8102, along with other related information, and shall use scorecards or similar systems to encourage increased biobased purchasing.
(f)  Within 1 year of the date of this order and annually thereafter, procuring agencies shall report to the Secretary of Agriculture specific categories of biobased products that are unavailable to meet their procurement needs, along with desired performance standards for currently unavailable products and other relevant specifications.  The Secretary of Agriculture shall publish this information annually.  When new categories of biobased products become commercially available, the Secretary of Agriculture shall designate new product categories for preferred Federal procurement, as prescribed by 7 U.S.C. 8102.
(g)  Procuring agencies shall strive to increase by 2025 the amount of biobased product obligations or the number or dollar value of biobased-only contracts, as reflected in the information described in subsection (c) of this section, and as appropriate and consistent with applicable law.
Sec. 7.  Biotechnology and Biomanufacturing Workforce.  (a)  The United States Government shall expand training and education opportunities for all Americans in biotechnology and biomanufacturing.  To support this objective, within 200 days of the date of this order, the Secretary of Commerce, the Secretary of Labor, the Secretary of Education, the APDP, the Director of OSTP, and the Director of NSF shall produce and make publicly available a plan to coordinate and use relevant Federal education and training programs, while also recommending new efforts to promote multi-disciplinary education programs.  This plan shall promote the implementation of formal and informal education and training (such as opportunities at technical schools and certificate programs), career and technical education, and expanded career pathways into existing degree programs for biotechnology and biomanufacturing.  This plan shall also include a focused discussion of Historically Black Colleges and Universities, Tribal Colleges and Universities, and Minority Serving Institutions and the extent to which agencies can use existing statutory authorities to promote racial and gender equity and support underserved communities, consistent with the policy established in Executive Order 13985.  Finally, this plan shall account for funds appropriated for FY 2022 and proposed in the President’s FY 2023 Budget.
(b)  Within 2 years of the date of this order, agencies that support relevant Federal education and training programs as described in subsection (a) of this section shall report to the President through the APNSA, in coordination with the Director of OMB, the ADPD, and the Director of OSTP, on measures taken and resources allocated to enhance workforce development pursuant to the plan described in subsection (a) of this section.
Sec. 8.  Biotechnology Regulation Clarity and Efficiency.  Advances in biotechnology are rapidly altering the product landscape.  The complexity of the current regulatory system for biotechnology products can be confusing and create challenges for businesses to navigate.  To improve the clarity and efficiency of the regulatory process for biotechnology products, and to enable products that further the societal goals identified in section 3 of this order, the Secretary of Agriculture, the Administrator of the Environmental Protection Agency, and the Commissioner of Food and Drugs, in coordination with the Director of OMB, the ADPD, and the Director of OSTP, shall:
(a)  within 180 days of the date of this order, identify areas of ambiguity, gaps, or uncertainties in the January 2017 Update to the Coordinated Framework for the Regulation of Biotechnology or in the policy changes made pursuant to Executive Order 13874 of June 11, 2019 (Modernizing the Regulatory Framework for Agricultural Biotechnology Products), including by engaging with developers and external stakeholders, and through horizon scanning for novel products of biotechnology;
(b)  within 100 days of completing the task in subsection (a) of this section, provide to the general public plain-language information regarding the regulatory roles, responsibilities, and processes of each agency, including which agency or agencies are responsible for oversight of different types of products developed with biotechnology, with case studies, as appropriate;
(c)  within 280 days of the date of this order, provide a plan to the Director of OMB, the ADPD, and the Director of OSTP with processes and timelines to implement regulatory reform, including identification of the regulations and guidance documents that can be updated, streamlined, or clarified; and identification of potential new guidance or regulations, where needed;
(d)  within 1 year of the date of this order, build on the Unified Website for Biotechnology Regulation developed pursuant to Executive Order 13874 by including on the website the information developed under subsection (b) of this section, and by enabling developers of biotechnology products to submit inquiries about a particular product and promptly receive a single, coordinated response that provides, to the extent practicable, information and, when appropriate, informal guidance regarding the process that the developers must follow for Federal regulatory review; and
(e)  within 1 year of the date of this order, and annually thereafter for a period of 3 years, provide an update regarding progress in implementing this section to the Director of OMB, the United States Trade Representative (USTR), the APNSA, the ADPD, and the Director of OSTP.  Each 1-year update shall identify any gaps in statutory authority that should be addressed to improve the clarity and efficiency of the regulatory process for biotechnology products, and shall recommend additional executive actions and legislative proposals to achieve such goals.
Sec. 9.  Reducing Risk by Advancing Biosafety and Biosecurity.  (a)  The United States Government shall launch a Biosafety and Biosecurity Innovation Initiative, which shall seek to reduce biological risks associated with advances in biotechnology, biomanufacturing, and the bioeconomy.  Through the Biosafety and Biosecurity Innovation Initiative — which shall be established by the Secretary of HHS, in coordination with the heads of other relevant agencies as determined by the Secretary — agencies that fund, conduct, or sponsor life sciences research shall implement the following actions, as appropriate and consistent with applicable law:
(i)   support, as a priority, investments in applied biosafety research and innovations in biosecurity to reduce biological risk throughout the biotechnology R&D and biomanufacturing lifecycles; and
(ii)  use Federal investments in biotechnology and biomanufacturing to incentivize and enhance biosafety and biosecurity practices and best practices throughout the United States and international research enterprises.
(b)  Within 180 days of the date of this order, the Secretary of HHS and the Secretary of Homeland Security, in coordination with agencies that fund, conduct, or sponsor life sciences research, shall produce a plan for biosafety and biosecurity for the bioeconomy, including recommendations to:
(i)   enhance applied biosafety research and bolster innovations in biosecurity to reduce risk throughout the biotechnology R&D and biomanufacturing lifecycles; and
(ii)  use Federal investments in biological sciences, biotechnology, and biomanufacturing to enhance biosafety and biosecurity best practices throughout the bioeconomy R&D enterprise.
(c)  Within 1 year of the date of this order, agencies that fund, conduct, or sponsor life sciences research shall report to the APNSA, through the Assistant to the President and Homeland Security Advisor, on efforts to achieve the objectives described in subsection (a) of this section.
Sec. 10.  Measuring the Bioeconomy.  (a)  Within 90 days of the date of this order, the Secretary of Commerce, through the Director of NIST, shall, in consultation with other agencies as determined by the Director, industry, and other stakeholders, as appropriate, create and make publicly available a lexicon for the bioeconomy, with consideration of relevant domestic and international definitions and with the goal of assisting in the development of measurements and measurement methods for the bioeconomy that support uses such as economic measurement, risk assessments, and the application of machine learning and other artificial intelligence tools.
(b)  The Chief Statistician of the United States, in coordination with the Secretary of Agriculture, the Secretary of Commerce, the Director of NSF, and the heads of other appropriate agencies as determined by the Chief Statistician, shall improve and enhance Federal statistical data collection designed to characterize the economic value of the United States bioeconomy, with a focus on the contribution of biotechnology to the bioeconomy.  This effort shall include:
(i)   within 180 days of the date of this order, assessing, through the Department of Commerce’s Bureau of Economic Analysis, the feasibility, scope, and costs of developing a national measurement of the economic contributions of the bioeconomy, and, in particular, the contributions of biotechnology to the bioeconomy, including recommendations and a plan for next steps regarding whether development of such a measurement should be pursued; and
(ii)  within 120 days of the date of this order, establishing an Interagency Technical Working Group (ITWG), chaired by the Chief Statistician of the United States, which shall include representatives of the Department of Agriculture, the Department of Commerce, OSTP, the NSF, and other appropriate agencies as determined by the Chief Statistician of the United States.
(A)  Within 1 year of the date of this order, the ITWG shall recommend bioeconomy-related revisions to the North American Industry Classification System (NAICS) and the North American Product Classification System (NAPCS) to the Economic Classification Policy Committee.  In 2026, the ITWG shall initiate a review process of the 2023 recommendations and update the recommendations, as appropriate, to provide input to the 2027 NAICS and NAPCS revision processes.
(B)  Within 18 months of the date of this order, the ITWG shall provide a report to the Chief Statistician of the United States describing the Federal statistical collections of information that take advantage of bioeconomy-related NAICS and NAPCS codes, and shall include recommendations to implement any bioeconomy-related changes as part of the 2022 revisions of the NAICS and NAPCS.  As part of its work, the ITWG shall consult with external stakeholders.
Sec. 11.  Assessing Threats to the United States Bioeconomy.  (a)  The Director of National Intelligence (DNI) shall lead a comprehensive interagency assessment of ongoing, emerging, and future threats to United States national security from foreign adversaries against the bioeconomy and from foreign adversary development and application of biotechnology and biomanufacturing, including acquisition of United States capabilities, technologies, and biological data.  As part of this effort, the DNI shall work closely with the Department of Defense to assess technical applications of biotechnology and biomanufacturing that could be misused by a foreign adversary for military purposes or that could otherwise pose a risk to the United States.  In support of these objectives, the DNI shall identify elements of the bioeconomy of highest concern and establish processes to support ongoing threat identification and impact assessments.
(b)  Within 240 days of the date of this order, the DNI shall provide classified assessments to the APNSA related to:
(i)   threats to United States national and economic security posed by foreign adversary development and application of biomanufacturing; and
(ii)  foreign adversary means of, and intended usages related to, acquisition of United States biotechnologies, biological data, and proprietary or precompetitive information.
(c)  Within 120 days of receiving the DNI’s assessments, the APNSA shall coordinate with the heads of relevant agencies as determined through the NSM-2 process to develop and finalize a plan to mitigate risks to the United States bioeconomy, based upon the threat identification and impact assessments described in subsection (a) of this section, the vulnerability assessments described in section 5(d) of this order, and other relevant assessments or information.  The plan shall identify where executive action, regulatory action, technology protection, or statutory authorities are needed to mitigate these risks in order to support the technology leadership and economic competitiveness of the United States bioeconomy.
(d)  The United States Government contracts with a variety of providers to support its functioning, including by contracting for services related to the bioeconomy.  It is important that these contracts are awarded according to full and open competition, as consistent with the Competition in Contracting Act of 1984 (Public Law 98-369, 98 Stat. 1175).  In accordance with these objectives, and within 1 year of the date of this order, the Director of OSTP, in coordination with the Secretary of Defense, the Attorney General, the Secretary of HHS, the Secretary of Energy, the Secretary of Homeland Security, the DNI, the Administrator of NASA, and the Administrator of General Services, shall review the national security implications of existing requirements related to Federal procurement — including requirements contained in the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement — and shall recommend updates to those requirements to the FAR Council, the Director of OMB, and the heads of other appropriate agencies as determined through the NSM-2 process.  The recommendations shall aim to standardize pre-award data collection to enable due diligence review of conflict of interest; conflict of commitment; foreign ownership, control, or influence; or other potential national security concerns.  The recommendations shall also include legislative proposals, as relevant.
(e)  The Director of OMB shall issue a management memorandum to agencies, or take other appropriate action, to provide generalized guidance based on the recommendations received pursuant to subsection (d) of this section.
Sec. 12.  International Engagement.  (a)  The Department of State and other agencies that engage with international partners as part of their missions shall undertake the following actions with foreign partners, as appropriate and consistent with applicable law — with a specific focus on developing countries, international organizations, and nongovernmental entities — to promote and protect both the United States and global bioeconomies:
(i)     enhance cooperation, including joint research projects and expert exchanges, on biotechnology R&D, especially in genomics;
(ii)    encourage regulatory cooperation and the adoption of best practices to evaluate and promote innovative products, with an emphasis on those practices and products that support sustainability and climate objectives;
(iii)   develop joint training arrangements and initiatives to support bioeconomy jobs in the United States;
(iv)    work to promote the open sharing of scientific data, including genetic sequence data, to the greatest extent possible in accordance with applicable law and policy, while seeking to ensure that any applicable access and benefit-sharing mechanisms do not hinder the rapid and sustainable development of innovative products and biotechnologies;
(v)     conduct horizon scanning to anticipate threats to the global bioeconomy, including national security threats from foreign adversaries acquiring sensitive technologies or data, or disrupting essential bio-related supply chains, and to identify opportunities to address those threats;
(vi)    engage allies and partners to address shared national security threats;
(vii)   develop, and work to promote and implement, biosafety and biosecurity best practices, tools, and resources bilaterally and multilaterally to facilitate appropriate oversight for life sciences, dual-use research of concern, and research involving potentially pandemic and other high-consequence pathogens, and to enhance sound risk management of biotechnology- and biomanufacturing-related R&D globally; and
(viii)  explore how to align international classifications of biomanufactured products, as appropriate, to measure the value of those products to both the United States and global bioeconomies.
(b)  Within 180 days of the date of this order, the Secretary of State, in coordination with the USTR and the heads of other agencies as determined by the Secretary, as appropriate, shall submit to the APNSA a plan to support the objectives described in subsection (a) of this section with foreign partners, international organizations, and nongovernmental entities.
Sec. 13.  Definitions.  For purposes of this order:
(a)  The term “agency” has the meaning given that term by 44 U.S.C. 3502(1).
(b)  The term “biotechnology” means technology that applies to or is enabled by life sciences innovation or product development.
(c)  The term “biomanufacturing” means the use of biological systems to develop products, tools, and processes at commercial scale.
(d)  The term “bioeconomy” means economic activity derived from the life sciences, particularly in the areas of biotechnology and biomanufacturing, and includes industries, products, services, and the workforce.
(e)  The term “biological data” means the information, including associated descriptors, derived from the structure, function, or process of a biological system(s) that is measured, collected, or aggregated for analysis.
(f)  The term “biomass” means any material of biological origin that is available on a renewable or recurring basis.  Examples of biomass include plants, trees, algae, and waste material such as crop residue, wood waste, animal waste and byproducts, food waste, and yard waste.
(g)  The term “biobased product” has the meaning given that term in 7 U.S.C. 8101(4).
(h)  The term “bioenergy” means energy derived in whole or in significant part from biomass.
(i)  The term “multiomic information” refers to combined information derived from data, analysis, and interpretation of multiple omics measurement technologies to identify or analyze the roles, relationships, and functions of biomolecules (including nucleic acids, proteins, and metabolites) that make up a cell or cellular system.  Omics are disciplines in biology that include genomics, transcriptomics, proteomics, and metabolomics.
(j)  The term “key R&D areas” includes fundamental R&D of emerging biotechnologies, including engineering biology; predictive engineering of complex biological systems, including the designing, building, testing, and modeling of entire living cells, cell components, or cellular systems; quantitative and theory-driven multi-disciplinary research to maximize convergence with other enabling technologies; and regulatory science, including the development of new information, criteria, tools, models, and approaches to inform and assist regulatory decision-making.  These R&D priorities should be coupled with advances in predictive modeling, data analytics, artificial intelligence, bioinformatics, high-performance and other advanced computing systems, metrology and data-driven standards, and other non-life science enabling technologies.
(k)  The terms “equity” and “underserved communities” have the meanings given those terms by sections 2(a) and 2(b) of Executive Order 13985.
(l)  The term “Tribal Colleges and Universities” has the meaning given that term by section 5(e) of Executive Order 14049 of October 11, 2021 (White House Initiative on Advancing Educational Equity, Excellence, and Economic Opportunity for Native Americans and Strengthening Tribal Colleges and Universities).
(m)  The term “Historically Black Colleges and Universities” has the meaning given that term by section 4(b) of Executive Order 14041 of September 3, 2021 (White House Initiative on Advancing Educational Equity, Excellence, and Economic Opportunity Through Historically Black Colleges and Universities).
(n)  The term “minority serving institution” has the meaning given that term by 38 U.S.C. 3698(f)(4).
(o)  The term “foreign adversary” has the meaning given that term by section 3(b) of Executive Order 14034 of June 9, 2021 (Protecting Americans’ Sensitive Data From Foreign Adversaries).
(p)  The term “life sciences” means all sciences that study or use living organisms, viruses, or their products, including all disciplines of biology and all applications of the biological sciences (including biotechnology, genomics, proteomics, bioinformatics, and pharmaceutical and biomedical research and techniques), but excluding scientific studies associated with radioactive materials or toxic chemicals that are not of biological origin or synthetic analogues of toxins.
Sec. 14.  General Provisions.  (a)  Nothing in this order shall be construed to impair or otherwise affect:
(i)   the authority granted by law to an executive department or agency, or the head thereof; or
(ii)  the functions of the Director of OMB relating to budgetary, administrative, or legislative proposals.
(b)  This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c)  This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.                            
JOSEPH R. BIDEN JR.

THE WHITE HOUSE,
  September 12, 2022.
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