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International Due Diligence: Charitable Contributions

International Due Diligence: Charitable Contributions - Due DiligenceCharitable contributions are an important component of corporate social responsibility which allow companies to give back to the communities in which they conduct business.  With the globalization of trade, many corporations now donate substantial amounts in the United States and internationally.

To avoid reputational risk as well as violation of the US Foreign Corrupt Practices Act, UK Bribery Act, US PATRIOT Act and/or other anti-bribery and anti-money laundering laws and regulations, corporations must take steps to mitigate the risks these contributions pose and ensure the recipient of the contribution as well as the transaction itself is legitimate. It is important to stress that a contribution to a legitimate charity can still create FCPA exposure if the contribution is quid pro quo for a foreign official taking some official action.

Charitable contributions carry the same risks as other interactions with 3rd parties and therefore, require a similarly robust due diligence compliance process. A charitable contribution due diligence program should include, at a minimum, these basic steps:
  • Create a written charitable giving policy.
  • Implement controls and an approval process to ensure that all charitable contributions are consistent with the policy.
  • Implement a rigorous review process for all charitable donations and grants which evaluate factors including how and why the donor recipient was chosen and whether there are any stipulations on the contribution.
  • Conduct due diligence research on the donor recipients.
  • The level of research conducted could be determined through a risk-based approach to include factors such as the country’s CPI Index (Country Risk Rating), and manner, timing, amount and purpose of the contribution as well as who requested the contribution.
Contact your representative to obtain a sample Charitable Contributions Due Diligence Report and to discuss our levels of research based on Risk Ranking.
 
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