The Week in GRC: SEC Proposes Cybersecurity Governance Changes, FinCEN Urges Banks to Monitor Sanctions Circumvention

– The the wall street journal (paywall) reported that the Financial Crimes Enforcement Network (FinCEN) is warning financial institutions and cryptocurrency companies to be on the lookout for attempts to evade sanctions and other restrictions imposed as a result of the invasion of Ukraine by Russia. FinCEN has issued an alert that includes red flags to help financial institutions identify potential sanctions-busting attempts and to remind them to promptly report suspicious activity.

FinCEN said sanctioned Russian and Belarusian entities and individuals could attempt to evade sanctions in a variety of ways, including through unsanctioned Russian and Belarusian banks and financial institutions in third countries. Some signs of possible evasion activity include the use of shell companies to conceal ownership of entities or funds or to conduct international wire transfers.

– President Joe Biden signed an executive order calling on the government to examine the risks and benefits of cryptocurrencies, CNBC reported. This is a long-awaited directive that has put the crypto industry on edge, especially given the growing regulatory concerns around the world regarding the digital asset market. The order calls on federal agencies to take a unified approach to regulating and overseeing digital assets, according to a White House fact sheet. The measures announced Wednesday will focus on six key areas: consumer and investor protection, financial stability, illicit activities, U.S. competitiveness on the global stage, financial inclusion, and responsible innovation.

– According to CNBC, as companies leave Russia at an unprecedented rate, one of the questions posed is where this response to an unprovoked act of war fits into the spectrum of leadership decision-making. Is this a short-lived hiatus, a sign of greater influence of ESG considerations in the C-suite or a significant shift in business and economic strategy around the theme of de-globalization ?

For some international business and management experts, current events seem to go far beyond reputation management and a fundamental shift from the post-World War II era characterized by increasingly more global and efforts to reach a global scale. Gary Hufbauer, a fellow at the Peterson Institute for International Economics, thinks the focus on CSR played a role in the rapid response.

“I think we had this period of emphasis on [CSR] and many CEOs and directors theoretically saying they’re all for it,” he says. “With the ‘waking language’ of the moment, they would have a hard time not being in front of the background, their statements and the atmosphere.”

Reuters reported that Cleary Gottlieb Steen & Hamilton is temporarily closing its operations in Moscow. The law firm said it would pause its work in Russia “pending further developments, while continuing to support our colleagues in Moscow.” Cleary Gottlieb is also ending his representation of Russian government and public entities and complying with sanctions imposed following the Russian invasion of Ukraine, a spokesperson said. Law firms Linklaters and Norton Rose Fulbright announced the closure of their offices in Moscow following the Russian invasion of Ukraine, and other firms said they were considering their future in Russia.

– The SECOND announced an award of more than $3.5 million to a whistleblower who provided critical information that significantly contributed to the success of two law enforcement actions by the agency. “Whistleblowers play a critical role in the agency’s enforcement efforts and in protecting investors,” Creola Kelly, head of the SEC’s whistleblower office, said in a statement. “In fiscal year 2022 alone, the SEC awarded more than $143 million to whistleblowers who provided high-quality information and assistance that led to successful enforcement action.”

– The SECOND proposed changes to its rules to improve and standardize disclosures regarding cybersecurity risk management, strategy, governance and incident reporting by public companies. The proposed amendments would require, among other things, up-to-date reporting of significant cybersecurity incidents and periodic reporting to provide updates on previously reported cybersecurity incidents.

The proposal would also require periodic reporting on a company’s policies and procedures for identifying and managing cybersecurity risks, oversight of cybersecurity risks by the company’s board of directors, and the role and expertise of leadership in cybersecurity risk assessment and management and cybersecurity implementation. – security policies and procedures. In addition, the proposal would require an annual report or certain proxy information on the cybersecurity expertise of the board, if any.

– The WSJ reported that Amazon’s board had approved a 20-for-1 stock split and authorized the company to repurchase up to $10 billion of its common stock. An Amazon spokesperson said the split will make the split-adjusted share price more accessible to potential investors and provide employees with more flexibility in how they manage stock-based compensation. . The stock split and authorized stock increase are subject to shareholder approval at the company’s annual general meeting, scheduled for May 25.

Reuters reported that according to people familiar with the matter, Ryan Cohen’s RC Ventures, which owns nearly 10% of Bed Bath & Beyond, has hired a proxy attorney, signaling that the company is preparing for a possible proxy battle at the household goods retailer. RC Ventures has retained Harkins Kovler, the attorney frequently used by activist investor Carl Icahn in his corporate battles, the people said.

Cohen, who co-founded online pet food company Chewy and chairs GameStop’s board, revealed his stake in Bed Bath & Beyond in a letter urging the company to focus on improving operations and inventory.

A representative for Cohen did not respond to requests for comment. Harkins Kovler declined to comment.

– Goldman Sachs said it was leaving Russia, becoming one of the first major global investment banks to do so after the country invaded Ukraine last month, CNBC reported. “Goldman Sachs is ending its operations in Russia in accordance with regulatory and licensing requirements,” a bank spokesperson said. “We are focused on supporting our clients around the world in managing or closing pre-existing obligations in the market and ensuring the well-being of our employees.”

CNBC reported that, according to Moody’s Investors Service, 29% of board seats at North American and European companies are held by women this year, up from 24% two years ago. Among North American companies, seats held by women on boards rose from 22% to 27%, according to the data. A higher proportion of women on corporate boards correlates with higher credit ratings, according to Moody’s. “We believe that having women on boards – and the diversity of opinions they bring – supports good corporate governance, which is positive for credit quality,” said the CEO. ‘rating agency.

Helen D. Jessen