GRC Report Staff

Alibaba had policies forbidding merchants from selling illegal pharmaceuticals, listed chemicals and pharmaceutical counterfeiting equipment through its marketplaces. Employees questioned whether those policies were working. Merchants found ways around them. Some shifted conversations into Alibaba's private messaging system before directing buyers to encrypted third-party platforms. Others continued operating even after concerns had been identified. According to the U.S. Department of Justice, the controls never kept pace with the activity they were supposed to stop. That failure has now produced one of the largest corporate resolutions involving online marketplace compliance.

Two foreign firms that supported offshore retail commodity trading platforms have agreed to pay a combined $2.5 million after the U.S. Commodity Futures Trading Commission found they facilitated illegal off-exchange leveraged or margined commodity transactions involving U.S. customers who did not qualify as eligible contract participants.

The European Commission brought together cloud providers, business users, software providers and technical experts on July 1 as it continued its examination of cloud computing services under the Digital Markets Act with a stakeholder roundtable to test the evidence it has gathered and explore where today's cloud market may still fall short of the competition and fairness the legislation is intended to promote.

The Office of Foreign Assets Control announced a settlement with FTI Consulting after determining that the Washington-based advisory firm had indirectly dealt in prohibited debt issued by VTB Bank, the Russian state-owned lender that has been subject to U.S. sectoral sanctions since 2014. That conclusion will cost FTI $1.05 million. Between April 2019 and May 2021, OFAC said, FTI repeatedly extended credit beyond the permitted 14-day maturity by continuing to perform consulting work while invoices ultimately owed by VTB remained unpaid for months. The mechanics of the arrangement had changed. The economic reality had not.

The U.S. Department of Justice recently announced a settlement with EagleBank, which agreed to pay more than $9.7 million after admitting it willfully failed to maintain an anti-money laundering and countering the financing of terrorism (AML/CFT) program required under the Bank Secrecy Act. The resolution comes in the form of a non-prosecution agreement covering conduct that stretched from 2010 through 2021.

From July 1, the Financial Reporting Council revised Audit Enforcement Procedure is officially in force, replacing a framework that often left investigations following the same procedural track regardless of whether a case was straightforward, contested or somewhere in between. The changes do not expand the FRC's enforcement powers. They expand its options.

The market had been told to expect a profitable year. On Feb. 28, 2023, Regional Express Holdings assured investors it remained "optimistic the Group will have positive operating profits for the full FY23 barring any further external shocks." Four months later, that confidence had dissolved into a forecast of a $24.2 million (AUD $35 million) operating loss. The question before the Supreme Court of New South Wales was not whether Rex's fortunes had changed. Businesses disappoint their own expectations all the time. The question was when the company knew its optimism no longer rested on reasonable grounds, and whether investors should have been told sooner.