• 2008 – HOT TOPIC, TRENDING NOW SERIES. BEING PROACTIVE. As the new regulatory regime takes hold with increasing requirements for due diligence. (Thompson Reuters Brochure or flyer – not sure which is which).  Why is informed choice making more important now as opposed to before?

• July 2009 – Due Diligence as a target process to model and execute. (Eclipse Community Forums)  Really, whisky-tango-foxtrot, we execute due diligence?

• Jun 6, 2011 – Many broker/dealers have hired new staff to conduct due diligence. (Wealth Management)  Here due diligence is used neither as a noun or verb, try inserting “car” or “run” for due diligence.

• Nov 16, 2012 – Fortunately, new due diligence tools are giving businesses and counsel improved capabilities for managing risk. (Metrocorpcounsel) Due diligence does not manage risks, it identifies risks.

• Jan 29, 2013 – Merrill DataSite Announces a New Article “Due Diligence Tips for SMEs … will enable owners to gain a balanced perspective on the topic.  We should all have a balance perspective on a topic, especially if we have no idea what we are writing about.

• Lexis Diligence creates a new standard in conducting legal due diligence. Go beyond just credit scores and watch lists–to develop a 360-degree assessment … Did not Hurricane Katrina create a new standard for 360 degree assessments, especially on New Orleans.  And why do we need 360 degrees of assessments, when 180 of those degrees look back at where we came from not where we are going?

• “Due diligence” is a somewhat technical phrase used to describe a range of assignments, legal obligations, reports and investigations that take place in business, manufacturing and law.  (Wise Geek) What utter over simplified drivel. This is close to the most inaccurate and misinformed and misdirected verbiage on due diligence see to date.

• We are pleased to announce you that the European IPR Helpdesk has issued a new fact sheet on IP due diligence. The knowledge of this intricate topic is fundamental for organizations having the purpose to acquire IP, raising capital and seeking financial assistance. Although IP due diligence is a precondition for any capital investment, it can be helpful for enforcing IP rights and reducing the IP-related costs as well. In a few words, IP due diligence can be considered as an essential process when developing an IP strategy. (European IPR Help Desk).  Two suggestions, if you write in English please also find an editors who speaks English, second it is not an intricate topic nor is it required to raise capital nor is it a part of any IP stratagems.

Due diligence is nothing more, and nothingless than, doing your homework on all representations expressed and implied on a matter or topic before making a choice. By gad that is incredible, and insightful, and right on topic.

Off To See Beau Geste

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Is it fair that the large and the well moneyed companies steal a start-up company’s IPCI?

Fairness does not matter, this is what happens.

Small companies, entrepreneurial companies, start up companies rely on their knowledge.  These development stage companies rely on their Intellectual Property and Critical Information – their IPCI is their advantage over others, as their kernel for success.  Yet often they choose not to protect the IPCI. This choice is more often than not out of carelessness.  The choice is out of ignorance. The small companies lack a basic understand of the very real threats to their IPCI and to their existence.

The threats to their existence are not capital, thought that is a problem.  The threat is to the IPCI assets that their time talent and treasury have been able to assemble.  Is the IPCI loss as the result of a break in to the office at night and a man in balaclava is using his Minox to photograph documents? Not usually.  Do the competitors deploy sexy and darning members of the opposite sex to get your designers, executives and engineers to spill the beans on a lust filled weekend vacation?  Sorry – no such luck. In reality the smaller companies leak their IPCI more like Hansel and Gretel going through the forest.  All leave little bits and pieces of the whole so that in a very short period of the competitors can assemble your whole IPCI from you and your employee’s blithe inadvertent disclosures.

Larger companies and other small development stage companies in your field want your IPCI.   The economic purpose of the desire is simple, to anticipate the impact of your technology so the other company can either steal the IPCI and use it for themselves, or develop blocks to your deployment of the technology and prevent you from disrupting their market.

This is not cloak and dagger.  It is more like sifting though your trash, watching your employee, a bit of social engineering, maybe even pretending to be a recruiter to recruit some of your employees to new jobs, in the process getting them to elicit some of what you are doing.

It is a big deal for the development stage companies.  Larger companies have dozens if not hundreds of IPCI asset items and the loss of any one or two means nothing. The development state companies may only have one or two core IPCI assets, and the compromise of any of these can be fatal.  Development state companies are very fragile when it comes to the disclosure and or compromise of their IPCI.

The profession of those dedicated to harvesting your information is called Competitive Intelligence – all Fortune 500 companies I am aware of have a Competitive Intelligence Department looking at many development stage companies just like yours.  There is also a professional body called the Society for Competitive Intelligence Professionals or SCIP.  SCIP offers excellent resources of how to get the information from company in perfectly legal fashions.  You are a target.

Once IPCI is diffuse
It is of little use
All value terminated

Bad Haiku – but the point is clear, if the IPCI you have is no longer exclusive to your company what is the competitive advantage you have?  Oh ya – none.

There are times you need to share your IPCI with third parties, potential customers that will assist in the design, build, implement, test of any development stage companies.  The general sharing of the IPCI that goes on within the organization must be managed. The sharing with third parties that must be done, especially with potential investors as investors deserve a decent amount of disclosure to make an informed choice also needs to be managed – just allowed to occur.  All employees and all key customers and vendors must be made aware of how important your IPCI is to you and your expressed intent to keep it secure for the benefit of all involved.

Non-disclosure and non-circumvention agreements are only just the beginning and for the most part are wholly ineffective at keeping your IPCI secure.  These agreements only provide a future for litigation and it is also most likely you do not have the money for litigation in the first place.

Be smart and keep you IPCI secure and discuss with all of those you are working with the need to keep it secure, for you future and theirs.  This is the core behind OPSEC.  Read up on OPSEC at the OPSEC Professional Society.

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The need for Executive Protection is unrelated to the size of your bank account or the size of your company.  The need for Executive Protection is a threat based assessment based upon where you are, what you have and what other may wish to get from you.

The editors told me to pay special attention the executives and gold collar workers of medium sized business all the way down to development stage business.  In particular those who have never ever thought of the use or need for Executive Protection.

So lets start with some simple questions,

What do you have that someone else may want?  Technology, formulas, sealed bid information, or sensitive information about a company or a person that may cause them harm when disclosed.

In what environment are you working?  Are you working in Western Europe, Canada, The United States of America, or are you working in China, Japan or a disintegrating third world country.

What is the value of your hide or the information?  This is not what is the value to you, but what is the value to others who may wish to posses the information or prevent you from using the information.

Also, did you company telegraph information to others? Did they tell lawyers, accountants, and government officials or just issue press releases?

You get the idea of the exercise.  What is your hide or the information you possess worth, not to you, but to others who wish to possess your hide or the information.

One quick example was a junior level executive, that was to courier a bid and submit a bid on a large contract in Detroit.  Since – it was known he had the bid, and he was going to submit the bid, and the bid was a very large bid the company did consider Executive Protection, and dismissed the idea as it was in the United States – but for some reason at the last minute did chose to send one Executive Protection specialist with the junior executive.

It was a wise choice.  Many readers may not know but for a long time Detroit was a massively corrupt little city.  To add insult to economic injury, the corrupt leaders were absolutely bereft of any skills at being corrupt.  The corruption was not just municipal but also spread out into the contractapreneurs that did business with the city.

As this was a public bid, and the company who employed the junior executive was on the public record as both have expressed and interest in the bid and had qualified for the bid – the competition knew someone was coming to submit a bid.

The junior executive and the Executive Protection professional flew from Dallas to Detroit. It did not take long before the harassment started.  The junior executive’s luggage never arrived, we guess it was stolen in Detroit as the time luggage handling at the airport was all done by Union employees – we can’t say for sure who did it, but the rest of the story may offer some clues.  The junior executive and the EP professional had made it but a few miles from the airport when someone tried to run them off the road.  It was not an accident, as the other driver tried 3 times, but the EP was a trained driver.  The junior executive had a hotel reservation and when they arrived at the hotel, checked in and went to the room, the EP tried using his very cheep but portable listening device detector to check the room.  Three bugs were found.

Everything about this junior executive had been compromised to that point.  It was a bad John le Carré short story at best.  Did I mention – this was a very big contract and if accepted it would have been very disruptive to organized labor in MI.

It was time to think.  The EP professional suggested it was time to go shopping; the junior executive needed some clothes anyway, as he had nothing more than that which was on his back.  They drove to a local mall and The EP thought they were followed, but it is often hard to tell, and the EP thought it best that if in fact they were followed, it would be to their advantage.  Once in the mall, in adjoining fitting rooms, they changed into their new clothes. Also from the changing rooms the EP called another member of an EP association he belonged to and through him made new hotel reservations under the EP’s name and not the junior executive’s name.  They got up, left the mall, met the other EP professional at the designated mall entrance and all three went to the new hotel.

The junior executive used the EP’s phone and called the office, told them everything was fine and he was ready to deliver the bid at 11:00 am the next morning.  Nothing was said of the fun had that afternoon.  That night the local EP brought by food and some adult beverages – and they all laughed at the adventures.

The next morning the local EP professional picked up the two and delivered them to the address for submission of the bid.  On the way into the building, a woman, with two police officers in tow, screamed, “There they are.  Those are the men who beat me up last night!”, staring straight at the junior executive and his EP professional. The police grabbed the executive and the EP.  The local EP said just a moment, took the BID and ran it in and submitted the bid.  Later, at the police substation, the local EP professional came in to address the accusations.  The local EP was a reserve officer and let the local police know that both of them, the EP professional and the junior executive had been with him all night.  Further, he suggested without disclosing much that the woman may have been paid to make the accusation.  The prior day’s events were shared with the local police and then the questioning turned to accuser.

It took about 2 to 3 minutes before she rolled over on who she was, why she had made the accusations and how much she had been offered and by who, if she could stop the bid submission.  She had been encouraged to do this late the previous night after the junior executive failed to return to the first hotel room.

Indeed, it was one of the competitors, but a specific Union that faced loss of many jobs that had put her up to this stunt, it was members in a sympathetic union that had tried to run them off the road and bugged the room.  And yes, they were followed as they left to go to the mall, but were lost almost immediately as the one car following was an amateur and they got caught behind an unrelated car at a red light.

How did they get all of the information on the junior executive?  They called and pretended to be part of one of those travel loyalty programs and got all of the information on the flight, rental car and hotel from the junior executive personal assistant – who was trying to help.

It was a keystone cop attempt at putting off the bid, it failed.  But there was one more trick, the bid they worked so hard to deliver was determined to be a non-conforming. The bid screening committee, a majority of which were past or present Union members, eliminated the bid from Dallas so the Dallas bid was not even considered.  That’s where the litigation started.

Upon retuning the corporate office the junior executive had one heck of a ripping yarn.  I am sure he told the over and over again as though he was a foreign corresponded traipsing through the back alleys of Bagdad, with the story getting better and more colorful with each retelling – as all good stories must.  And why not, it was an interesting 24 hours, but for us EP – it’s just another day not at the office.

Sometimes the threat is real and very serious, sometimes it is implied or can be inferred, and sometimes it is stupid, but none-the-less very real.

Take the time to understand your threat profile.  Invest in an hour or two of a trained Executive Protection Specialist to help you make that assessment.

This Executive Protection article was written or edited by Baron James Shortt, the Executive Director of the IBA. http://www.ibabodyguards.com

International Bodyguard Skills Master Classes Schedules in 2013

Dublin (Ireland) 07th May
Nicosia (Cyprus) 25th June
Tempe AZ (USA) 19th August

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You see the ads sent to Human Resources Departments, National Background checks for only $25.00.   Really, for only $25.00 someone has a database that can check each and every city, county, state, federal, and tax courts in the nation for only $25.00.

There are over 30,000 incorporated cities
There are 3,077 Counties
There are 94 Federal Judicial Districts

Cities typically have a single municipal court, but in New York there are many branches of the same court.

Counties typically have a justice or lower court, a superior court with the superior courts typically broken down into criminal, civil, domestic and probate.

Each Federal Judicial district has a civil court, criminal court, bankruptcy court, and appellate court.

Let’s not forget that several other branches of government have enforcement capabilities. Inn the United States, administrative courts are tribunals within administrative agencies, and are distinct from judicial courts such as the Securities Exchange Commission, Internal Revenue Service, Environmental Protection Agency, OSHA, etc…

So lets do a bit of math first.

City Courts                  30,000
County Courts            15,385
Federal Courts                 376
Total Courts                45,761

Now, how many of these courts are computerized? Many courts are computerized and represent a lion’s share of the US population, but most defiantly all are not computerized.  Another factor to consider is how many charge a fee for each and every access and do not allow bulk access to their databases?  A good number in particular those courts in the big states that have budget issues. Last, several states do not allow online access to criminal records and require a person to go into the court and request the records.

We are just discussing courts and have not even touched educational credentials, professional licensing boards, local media, social media, …

So what are the odds that any of the sellers of a National Background Check for $25.00 have a real nation wide background check for $25.00?

Yeah – I thought so…

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You’re a small business, you run a series of stores located at malls.  You have simple merchandise and there are really few if any barriers to entry.  So what do you care if your competitors know all?

A small chain of mall stores selling hats is not an exciting business, least not for me.  Margins are small and competition while not fierce is real.  The business is trying to craft a premium product from generic stock.  The idea of the store is to offer custom embroidery on any cap for any number of caps for any reason.  They have in each store a computer operated embroidery machine that can embroider anything in many different colors and styles.  You bring in a design and in just a bit you have custom embroidered hat.  They also stock some designs of their own as well as have ten of thousands of designs they have accumulated for just about every conceivable sports team or event all stored in their computer.

The owner of one of these hat chain stores was interested in selling one of the stores.  He spoke to several different buyers and shared with the buyers the gross sales for each month for the last year.

About a month later one of his competitors called him and asked if he would sell the store to him?  The competitor then rattled off the sales volume for the store for the last 12 months – down to the penny. The owner was not upset that the competitors wanted to buy, but that someone had fed him the information

The owner was furious, not that the competitors wanted to buy, but that either someone had breached their non-disclosure agreement or the competitors had sent in a secret shopper into his store to get the information by subterfuge.

The owner began calling all of the potential buyers demanding to know if they had disclosed the information of if they were a secret shopper for the competitor.  This got him nowhere.  All potential buyers were very put off by the accusation and figured he was barking mad.  He killed all buyers’ interest.

If was only after racking his brains and coming up empty-handed – did he call us.  We reviewed the sales, to find who had access to the information and reviewed his external agreements.  All relationships looked tight and all agreements seemed well drafted.

I went to the mall and walked about.  There were a few shops empty with contact information to mall management for anyone who might want to rent the space.  This is what I called the “duh”, moment.  I called the agent for the property, expressed and interest and asked to know the sales volume for each of the stores in that section of the mall near the available space that was only two locations down from the hat shop.  I got everyone’s past sales for the past year – not just the hat shop.  The “duh” was remembering that many retail landlords rent on a fix monthly, plus a percent of gross.  Also property managers will say just about anything to get a sale.

The engagement was over, the owner knew how the information was passed on to the competitor.  The owner than requested similar information from the malls where the competitors had his stores and got all of the competitor’s sales for the last 12 months. He called up the competitor and ticked off the competitor’s sales in each of his stores.  The competitors had a great laugh and said, “Ah you called the leasing agents, didn’t you?”

In the end, my clients demanded the sales information disclosure by the landlords at his different locations be restricted.  This was granted, after a bit of fuss from each of his landlords.

In the end, I think the two competitors would have been better merged, but they keep battling, and they are still at it even today.

There are many ways one’s information can leak that are not nefarious.  Think about who has possession of your IPCI and who can or would disclosure that information that is inconsistent with the needs and requirements of your business relationship.

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In the Compliance world there is Too Big to Fail… you know, the global financial institutions that are so large that some question whether they are even capable of fully understanding and detecting all of the different ways that their institutions can be “gamed” by fraudsters, money launderers and other ne’er-do-wells.

But what about institutions that are the other end of the spectrum? Small Financial Institutions, Smaller Financial Services Firms and smaller businesses, whether they are start-ups or just small well-run businesses, also have need for knowledgeable subject matter experts in areas of money laundering compliance, sanctions compliance, trade compliance, FATCA,  FCPA, etc., etc. Many such firms have two handicaps in meeting the variety of regulatory requirements and operational risk management efforts of their larger brethren:

• Lack of knowledge/understanding,  and

• Lack of Financial where-with-all to bring in such subject matter experts.

First, let’s briefly discuss lack of understanding/knowledge:  Here the issue is one centered in the issue of “good enough is well, ‘good enough’”. Many smaller firms fail to realize that their firms are just as prone to be “gamed” by the bad guys as a larger firm. Smaller firms are attractive targets because of the perceived lack of need coupled with experience and financial limitations.

They often mistakenly cling to the notion that “we know our customers and they would never do anything wrong”. Compounding the problems of this naïveté with a strong over-reliance on the over-stated idea of “using a risk-based approach”, many firms do not perform a truly independent review of their compliance programs from top-to-bottom to determine where gaps or potential flaws may exist. Smaller organizations similarly fail in the areas of fully protecting their intellectual property and critical information assets as well. It is interesting to note that a number of the penalties issued by the US Treasury’s Office of Foreign Asset Control over the past 12-24 months have involved civil money penalty assessments against smaller firms (both banks and corporate) for sanctions-programs violations.

FFIEC guidelines and sound business practices alike clearly call for all institutions to perform regular independent reviews of their compliance programs. In addition to more stringent AML and Sanctions Compliance regulations, the passage of Dodd-Frank further punctuates the need for this by imposing a wide range of additional regulations that affect large and small institutions and businesses alike.

This brings us to the reality of the second issue of lack of financial where-with-all to place themselves in a position of obtaining the right resources to help them accurately not only identify legitimate gaps but to also remediate those flaws in a satisfactory manner.  This merely reinforces the faulty notion of damned if you do and damned if you don’t.

So what should a small financial services firm or start-up business do?  They can’t ignore the regulations requiring compliance and they can’t ignore the problems due to the keen awareness caused by limited resources.

One solution is to bring in the right consultants in perhaps a different way. Training can be provided in a pooled manner by sharing the costs among several firms. Another way might involve bringing on subject matter expertise providers as advisors to your firm, or to your Board of Directors. Core Systems providers in the financial sector and other software systems providers to the marketplace are bringing on subject matter experts to help firms to address compliance issues that smaller firms face. These are well-intentioned efforts in the right direction. However, because these firms also have a vested interest in selling their products to these smaller firms (namely, their software and/or their data services), a reasonable question arises as to how truly independent are they in providing advisory services to smaller firms?

Yet another way might involve outsourcing parts of your program requirements to firms with demonstrable expertise in these areas.  This can be done but it requires that the firm definitely contract with firms possessing the right resources on hand to help manage these services as a “partner” with smaller firm clients.

Whatever ways you choose to address these issues, as a smaller or even a moderately sized organization, know that there are more options available than you might be aware of.  If we can help direct you, please do not hesitate to call on us to help provide clarity from the complexity of such situations.

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By Gail Kasper

It can be frustrating when you ask your child to tidy their room and they tell you, “In a minute.” That minute stretches into five, then twenty, then sixty, but the room remains a mess. Or how about when your child has had three weeks to work on a school project, but she hasn’t done a thing and now she’s rushing through it because it’s due tomorrow? I’d say a lesson on avoiding procrastination is in order.

But what if the one who inadvertently taught your child to procrastinate is YOU? If your son or daughter has learned to put tasks off to the last possible minute from watching you do the same, don’t scold your child and don’t beat yourself up. Instead, take action! Teach yourself to avoid procrastination, and you’ll become a fantastic role model of efficiency for your child.

My self-empowerment tool called Systematic Attitude Development-Technique (SAD-T) teaches people to take action and get results, especially when they feel stuck or unmotivated. I’ve included three action items below, taken straight from SAD-T, to give you an effective strategy for avoiding procrastination.

1. Formulate a plan. You have a job to do, but you keep putting it off because you have no idea where to begin. Lacking a roadmap, you don’t know what to do, how to start, or even what’s involved to get the job done. To get out of this crippling state of uncertainty, the first thing you must do is to develop a plan. Write down what needs to get done and how you plan to approach the job. Don’t worry about all the details yet. Just capture on paper a big-picture plan listing major goals and activities.

2. Create a detailed list. Once you’ve written down the major points of your plan, its time to define and refine. How will you accomplish the goals listed in your plan? What steps will you take to get from point A to point B? What specific tasks need to get done to complete each goal and activity in your plan? Here’s where you work out all the little details, getting as specific as possible. If you can, give each task a time frame.

3. Now do it! You’ve got your roadmap, you’ve got your detailed list of specific tasks. All you have to do now is jump in and do it! Follow your step-by-step plan, and keep that momentum going. You can be sure that your kids are watching and learning from you. By beating procrastination through a systematic, logical approach, you’re setting a great example for them to follow.

About Gail Kasper: Mid-1998, Gail Kasper started her business from a small one-bedroom apartment, in the middle of bankruptcy, with no money in the bank. Today, Gail is one of the nation’s leading speakers, author, Top 1% Club Mentor, a television host, advice columnist, Certified Fitness Trainer, Ms. Continental America 2008, and the creator of SAD-T™ (Systematic Attitude Development-Technique™). A former Contributing Editor to Success Magazine with the “Ask Gail” column and host of the “Ask Gail” segment on the Comcast morning show, Gail is the author of her self-help autobiography Another Day Without A Cage: My Breakthrough From Self-Imprisonment To Total Empowerment and the self-help parable Unstoppable: 6 Easy Steps To Achieve Your Goals. With national media appearances that include Inside Edition, The Today Show, FOX Business News, and Oprah and Friends, Gail has earned the ranking of an in-demand national media personality who has been the topic of discussion on Regis and Kelly. The current host of the Philadelphia Visitors Channel, she has also made numerous appearances on network affiliates that include ABC, FOX, CW11, Comcast, and CBS, where she co-hosted the Emmy award-winning America’s TVJobNetwork. www.gailkasper.com

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The editors and contributors of this publication travel a great deal.  We are the savants of our slice in our professions and our narrow bands of knowledge are desired by many located in far off places.  We cherish the opportunity to make a difference wherever we go.

The trade off – and it is a trade off is that we miss times with family, spouses and our children that cannot be made up.  Feeling guilty about it or over compensating for our time away – are both counter productive.

What we can do, is share travel.  Use the frequent flyer miles and bonus points and take our families overseas to see a bit of the world.  Share with our family different languages, different culture, different foods, different histories and experience on the stage of the world.

I sensed this was a good idea, but had no idea what the impact might be.

The dividend came just last week.  We watch the news in the morning as the kids are fed breakfast and lunches are made.  That day it was a news story about what Germans think of Americans.  Americans eat nothing but fast food, everything is supersized, Americans are all fat and Americans don’t care about the poor.

My daughter, who had spent 6 weeks in Germany – laughed.  She ate more fast food in Germany than in the US because it was so much cheaper.  Between McDonalds French Fries, Turkish food stalls and Doener Kebap Germans’ are more or less on par with Americans.  As for everything is supersized and we are all fat – no, she said Germans are keeping their end and gut up.  As for not caring about the poor, this was a bump she ran into in Germany.  Germany has very high taxes to help with social matters and are dealt with by the state.  She had a very hard time explaining the tradition in American of volunteer work, private charities, and public service.  It just did not register with her host family.

The dividend was she could and did argue with the very poor quality talking head news reporter.

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Laundering money is moving money in such a way that the sole economic purpose behind the movement is deny to a viewer or participant the ability of ever knowing the real source of the money.  It become money laundering when and if the original source was a crime – such as drugs, frauds, tax evasion, bribery….

Some Signs of Money Laundering…

The primary contract person does not appear to be the beneficial owners but appears to be acting as a nominee… when questions are asked about the fund – you get stories but no answers.  These front men have more stories than there are gains of sand on the beaches of the world.  Some are so good at answering the question – that they can say nothing for hours and have you agreeing with them – and you have no idea why.

The use of many different entities and transaction architectures that escapes understanding.  It is the “Clown Car” of finance.  We have seen the routine of a zillion clowns coming out of one car at a circus.  It is the same thing in finance.  The clown car and all of the antics of the clowns serves to distract the viewer that it s is the same number of clowns sneaking back into the car only to come out again from another door.

The purchase or sale of items whose values are intangible – such as designs, patterns, programs, databases, art, services.  My all time favorite is the use of art to launder money.  Programs and services eventually can be measured, but not the value of a rare and authenticated vase or antiquity.  Even better, you buy a vase for 30 million, but choose not to close on the vase. Thus, you have wired 30 million from say India to London, fail to close, and that the money refunded to an account in London or New York.

The dwell time of money in an account is very – very short and seems to come only from a few sources and go to a few sources.  Typically we have more customers than creditors or more creditors than customers – money laundering you will see few of either.  Also we have money on account as part of our planning process for cash flow irregularities.  Not so with a laundering account – the money come in from a few sources and goes out to fewer sources and the dwell time is as short as it can be.  The money is on the run, dwell in one place too long and it might be confiscated.

Action that are incongruent – such as 35 million invested in a private placement and the manager lost all 35 million in less than nine months, all in one taxable year – and none of the investors complained or sued.  The same investors came back the next near and lost another 30 million with the same person… go figure…  The securities industry is just waking up to the many ways it can be used to move money.  With improved information and trading – markets and be moved, manipulated and manhandled to move money in ways that were impossible only but a few years ago.

A cash business is as good as always, but a cash business will have many depositories to make it work.  Collect $12,000 a day from your restaurant, and deposit the cash in Bank A, have identical deposits in Bank B, Back C and Bank D.  Thus, if anyone comes to look at your business records – it all matches your deposits.  Just pray the different banks do not all merge.

Buying items for a serious premium over what they are worth, such as buying a $10 car part, from a Swiss Company, that buys the part from Japan for $2…  This way the owner of the company uses trade to launder gains and not pay taxes on the $8 of profit retained by the Swiss Company.

By far and away more money is laundered in conjunction with financial fraud than for any other crime origin, far more than drugs and buying influence…

There is nothing wrong with a cash based business, it only need to have real KYC and due diligence research done by the institution.  It is not wrong to have short dwell time on account – it is also a reflection of financial pressure on the business where money comes in and is paid to creditors quickly.  It is not wrong to buy and sell intangibles or work with transfer pricing – but all needs to be explained, be reasonable, and transparent to the parties.

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If the duty to exercise due diligence is fulfilled, you will have a better hand in court proceedings. But who sets the standards for due diligence?

The ISO sets the standards for diligence and compliance in many fields, but still has yet to define what is due diligence absent a subject field.

Service provision to the state of the art in connection with the accepted level of due diligence is a familiar path through legal matters. Actions relating to compliance refers to both to the company as a legal entity as well as the management such as Directors or CEO’s and the employees. This is also a moving target as both law, technology, and the understanding of new threats is understood. What used to be regarded as due diligence some years ago, could be insufficient today. If a good or service is not provided due to a lack of due diligence, the company will be threatened with considerable damage claims on the part of the client.

Once an ISO Standard is published, it will often be used as a scale for expert opinions before the court.  The same will be true for due diligence standards when published.

What relationship to ISO Standards do you see ?

To get to the heart of it: If it is regarded as being state of the art to apply standardized information to products and processes, compliance with the corresponding ISO Standard will be reviewed in the event of damage. ISO Standards are based on good practices that have been defined and agreed to worldwide. As soon as an ISO Standard has been published, it will be very probable this standard will be used as the scale for competency and effort by court experts. All management in a given field will have to keep themselves informed according to ISO Standards and legal requirements. In the areas for which there are ISO Standards, general management will have to ensure the company is working at least to this level.

What are the advantages of ISO certification for legal matters?

On the one hand, ISO Standards require top management’s knowledge of the standards and related law. On the other hand, verification is required in order to document that top management and the employees are complying with the standards. In short not only does one require on going knowledge of the relevant ISO Standards but also certification that a given company is operating with in compliance for these standards. Certifications demonstrate ability, independent certification demonstrates that the organization is working according to the standards. The independent certification of compliance with ISO standards can be considered and represented ads a sufficient level of due diligence, mind you there is no true safe harbor.

Further, from time to time, it may also make sense to integrate ISO Standards in contracts. The standards create an agreed upon international standards for performance required by all parties to an agreement.

If there is certification, is the company not at fault even if there are failures?

Compliance with ISO Standards make it much easier to demonstrate on diligence in their performance of their due diligence. If failures do occur in spite of all precautions, the company can argue that they are not at fault or at least not negligent so that there principally is no liability for damages. It is a sound argument. Inclusion of the ISO stands again set the expectations of all parties very clearly. The company and its customers / companies will profit as customers can be more certain they will obtain without failures and companies will minimize liability exposure when providing their services as they can demonstrate more easily the exercision of due diligence to an internationally accepted standard.

What advantages are ISO Standards yield for internal controls from a legal perspective?

Such rules as Sarbanes Oxley or the 8th EU Directive require an internal control systems be in place and functioning. In connection with product liability, an internal control system is not required explicitly but is becoming more and more important in practice. With issues such as sanctions, FCPA, UK Anti Bribery Act, and the strict liability many face for lack of internal control in a host of product liability matters – operation up to and or beyond IOS Standards is an excellent standard both for a competitive advantage but also as a legal defense should such an unfortunate event occur that many raise the issue of liability.

As the legal requirements of duty of care and diligence is further codified by law – usually from cases where management really screwed up – , ISO Standards and its required documentation, testing and independent certification of compliance with those standards means that a company has demonstrably fulfilled their duty to exercise due diligence up to an agreed upon international standard.

While no level of due diligence will ever provide a safe harbor – this does provide counsel with an excellent argument – with independent documentation.

We are aware that the International Due Diligence Association is working on standards and we expect some of these standards to be published with in the coming months.

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