Rethinking compliance and sustainability through collective action Vanessa Hans, Basel Institute on Governance
We ensure that our conduct is always in line with all applicable laws and we seek to apply internationally recognised standards across our global activities.
Trafigura’s Compliance department oversees the Group’s global activities. It operates in partnership with front- and back-office functions to ensure that our controls are relevant, robust and aligned with the latest international standards. Trafigura’s Head of Compliance reports directly to the Group’s Chief Operating Officer and the Group’s Compliance Committee.
We maintain a responsible compliance culture where all staff recognise personal and collective responsibility. The high standard of behaviour we expect from all of our people is enshrined in our Code of Business Conduct (the Code) which is based on the highest standards of international law.
Every member of staff must attest to receiving, understanding and complying with the Code, which sets out expected behaviours in all our business activities. All management teams are charged with promoting these behaviours across the Group. They are supported by our Compliance department.
Commercial compliance is founded on the application of Trafigura’s Code. All employees are bound by the Code, which encompasses:
Our people operate in many different jurisdictions and often interact with competitors. We provide detailed guidance on how to adhere to relevant competition law principles and how to prevent the inappropriate exchange of commercially sensitive information.
As a Group with global operations, compliance with applicable economic and trade sanctions is a legal requirement. The sanctions landscape is constantly shifting; we ensure that we remain compliant by paying close attention to developing policy. During 2020, the US administration introduced sanctions in relation to China and targeted the shipping industry with greater surveillance and compliance requirements. We have reviewed and revised our policies accordingly.
The Compliance department works closely with the Legal team to track the introduction and evolution of sanctions, to raise questions where clarity is required and to ensure that we have correctly understood and applied the rules.
Trafigura seeks not just to keep pace with, but also to anticipate changing regulatory conditions. We maintain relationships with regulatory experts and advisors in various jurisdictions to monitor developments that may impact our business.
During 2020, we focused on ensuring effective controls and monitoring during the COVID-19 pandemic, which caused disruption to normal working practices, with employees spending extended periods working outside of the office environment.
Trafigura continually reviews its KYC methodology to ensure that it remains up to date with developing international standards. We increasingly utilise technology to review, monitor, identify and flag high-risk counterparties and activities faster and more accurately.
We screen counterparties using Thomson Reuters’ Accelus enterprise risk management software. We continually monitor the changing status of people and organisations to keep our KYC methodology up to date and receive daily updates from Thomson Reuters World- Check on the evolving status of all counterparties.
Our KYC and screening procedures are aimed at identifying prospective counterparties that might pose any risk to our business. We have implemented a range of measures to raise awareness internally, including mandatory online training, to give employees a detailed understanding of anti-money laundering and associated control processes. Trafigura continues to apply the principles set by the Joint Money Laundering Steering Group, which is widely seen as global industry best practice. Our KYC procedures delivered 10,576 KYC checks during 2020 (2019: 8,672 checks).
The banking community is a key stakeholder group. We invest significant time in explaining and documenting our compliance systems and processes. Over the course of 2020, our Compliance department engaged with many of the leading banks across the world’s financial centres.
We engage with regulators including to assist in the development of appropriate regulations for our industry. We also participate in industry advisory bodies, such as the International Swaps and Derivatives Association, the Futures Industry Association and the Commodity Markets Council Europe.
Leading external US law firm, with an extensive Compliance and Regulatory department, Quinn Emanuel Urquhart & Sullivan LLP, recently conducted a review of Trafigura Group’s compliance policies and procedures. The key findings were reported to the Trafigura Board of Directors as follows:
“Based on the materials we have reviewed, the briefings provided and our experience advising companies in various industries on compliance best practices, we consider the Compliance Function to represent an appropriate and proportionate approach to the compliance risks faced by Trafigura, which adequately seeks to minimise the risk of compliance failures.
As with any compliance programme, a continual system of review and incremental improvement should be adopted and it was encouraging to see the Compliance Function continue to improve and update its policies by, for example, reviewing and ensuring the programme had been tested against the DOJ’s latest guidance issued on 25 November 2020 and requesting and implementing advice even during the course of our review.
We consider the Compliance Function, as designed, to adequately meet the applicable standards and requirements of the UK Bribery Act 2010, the U.S. Foreign Corrupt Practices Act, and the European Anti-Money Laundering and Terrorist Financing Directives. We note that the compliance function adopts the universal application of the highest standard of compliance required by law across all jurisdictions in which it operates, even where those standards are higher than those imposed at a domestic level. We consider this to be the appropriate benchmark to ensure a thorough approach to risk mitigation is achieved.”