Detailed check items and recommendations can help enterprises more comprehensively manage compliance risks in cross-border transactions. It’s important for enterprises to customize their compliance management systems based on their specific business characteristics and operational region requirements.

Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Checks

Detailed Check Items:

• Customer Due Diligence (CDD): Including identification of beneficial owners and Politically Exposed Persons (PEPs).
• Transaction Source of Funds Review: Verify the legitimacy and reasonableness of fund sources.
• Suspicious Transaction Monitoring: Set transaction alert thresholds, monitor unusual transaction patterns.
• Risk Assessment: Implement risk-based management for customers and transactions.
• Record Keeping: Maintain transaction and due diligence records, typically for 5-7 years.

Additional Violation Cases:

In 2020, a multinational bank was fined approximately $400 million for failing to effectively monitor suspicious fund transfers. In 2019, a payment company was fined $100 million due to deficiencies in its anti-money laundering procedures.

Extra Prevention Recommendations:

Conduct regular independent AML audits. Implement ongoing customer due diligence, regularly update customer information. Establish a cross-departmental AML compliance team. Utilize AI and machine learning technologies to enhance suspicious transaction identification capabilities.

Export Control Compliance

Detailed Check Items:

• Goods/Technology Classification: Determine if items fall under dual-use or military categories.
• License Management: Apply for and manage required export licenses.
• End-use and End-user Screening: Verify end-user identity and intended use declarations.
• Sanctions: Check if transaction parties are on various sanctions lists.
• Red Flag Indicator Identification: Identify potential violation risk signals.

Additional Violation Cases:

In 2019, a tech company was fined over $1 billion for exporting controlled equipment to Iran. In 2021, a telecommunications equipment manufacturer was penalized approximately $150 million for violating export control regulations.

Extra Prevention Recommendations:

Implement automated export control compliance systems. Establish and regularly update a product classification database. Conduct comprehensive export control training for employees. Develop detailed internal compliance manuals, including procedures for various scenarios.

Foreign Exchange Management Compliance

Detailed Check Items:

• Cross-border Fund Flow Review: Audit consistency of fund purposes and amounts with contracts.
• Foreign Exchange Balance: Monitor if foreign exchange receipts and payments comply with relevant regulations.
• Overseas Investment Approval: Ensure major overseas investment projects obtain necessary approvals.
• Foreign Exchange Risk Management: Assess and control exchange rate risks.
• Foreign Exchange Account Management Norms: Opening and usage of domestic and foreign exchange accounts.

Additional Violation Cases:

In 2018, a large corporation was fined millions for violating foreign exchange management regulations. In 2020, a multinational company faced substantial penalties and restrictions on foreign exchange business due to unauthorized cross-border foreign exchange transfers.

Extra Prevention Recommendations:

Establish a cross-border fund flow monitoring system to track fund movements in real-time. Develop detailed risk management strategies, including hedging plans. Conduct regular foreign exchange compliance self-checks to promptly identify and rectify issues. Strengthen communication with regulatory authorities to stay updated on policy changes.

Tax Compliance

Detailed Check Items:

• Transfer Pricing Analysis: Ensure related-party transactions adhere to the arm’s length principle.
• Withholding Tax Management: Correctly calculate and timely pay withholding taxes.
• Permanent Establishment Risk Assessment: Evaluate if domestic activities constitute a permanent establishment.
• Indirect Tax Compliance: Manage VAT, GST, consumption tax, and other indirect taxes.
• Tax Treaty Application: Correctly apply tax treaties to avoid double taxation.

Additional Violation Cases:

In 2017, a tech company was ordered to pay over $1 billion in back taxes due to improper transfer pricing arrangements. In 2021, a multinational corporation was fined €2 billion for tax evasion in multiple countries.

Extra Prevention Recommendations:

Implement a global tax risk management system to uniformly manage tax risks across locations. Prepare contemporaneous documentation to support transfer pricing policies. Utilize digital tools for tax compliance management to improve efficiency. Stay informed about international tax reform trends, such as the BEPS 2.0 project, and adjust strategies timely.

Data Compliance

Detailed Check Items:

• Data Classification and Mapping: Identify and classify types of data transferred across borders.
• Legal Review: Ensure the legality of cross-border data transfers.
• Data Localization Requirements: Comply with local data storage regulations.
• Data Recipient Assessment: Evaluate the data protection capabilities of overseas recipients
• Data Subject Rights Protection: Ensure data subjects’ rights are protected in cross-border transfers.

Additional Violation Cases:

In 2018, a social media platform was fined £500,000 by UK regulators for a data breach incident. In 2020, a hotel group was fined €18 million by EU regulators for a data breach.

Extra Prevention Recommendations:

Implement data lifecycle management, including data collection, use, storage, and deletion. Conduct regular Data Protection Impact Assessments (DPIA). Establish a data breach response mechanism to ensure timely detection and reporting of data breach incidents. Sign standard data processing agreements with overseas partners, clearly defining responsibilities and obligations.

Anti-Bribery and Anti-Corruption Compliance

Detailed Check Items:

• Third-party Due Diligence: Conduct background checks on agents, intermediaries, etc.
• Gift and Hospitality Management: Develop and enforce reasonable gift and hospitality policies.
• Charitable Donation and Sponsorship Review: Ensure charitable activities are not used to disguise bribery.
• Conflict of Interest Management: Identify and manage potential conflicts of interest.
• Financial Controls: Establish strict financial approval and reimbursement systems.

Violation Cases:

In 2019, an airline was fined nearly $4 billion for bribery in multiple countries. In 2020, an energy company was fined over $1 billion for bribing officials in multiple countries to secure contracts.

Prevention Recommendations:

Establish a comprehensive anti-bribery compliance system including policies, procedures, and training. Implement a whistleblowing mechanism to encourage employees to report misconduct. Conduct regular anti-bribery risk assessments to identify high-risk areas. Perform enhanced due diligence and approval processes for high-risk transactions.