We have considered aspects of international due diligence investigations. In many ways this can be viewed as finding a needle in the corporate haystack of information and data. Candice Tal helps us through the maelstrom to find useful and actionable information for your compliance program. In this concluding Part V, we consider how the changing nature of international anti-corruption compliance programs, through data privacy laws such as General Data Protection Regulation (GDPR), and technical innovations, such as Artificial Intelligence (AI), are prompting innovation in global investigations and investigative due diligence.

The rules around data privacy outside the US changed significantly when GDPR went live in May 2018. Now the state of California has passed data privacy legislation and many are lobbying the US government to enact a national standard. Issues in this arena are playing out literally in real-time. It is changing the manner in which information is obtained and transmitted. The most significant aspect for investigative due diligence is “how we will investigate criminal activity”. This is because of GDPR’s right to be forgotten which is most often used by the criminal element to attempt to rescind data online. She noted that if there is a criminal conviction, such information may be prevented from being “forgotten” but if there is only a guilty plea or other resolution or simply a civil allegation, a fraudster or other nefarious actor may be able to hide the information by having it removed online.

We next turned to AI in investigative due diligence. Candice Tal believes that AI will be a “game changer” in compliance. Massive data sets require some type of AI to sort through and analyze the information. She said this is particularly important for internal controls and accounting books and records provisions to identify massive fraud. This is yet another area which is still developing. Tal stated, “I’ll frame that by saying at least in the next few years, there will still be a need for the traditional investigative approach that the boots on the ground, one where an investigator goes out and physically checks on facilities. Artificial intelligence is going to have limited ability to do that.” While drones may become part of an investigators tool kit, Tal believes that AI will be used “in a similar way to most data aggregators today. They find about 80% of the information. Yet there will always be the remaining 20% which they cannot find and you will need human intervention on the investigative side.”

Looking down the road to the veiled land of the future, Tal sees continued innovation facilitating investigative due diligence. While AI is more than simply on the horizon she said it “is a tried and tested methodology that has existed for many years, in terms of how do you look for and locate shell companies.” It is also true about finding information about people who are trying to deliberately hide information. The bottom line is some of these investigative techniques involve old-fashioned shoe leather or simply hard diligent investigative work and “that’s not new”. Yet AI and other technological tools can make investigations more efficient and more cost effective, while giving better results. At the end of the day, AI can be used to sharpen and hone the due diligence process.

Yet with all of this information, many compliance professionals become somewhat bewildered with data overload. They often receive a substantial amount of information but are not certain of what it might mean or even how to use the data. Tal responded that one of the things Infortal provides is both a summary of the factual findings and recommendations based on Infortal’s investigative experience. It consistently helps a Chief Compliance Officer (CCO) to shape the data into their compliance program for continuous improvement. Further, one area of ongoing concern is conflicts of interest, in terms of both third parties and senior executives and even Board members.

Tal concluded by returning to a place we began earlier in this series. A Level 1 due diligence investigation simply does not provide you enough actionable information, in many circumstances. Even if a CCO is cost-constrained, there are ways to move forward to a more rigorous due diligence investigation without breaking the bank.

In this 5 part series, Tom Fox and I have been discussing various aspects of due diligence investigations. Tom Fox, the Compliance Evangelist, is a widely respected attorney in the compliance field and author of the comprehensive compliance guide: The Compliance Handbook. He is a well-known and frequent speaker on issues related to compliance and ethics, and is founder of The Compliance Podcast Network. For the full podcast click here.