Rapid growth, which usually indicates a positive stage for companies, comes with potential downsides, as seen in the cautionary tale of
Background
In Toll's case, the company began acquiring regional freight forwarding companies in 2007 and had amassed almost 600 "invoicing, data, payment, and other system applications spread across its various business units." Unfortunately, compliance programs and oversight didn't keep pace while the business operations grew in complexity. As a result, between
Toll received multiple warnings from one of its banks beginning in
In addition to its system upgrades, Toll also introduced sanctions training for all employees, terminated its franchise business model, and created enhanced on-boarding for agents. Toll also identified and removed the employees involved with the violations.
Takeaways
First, self-disclosures are worth it. OFAC calculated the maximum penalty for Toll's violations to be over
Second, robust corrective actions both mitigate fines and prevent future violations. For example, Toll conducted a "risk-mapping exercise to identify the root causes of the compliance lapses" and restructured its compliance division.
Third, don't turn a blind eye to warnings. They can become aggravating factors. For example, OFAC determined that Toll had "reason to know" it was committing sanction violations for reasons including bank warnings. Further, OFAC pointed out Toll's "reckless disregard for
Finally, when considering mergers and acquisitions or organic growth, companies must keep compliance on the front burner. If needed, bring on additional, temporary expertise to shore up your compliance teams. It may not be enough to put aside funds to resolve unknown compliance issues. You may also be adding new risks to your organization. Had OFAC begun an investigation before the voluntary self-disclosure, the fine may have been higher.
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