Audit committee requirements
Audit committee oversight of trade and geopolitical risk has moved from a governance best practice to a direct compliance obligation, with the U.S. Securities and Exchange Commission's 2023 cybersecurity and risk disclosure rules establishing audit committee accountability for material risk identification in ways that now extend to supply chain exposure and sanctions-related contingencies. The U.S. Department of the Treasury's Office of Foreign Assets Control and the European Securities and Markets Authority have each issued guidance that touches audit committee responsibilities when firms hold cross-border exposure to sanctioned jurisdictions or restricted counterparties. Compliance teams are currently mapping audit committee charters against these disclosure thresholds to determine where geopolitical risk triggers a reportable finding.
Watch
- SEC final rule 33-11216: audit committee disclosure duties for material risk events
- OFAC's 50 Percent Rule: audit committee awareness obligations for sanctioned-entity ownership
- ESMA guidance on board-level geopolitical risk reporting for cross-border investment firms
- Diverging U.S. and EU definitions of 'material' in trade-related risk disclosure frameworks
Recent material activity in Trade & Geopolitical Risk
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OFAC designates 14 entities linked to Russian defense procurement network
The Treasury Department's Office of Foreign Assets Control added 14 entities and 6 individuals to the Specially Designated Nationals list for their roles in procuring critical technology components for Russia's defense i…
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BIS adds 22 Chinese semiconductor entities to Entity List for advanced chip diversion
The Bureau of Industry and Security expanded export controls targeting Chinese semiconductor entities found to be diverting advanced computing chips through third-country intermediaries. New license requirements affect i…
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