Mike and Brent return for the new year with a refresher on The Fraud Diamond Framework(SM) introduced in Episode 34 and an explanation of how it would apply in practice as trade compliance professionals try to expect the unexpected in 2026. They discuss the importance of designing and implementing “compliance backstops” as geopolitical guardrails (01:47), how Stoic philosophy and the good work of Mo Bunnell (CEO and Founder of Bunnell Idea Group, author of Give to Grow) help build resiliency (03:40), review The Fraud Diamond Framework(SM) (05:57), describe how the framework can help trade compliance personnel to make and defend triage decisions (10:59), the implications of many trade compliance programs reaching a point in their evolution where they need to be able to demonstrate true integrity and effectiveness (13:45), the new 25% tariffs on certain semiconductors (14:38), and notable economic sanctions enforcement decisions related to lawyers’ advice or lawyers themselves (15:56). They conclude with Brent’s first Managing Up of 2026 (21:04).

Mike and Brent welcome author and compliance professional Severin Wirz to the pod to discuss his first book, Bribery Beyond Borders: The Story of the Foreign Corrupt Practices Act. They discuss with Severin his inspiration for writing the book (02:44), the book’s focus on the people and personalities involved in the events between 1975 and the 1977 passage of the FCPA (05:50), the political and geopolitical scandals that kept up the momentum for a law banning overseas bribery (06:59), what his research uncovered beyond the traditional FCPA origin story (10:49), the relevance of the Cold War to the FCPA’s passage—specifically how corruption by capitalists fed into Communist propaganda (12:39), how the political “sausage” was made (16:33), stories of personal courage and risk-taking that made the FCPA possible (18:27), the use of the phrase “post-Watergate morality” as a critique of the FCPA and other reform efforts (21:48), how anti-corruption laws actually help American companies competing for business overseas (29:21), where the FCPA stands today (31:17), and how corruption is a social construct that, to paraphrase former federal appellate judge and author himself John Noonan, to exist as a legal concept must first exist in the minds of everyday people (35:40).

Mike and Brent then conclude with another installment of Brent Carlson’s “Managing Up” (38:14).

Bribery Beyond Borders: The Story of the Foreign Corrupt Practices Act—

Learn more at Corporate Compliance Insights here: https://www.corporatecomplianceinsights.com/bribery-beyond-borders-fcpa-severin-wirz/

Available at Amazon here: https://www.amazon.com/Bribery-Beyond-Borders-Foreign-Practices/dp/1735028592

More about Severin here: https://www.linkedin.com/in/severin-wirz-3574b574/

Contact Brent: brent@redflagsrising.com

Contact Mike: michael.huneke@morganlewis.com

Mike & Brent explore the classic “Fraud Triangle” of pressure, opportunity, and rationalization and discuss Brent’s creation of a new “Fraud Diamond Framework” (SM) to help trade compliance (and other) professionals who are looking not to explain past misconduct but instead to prevent future misconduct. They discuss recent news and developments in the export controls world (00:55), how seemingly inconsistent headlines are actually consistent with each other (04:05), and how Edward Fishman’s “impossible triad” concept continues to be a useful tool for understanding what’s happening in geopolitics and trade competition (06:22), and then they launch into their discussion of Brent’s Fraud Diamond Framework (SM) (08:05).

Regarding the Fraud Diamond Framework (SM), they discuss the classic fraud triangle and the backward-looking perspective from which it was derived (09:18), and then explain the Fraud Diamond Framwork’s four elements of pressure (12:08), opportunity (13:06), something that’s too good to be true that comes at a critical time for the business (14:06), and signs of concealment (15:48). Brent next explains the Fraud Diamond Framework (SM) through a historical case study pulled from his own prior experience helping a client with a compliance commercial fraud dispute involving the acquisition of a business in China (17:35), after which they explain how the Fraud Diamond Framework (SM) can help trade compliance teams today (23:02).

They conclude with another installment of Brent’s always popular “Managing Up” segment (24:43).

Contact Brent: brent@redflagsrising.com

Contact Mike: michael.huneke@morganlewis.com

“Chokepoints: American Power in the Age of Economic Warfare” by Edward Fishman: https://a.co/d/3Phvprs

Brent’s original NYU PCCE post, “When Loopholes Create Liability Pitfalls: A Fresh Look at Export Controls” (Aug. 25, 2023): https://wp.nyu.edu/compliance_enforcement/2023/08/25/29814/

As the geopolitical and national political winds continue to swirl, Mike & Brent go back to basics to level-set and provide some foundational first principles of export controls compliance. They discuss the roller-coaster of the Affiliates Rule suspension (01:44); why the real risks from a compliance and enforcement perspective lay just outside of the Rule (02:37); how General Prohibition 10, the full definition of “knowledge” to include “an awareness of a high probability,” and the various inchoate provisions (i.e., causing, aiding and abetting, solicitation and attempt, conspiracy, acting with knowledge, misrepresentation and concealment, intent to evade, and failure to comply with recordkeeping requirements) are the foundational anti-diversion provisions under the U.S. Export Administration Regulations (EAR) (03:02); great listener feedback about how the Affiliates Rule shaped the in-house discussion of diversion risk (05:23); developing and implementing a high probability protocol as the only way to stay grounded in dynamic and challenging times (08:33); recent legislative proposals and hearings, including a recent hearing by a subcommittee of the House Foreign Affairs Committee focused on export controls loopholes, and the dangers of a dissatisfied U.S. Congress (09:42); why the definition of “knowledge” under the EAR is not mere legalese to be lost in the 1,467 pages (as of January 1, 2025) of the EAR but is instead the path forward for both government and industry (14:18); the details and implications of General Prohibition 10 (17:11); the details of the full definition of “knowledge,” including what we can learn from its history in the U.S. Foreign Corrupt Practices Act and, before then, the Model Penal Code (18:48); and recent enforcement activity by DOJ and BIS, and what the activity signals about the government’s next enforcement moves (22:30).

They then conclude with the latest installment of Brent’s increasingly popular “Managing Up” segment (27:14).

Contact Brent: brent@redflagsrising.com

Contact Mike: michael.huneke@morganlewis.com

Brent’s latest NYU Program on Corporate Compliance & Enforcement (PCCE) post, “From Peanuts to Elephant-Sized Penalties: A Fresh Look at Recent U.S. Export Controls Enforcement Developments & Future Trends” (Oct. 31, 2025): https://wp.nyu.edu/compliance_enforcement/2025/10/31/from-peanuts-to-elephant-sized-penalties-a-fresh-look-at-recent-u-s-export-controls-enforcement-developments-future-trends/

Mike & Brent draw inspiration from the current Broadway run of Waiting for Godot starring Keanu Reeves and Alex Winter to suggest some first principals of risk-based export controls compliance to trade compliance teams. They discuss the futility of the oft-reported sentiment in the trade compliance press of wanting more or clearer guidance from the U.S. government about export controls risk management is not necessary, because the guidance is already here and the “high probability” standard offers a path forward (01:03); how the “high probability” standard and a return to anti-diversion first principles is a way to avoid a repeat of the compliance whipsaw effect occasioned by the announcement, then suspension, of the Affiliates Rule (a/k/a the 50% Rule) (03:47); how an example of this is focusing on your compliance and enforcement risks under General Prohibition 10 and the inchoate provisions of U.S. export controls (07:10); how neither the Affiliates Rule’s adoption nor its suspension changed GP10 or the other anti-diversion regulations under U.S. export controls (12:03); why efforts to comply with the Affiliates Rule were not wasted (14:23); how to deal with and overcome “compliance fatigue” in organizations (16:04); Brent’s latest NYU PCCE post (17:59); and why there was an over-focus on item-based classifications relative to knowledge-based end-use and end-user catch-all provisions and GP10 (19:17).

They then conclude with a righteous installment of Brent Carlson’s “Managing Up” (21:36).

“Waiting for Godot” starring Keanu Reeves and Alex Winter is currently playing at the Hudson Theater in New York City until January 4, 2026. For tickets: https://boxoffice.nyc.com/waiting-for-godot/13147/calendar/

Brent’s latest NYU Law School Program on Corporate Compliance & Enforcement post, from October 31, 2025: https://wp.nyu.edu/compliance_enforcement/2025/10/31/from-peanuts-to-elephant-sized-penalties-a-fresh-look-at-recent-u-s-export-controls-enforcement-developments-future-trends/

Brent’s email: brent@redflagsrising.com

Mike’s email: michael.huneke@morganlewis.com

Mike and Brent take a break from Affiliates Rule (delayed) suspension news to focus on practical advice for companies that might be in the middle of U.S. government investigations into alleged export controls violations. They discuss the importance of engaging with the government with an awareness and an appreciation for the latest enforcement trends and signals, particularly regarding the government’s emphasis on the full definition of “knowledge” to include “an awareness of a high probability” (00:49); the importance of not being surprised by these trends in the middle of an investigation (02:52); the dangers to the cost, delay, and outcome of any investigation for failing to perceive the signals through the noise (04:08); the particular relevance of these strategies in defending against allegations of entity-shifting (09:48); the need to consider waiving privilege over prior bad legal advice—especially to avoid paying more to defend an investigation that was triggered by adhering to the prior advice (11:52); what to look for in the terms of a proposed settlement agreement, including whether and how the company will be “covered” if there are post-resolution reports of additional, previously undisclosed pre-resolution misconduct (13:22) and executive officer certification requirements (16:51); and the importance in national security resolutions, where they are imposed, of having post-resolution independent monitors or independent compliance consultants commit to focused, risk-based post-resolution monitoring that direct addresses the root causes of the violations, to avoid “industrial tourism” and to best promote the national security objectives of the United States (19:34).

Then then conclude with the next installment of Brent Carlson’s “Managing Up” segment (23:37).

Brent’s latest NYU Program on Corporate Compliance & Enforcement (PCCE) post, “From Peanuts to Elephant-Sized Penalties: A Fresh Look at Recent U.S. Export Controls Enforcement Developments & Future Trends” (Oct. 31, 2025), https://wp.nyu.edu/compliance_enforcement/2025/10/31/from-peanuts-to-elephant-sized-penalties-a-fresh-look-at-recent-u-s-export-controls-enforcement-developments-future-trends/

Mike & Brent’s prior NYU PCCE post, “Monitoring What Matters: A Fresh Look Proposal to Government and Industry for How Post-Resolution Oversight Can Best Deny Hostile Actors the Means to Cause Deadly Harm” (Mar. 28, 2024), https://wp.nyu.edu/compliance_enforcement/2024/03/28/monitoring-what-matters-a-fresh-look-proposal-to-government-and-industry-for-how-post-resolution-oversight-can-best-deny-hostile-actors-the-means-to-cause-deadly-harm/

Contact Brent: brent@redflagsrising.com

Contact Mike: michael.huneke@morganlewis.com

Fresh off the October 15, 2025, WIT-NC/PAEI/TTRA “Global Trade Compliance Best Practices Conference” in Santa Clara, California, Mike and Brent discuss the practical takeaways of several recent media reports and statements from the U.S. Congress, including how compliance programs that incorporate the high-probability standard give executives and spokespersons the most options. Specifically, they discuss the conference (00:49); the recent Affiliates Rule (01:27); why straightforward statements that a company “complies with the law” might generate cynicism from the public and inquiries as to how from the government (02:59); why it’s important for companies to consider the context in which their public statements will appear, even where they might not agree with the facts asserted in that context (04:06); how delegitimizing the laws in the eyes of the public might be one of the smugglers’ objectives (05:47); how thinking about compliance as never being a one-and-done solution can help avoid pitfalls in public statements (06:54); why it’s dangerous to rely upon assertions by anonymous “legal experts” reported in articles about the existence of loopholes, including because those loopholes do not actually exist (08:49); the importance of keeping in mind, in the context of the Entity List and the Affiliates Rule, that the List is but one part of U.S. export controls and statements that fixate on the Entity List’s applicability expose corporations to questions about their compliance with other catch-all provisions, with General Prohibition 10, and with the various inchoate provisions (10:27); the importance of appreciating that U.S. regulators read the news too (11:40); how the “high probability” standard can help companies in making enhancements to their compliance programs to better support broader public statements as to their compliance with the law (14:41); recent reports about U.S. items being sold for crime control purposes and attention from the U.S. Congress on those reports (15:03); similar risks related to the recent report by the U.S. House of Representatives’ Select Committee on the Chinese Communist Party (17:23); keeping in mind that your own disagreement with U.S. national security policy is not a defense to export controls promulgated in support of that policy (19:02); and the importance of having advisors who are viewed by the government as honest brokers that are not clinging to legacy views about the government’s intentions or authorities (21:07).

Mike and Brent then conclude with another installment of Brent Carlson’s “Managing Up” (23:29).

Contact Brent: brent@redflagsrising.com

Contact Mike: michael.huneke@morganlewis.com

Learn more about the conference’s organizing associations:

Women in International Trade – Northern California (WIT-NC): https://wit-nc.com/

Professional Association of Exporters & Importers (PAEI): https://www.paei.org/

Technology Trade Regulation Alliance (TTRA): https://ttralliance.org/

Mike and Brent take an even deeper dive into the “Affiliates” or “50%” Rule announced by the Bureau of Industry & Security (BIS) on September 29, 2025. They identify several misperceptions in the public discussion, explain why they are misperceptions, and identify the pitfalls of operating under those misperceptions—especially in response to inquiries by BIS about pre-rule due diligence on affiliates of entities on the entity list. Specifically, they discuss why the Affiliates Rule is a close cousin to the Office of Foreign Assets Control’s own 50% rule, but why and how BIS’s Affiliates Rule serves different national security objectives and operates a bit differently (02:42); whether the Affiliates Rule brings new compliance burdens and, if so, risk-based due diligence strategies and likely questions from BIS regarding why (10:26); why in the current geopolitical context the benefit of local, boots-on-the-ground compliance might be overstated—or significantly discounted by the U.S. government—and what to do about it (16:18); why it would be a mistake to think that BIS is not today able to bring enforcement actions based on the Affiliate Rule, especially given their ability to bring enforcement actions on the “full” definition of knowledge to include “an awareness of a high probability” (19:26); and why it is dangerous to think of “knowledge” as only “actual knowledge,” and thereby misperceiving that the new Affiliates Rule—by reminding everyone that the catch-all provision under which the Entity List is promulgated is a strict-liability regulation, even as to awareness—has someone taken away a previously available “absence of actual knowledge” defense (23:00).

Mike and Brent then offer practical tips for applying for the license available under the Affiliates Rule for situations where the exporter, reexporter, or transferor is aware of “red flags” as to ownership that it cannot resolve through risk-based due diligence (28:20).

Mike and Brent then conclude with a special edition of Brent Carlson’s “Managing Up,” in which Brent offers some valuable self-reflection (34:58).

More about Brent: www.redflagsrising.com

Contact Brent: brent@redflagsrising.com

More about Mike: https://www.linkedin.com/in/mhuneke/, https://www.morganlewis.com/bios/michaelhuneke

Contact Mike: michael.huneke@morganlewis.com

BIS’s “Export Control Decision Tree”: https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-732/appendix-Supplement%20No.%201%20to%20Part%20732