Compliance risks are manifold and they occur on a day to day basis in the con-stantly changing business landscape. The Global Compliance Forum run by DC Business Ambassador Dr. Thomas Durchlaub has set itself the tasks to comprehinsively process the numerous compliance risks om-nipresent in daily economic life for DC-members and other relevant financial actors.
Furthermore, in times of an advancing globalization of the financial markets connected with steadily rising legal requirements, the Global Compliance Forum intends to develop solutions in consultation with the parties involved in order to ensure legaly safe and compliant business practices. This approach is manda-tory in order to contribute to an equitable and trasparent market economy which also constitutes an imperative requirement for a long-term national as well as international peace process.
The area of economic crime constitutes the first focus within this challenging task management. Besides the fight against tax evasion and corruption, the aforementionted topic particularly includes the fight against money laundering, which is also being regarded as a means for combating terrorist financing – par-ticularly since the attacks of September 11th 2001 on the World Trade Center.
Due to the current national and european legislation on the fight against money laundering and the increasing number of terrorist attacks throughout the world, recently also in Europe, the competent state supervisory and law enforcement authorities are expected to accelerate anti-money laundering and terrorist fi-nancing compliance more vigorously than ever. Undoubtedly, this approach is indispensable.
Importance of Compliance
The term „Compliance“ describes the assurance of the fulfillment of statutory provisions and internal corporate directives by the corporate management as well as the timely recognition and minimization of the according risks. Nr. 4.1.3. of the German Corporate Governance Codex states accordingly: „The executive board has to ensure the fulfillment of the statutory provisions and the internal corporate directives as well as to work towards their fulfillment by the group companies (compliance).“ While being „merely“ a non-binding recommendation, this principle naturally does not exempt the enterprises from the fulfillment of their statutory obligations.
This „universal message“ to enterprises to comply with the applicable law is as self-explanatory as its particular requirements are complex at the same time.
The question of risk evalutaion with regard to business decisions as well as to the fulfillment of statutory provisions and internal corporate directives arises in all business sectors. However, depending on the particular sector, the answers to the aforementioned question can substantially differentiate. The following business sectors are typically prone to compliance risks:
• Insurance sector
• Real estate- and transport business
• Contruction industry
• Pharmaceutical industry
• Recycling and waste management
• Public administration and many more.
Experience shows that even the largest global companies, despite of typically being assumed to be managed in accordance with the applicable law, are any-thing but free from legal violations. This is also illustrated by the recent interna-tional corruption scandal within the Volkswagen group over the feigned fulfill-ment of emission standards regarding diesel engines, arleady having resulted in losses worth billions. As of right now, the long term consequences of such inci-dents can only be speculated about.
All the significat business sectors have in common that the diversity as well as complexity of the mandatory compliance regulations has significanty increased over the last few decades – last but not least due to the advancing harmoniza-tion on the european and, to a lesser extent, on the international level. Thus, speaking of an overregulation in certain branches does not appear to be out of touch with reality anymore.
More often than not enterprises are subject to compliance obligations regarding various legal areas, such as:
• Human resources management
• Labor criminal law
• Bankruptcy law
• Data protection law.
Bigger enterprises and company groups can additionally experience compliance risks in the following legal areas:
• Exchange and capital market law
• M&A transactions
• IT security
• Environmental protection
• Product development and product recalls
• Antitrust law and many more.
Fight against Economic Crimes
Regardless of the company´s size, special attention has to be paid to compli-ance requirements which, if not followed correctly, may result in criminal penal-ties and harm the economic growth, particularly in the area of:
• The fight against money laundering
• The fight against tax evasion (tax compliance) as well as
• The fight against corruption.
Thus, the Global Compliance Forum commences its work with the examination of these highly sensitive topics. In order to meet the challenge of processing these extensive topics and especially presenting according solution concepts, being elaborated with private financial actors, diplomats and public authorities, the Global Compliance Forum will dedicate an extensive paper to each of the three aforementioned areas of economic crime.
While doing so the Global Compliance Forum also has the responsibility to balance the public and commerical interest in criminal prosecution against the financial actors´ commercial rights including data protection concerns with utmost scrutiny.
Since many financial actors are merely „intermediaries“ with regard to the ac-cording property crimes, the topic „third party compliance“ has also to be taken into consideration. „Third party compliance“ deals with the evaluation and mini-mization of risks which may arise within a company as a consequence of busi-ness practices with external parties.