The State of Compliance: A Fresh Look

One of the most popular blog entries I have written in my young blogging career was about the future of Chief Compliance Officers which was entitled “Chief Compliance Officers: The Evolving Picture.”  (A link is HERE.)

I received a number of comments about the entry and I wanted to take a fresh look at some of the issues.

I am continuing to work with companies dedicated to elevating compliance officers in the organizational chart.  This is a welcome sign and reflects growing sensitivity in the business world to anti-corruption compliance.  On the other hand, more companies need to consider creating Compliance Committees at the Board level.  A recent estimate I read was only 25 percent of companies have a Compliance Committee at the Board level.  In today’s world, I think it is too much to ask an Audit Committee to monitor effectively a Company’s financial auditing functions while ensuring compliance with the myriad of regulations and legal requirements.  The elevation of the compliance function requires a talented and dedicated compliance staff, along with Board support with a Compliance Committee.  Or as I like to short hand it — the CCO needs a CC at the Board.

Companies are definitely upgrading compliance operations, dedicating more resources, and looking for more compliance solutions — be it personnel, software support tools and other means by which to elevate compliance.  Compliance officers, who are successful, can certainly expect to rise within a company by avoiding regulatory and legal challenges.

Companies that continue to ignore compliance are definitely asking for trouble.  The enforcement landscape has changed dramatically under the Obama Administration and there is no end in sight to this continuing environment.

On some more specific issues in the anti-corruption area, companies are moving beyond the requirements of the FCPA and stretching into best practices in the area of bribery in general and facilitation payments.

Even in those cases where the UK Bribery Act does not apply, companies are deciding to enforce a general prohibition against bribery.  One convenient result of such a policy is there is no need to engage in hair-splitting over who or who is not a “foreign official” under the FCPA; rather, the act is barred no matter who  the potential recipient of the bribe.

Most companies now have decided to prohibit all “facilitation” payments.  Some companies have decided that it is too risky to allow some payments to government officials while prohibiting others.  The temptation to cross the line is too much and the enforcement of such a limitation is too difficult for compliance and legal staff. 

All in all, the news from the compliance front is better but some improvements can be made. 

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