Compliance and the Global Economy

It is interesting to take a step back from the micro-world of compliance and examine current trends in compliance and the global marketplace. More companies recognize the importance of compliance – global enforcement is becoming more aggressive, international enforcement and information sharing is increasingly coordinated, and compliance has become a more important requirement for participation in the global marketplace. The importance of compliance cuts across all industries, especially those which are government regulated or government influenced.

What is more interesting is the anti-corruption compliance is being demanded by all the sources of capital and debt — financial institutions, private investors, bond holders and shareholders. Many clients now are required to demonstrate the existence of an effective compliance program before banks will lend them money.  In fact, some banks have even denied funds when they found an anti-corruption compliance program deficient.

This is a remarkable response from the marketplace to increased risk. More players are now requiring more compliance. The ticket to a seat at the global marketplace – whether it is access to capital, sales of stock, access to funding, or buying or selling companies – is anti-corruption compliance. This is not surprising. An anti-corruption enforcement action can have a devastating impact on a company, and a bank’s investment in a company. It is reasonable for banks to include anti-corruption compliance in its due diligence of a company.

As the risk of enforcement increases, the old adage of “penny wise and pound foolish” continues to resonate in the global marketplace. Those companies that choose to ignore this trend do so at their peril and will have to take a seat on the sidelines of the global economy.

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