Compliance is one of the most relevant topics on the agenda of practices that should be adopted by companies committed to applying work and management procedures in accordance with standards and legislation.

Thus, compliance ultimately helps companies understand the importance of its use in their control and management programs, even though there is still a perceived lack of understanding among managers regarding the technical conditions for applying compliance in companies.

That being said, this article aims to provide lawyers and legal professionals with clarification on the requirements for implementing compliance practices in companies across various sectors. Let's get started?

What is compliance?

Compliance is an English term derived from the verb "to comply," which has become a common "crutch" for those who need to talk about conformity. A free translation from Portuguese means to fulfill, obey, and execute what has been determined.

This compliance with laws and regulations, which largely translate into a company code of conduct that must obviously be followed, underlies all policies and procedures adopted by companies. It's important to remember that every procedure adopted there is based on the principles and values ​​upheld by the company in question.

In fact, it consists of the duty to promote a culture that encourages ethics and the pursuit of the organization's social purpose in accordance with the law among all members, from managers to operators.
The topic of compliance, although a well-known tool for professionals working in compliance, such as internal control and audit agents, has gained even more prominence in recent years.

This is because, consequently, there have been major scandals in Brazil and around the world involving corruption and money laundering. Compliance practices are already widely used worldwide, but in Brazil, they truly began with the publication of Law No. 9.613/98 by the National Congress.

This legislation addresses crimes of money laundering and concealment of assets, the prevention of the use of the National Financial System for the illicit acts foreseen in said law, and creates the Council for the Control of Financial Activities (COAF), the Brazilian financial intelligence unit, and an agency within the Ministry of Finance.

It is important to mention some legal milestones that contributed to the consolidation of compliance as an instrument of ethics and integrity in business, starting with the US Foreign Corrupt Practices Act (FCPA), enacted in 1977, which aimed to control the payment of bribes to foreign public officials and thus, in an attempt to restore the domestic market in the United States.

It is clear that compliance is strongly related to the fight against corruption. But on the other hand, compliance goes far beyond that; it's about people. It is guided by decisions, made by managers or employees, who should strive to base their actions on corporate responsibility, always choosing to do what is right, until this behavior becomes natural.

These are hypothetical scenarios for implementing compliance:

• Implementation of new products and services;
• Technology implementation;
• In production and distribution systems;
• In relationships with suppliers, partners, and customers;
• With public authorities, society, and the environment.

Therefore, it consists of planning the prevention of risks of misconduct and legal non-compliance, as well as incorporating methods to detect and control them. All this through a compliance program, which is also known as an integrity program.

Therefore, the impacts of implementing the program are diverse; compliance is able to promote:

• Cost reduction related to legal liabilities;
• Neutralizing the risk of administrative sanctions – for example, fines and penalties;
• Planning and reducing the business's tax burden;
• Greater legal certainty in commercial relationships with clients, partners, suppliers, and stakeholders;
• Gaining greater credibility and fostering a good relationship with regulatory bodies;
• Protecting and improving the company's institutional image with the market, investors, and shareholders;
• Increased competitiveness and profitability of the business.

Compliance in public and private companies

Compliance can be used in both the public and private sectors. In companies, it typically motivates managers to adopt a more proactive and preventative approach to managing and addressing the risks inherent in business activity and that compromise its sustainability, such as:

• Labor disputes;
• Tax problems;
• Fines and sanctions imposed by direct or indirect public administration;
• Damage to physical property;
• Failures in IT tools, systems, and the security of stored and shared information;
• Failures in hiring clients, partners, and suppliers;
• Fraud and financial misconduct by employees holding positions of trust and management;
• Corruption of public officials;
• Money laundering.

Compliance is one of the pillars of corporate governance, along with trust and transparency (disclosure); fairness, summarized in the loyalty of managers to the company's interests; and accountability.

Finally, it relates to the public disclosure of accounts to those interested in a particular business, as well as holding managers and subordinates accountable for any illegal act committed.
Responsibility in compliance

Initially addressed in Brazil within the framework of the original Money Laundering Law (Law No. 9.613), the concepts of criminal compliance underwent profound changes, especially after the entry into force of Law No. 12.683, which restructured the entire dynamic related to the criminal treatment of money laundering.

Furthermore, one of the main innovations of the Anti-Corruption Law (Law 12.846/2013) was to establish hypotheses of strict liability for legal entities involved in acts of corruption.

Companies are responsible for creating instruments to prevent irregularities, as well as for suppressing acts committed in violation of the law, under penalty of strict liability and the imposition of rigorous sanctions provided for in Article 19 of Law No. 12.846/2013, applied proportionally to the conduct committed.

Article 19. Due to the commission of acts foreseen in Article 5 of this Law, the Union, the States, the Federal District and the Municipalities, through their respective Public Attorney's Offices or judicial representation bodies, or equivalents, and the Public Prosecutor's Office, may file an action with a view to applying the following sanctions to the offending legal entities:

I – forfeiture of assets, rights or values ​​that represent an advantage or benefit directly or indirectly obtained from the infraction, without prejudice to the rights of the injured party or a bona fide third party;
II – partial suspension or prohibition of its activities;
III – compulsory dissolution of the legal entity;
IV – prohibition from receiving incentives, subsidies, grants, donations or loans from public bodies or entities and from public financial institutions or those controlled by the public authorities, for a minimum period of 1 (one) and a maximum of 5 (five) years.

Therefore, sanctions may be applied individually or cumulatively. The Public Prosecutor's Office, the Public Attorney's Office, or the judicial representation body or equivalent of the public entity may request the freezing of assets, rights, or values ​​necessary to guarantee the payment of the fine or the full reparation of the damage caused, as provided for in Article 7, without prejudice to the rights of a bona fide third party.

The role of the lawyer in compliance.

Lawyers have a strong appreciation for compliance because they are essential in formulating codes of conduct that conform to laws and regulations. Therefore, it's clear that the more in tune a lawyer is with compliance and its application methods, the better the results will be.

In many companies, regardless of their specific industry, it is highly valuable to have pre-determined, documented procedures for presentation to potential clients. Therefore, the role of a lawyer is fundamental in the secure production of this document, aligned with the company's values.

Because it requires knowledge of a complex chain of regulatory norms for a wide variety of activities, the role of the lawyer is very important. In this scenario, the compliance lawyer stands out within companies of all segments in Brazil and worldwide, especially in the legal-economic system.

Legal professionals interested in this area should seek to expand their knowledge in non-legal topics, such as audit and due diligence systems, administrative, financial, and accounting matters, among others.

Therefore, training for lawyers in compliance is a fundamental requirement for effective guidance, identification, and development of the best program to be adapted and implemented within the organizational context of each company.

References

ASSI, Marcos. Compliance: how to implement it. São Paulo: Trevisan, 2018.

LEC Blog. Definitely Understand the Role of the Lawyer in Compliance. Brazil, 2019.

LAW No. 12.846, OF AUGUST 1, 2013.

LAW No. 12.683, OF JULY 9, 2012.