Corporate Compliance

Written by: Francisco Letona

The application of good compliance practices in the corporate sphere has not reached the expected level; However, in recent years, these practices have been a trend and have been growing, mainly in large organizations such as transnationals and multinationals.

According to the WORLD COMPLIANCE ASSOCIATION (hereinafter: -WCA-), “ Corporate Compliance ” is a set of procedures and good practices adopted by organizations to identify and classify the operational and legal risks they face and establish internal mechanisms for prevention, management, control and reaction against them. “

Currently, due compliance is no longer an option for many organizations and has become an essential requirement within their policies that is intended to comply with legal precepts or to avoid contingencies that put stability, commercial prestige at risk. and business operability.

The WCA considers that: “The benefits of compliance are diverse for those organizations that decide to implement a regulatory compliance management system, depending on the scope of their system and the types of risks to consider, whether criminal, tax, operational, reputational and labor. “

Good compliance practices are intended to minimize risks within an organization. Therefore, it is important to contemplate as broadly as possible the areas in which such risks may exist, for example: relations with public officials, clients, suppliers, personnel selection, procurement procedures, accountability, management of economic resources, among others. Therefore, it is essential to establish procedures, study and analyze the relationships that an organization has (through its representatives) with third parties.

It is important to take into account that good practices, in addition to promoting risk prevention, mainly seek to create a culture of due compliance among employees, managers, clients, suppliers and all those agents that have a direct or indirect relationship with the organization, this with the aim of promoting the development of activities and businesses in accordance with current and ethical regulations.

The Compliance is not rigid. Within organizations, prevention models can be established, considered these as norms, protocols, rules and procedures for: crime prevention, risk mitigation, financial resource management, obligations and prohibitions, as well as penalties for non-compliance with these.

These practices are not done by themselves. The Law against Money or Other Assets Laundering establishes the obligation for some people to have compliance officers. As for the other entities, it will be each one, depending on its structure and type of business, that seeks its best option to implement these good practices, choosing prevention delegates, compliance officers, internal or external auditors, legal team , and why not mention, those who occupy management or managerial positions that hold legal representation. Consequently, the recklessness or negligence in the performance of the functions carried out by a member of the organization (individually), with a position of this nature, may represent a certain responsibility and even, suppose the imposition of a sanction in the event of a breach, the foregoing without prejudice to the legal consequences in which the same organization as a legal entity may be involved. Currently, Guatemalan legislation already includes some regulations related to this issue, to mention a few: Penal Code, Law against Money or Other Assets Laundering, Law Against Organized Crime, among others.

Article 38 of the Guatemalan Penal Code, underwent a reform in 2012, contemplating more broadly the criminal responsibility of legal persons, establishing: “With regard to legal persons, directors, managers, executives, representatives, administrators, officials or employees of them, who have intervened in the act and without whose participation it would not have been carried out, will be held responsible for the respective crimes and will be sanctioned with the same penalties indicated in this Code for individual persons. Legal persons will be responsible in all cases where, with their authorization or consent, their directors, managers, executives, representatives, administrators, officers or employees of them participate; in addition, when any of the following circumstances occurs: a) When the criminal act is committed due to the omission of control or supervision and the results are favorable. b) When the criminal act is committed by decision of the decision-making body. In all crimes where legal persons are responsible and a penalty is not indicated, a fine will be imposed from ten thousand dollars (US $ 10,000.00) to six hundred twenty-five thousand dollars of the United States of America (US $ 625,000.00), or its equivalent in currency national. The fine will be determined according to the economic capacity of the legal person and will be set taking into account the circumstances in which the crime was committed. In case of recidivism, the definitive cancellation of its legal personality will be ordered. ” The fine will be determined according to the economic capacity of the legal person and will be set taking into account the circumstances in which the crime was committed. In case of recidivism, the definitive cancellation of its legal personality will be ordered. ” The fine will be determined according to the economic capacity of the legal person and will be set taking into account the circumstances in which the crime was committed. In case of recidivism, the definitive cancellation of its legal personality will be ordered. “

This norm is the same reflection of the legal consequence that could derive from bad practices, including corruption, money laundering and others, both internally and externally in an organization, also taking into account relations with third parties (private or public). ). Obviously the damage that is caused is serious, mainly due to the penalties that the commission of a crime entails for individual people, and why not say, for an organization, such as millionaire fines, reputational damage and even definitive cancellation of legal personality.

More and more countries are incorporating compliance standards, so it is important to start as soon as possible with the implementation of these practices in all types of organizations.

As the WCA states: ” The risks to be prevented are those that carry consequences such as reputational damage, the imposition of significant fines and penalties, business losses due to non-enforceable contracts or the exclusion of public tenders or subsidies, among others.”

There is no doubt that good corporate compliance practices are of great benefit to an organization. Ethical standards have evolved in recent years, so dissemination is necessary so that people know the rules and can clearly delimit between what is right and what is wrong. Likewise, it must be made known which are the rules that must be respected and considered in a given situation.

References:

  1. World Compliance Association (WCA). Available on the internet: http://www.worldcomplianceassociation.com/quienes_somos.php . Consulted: 04/10/2020
  2. World Compliance Association (WCA). Available on the internet: http://www.worldcomplianceassociation.com/que-es-compliance.php Accessed: 04/10/2020
  3. Congress of the Republic of Guatemala, Penal Code, Decree 17-73.

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