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woman explaining what is a compliance strategy is.

Why do international businesses need compliance strategies?

Businesses are responsible for more than their products, services, and returns to their shareholders. Increasingly – especially in the wake of the Covid-19 pandemic – compliance is a hugely important consideration that business owners have to take seriously.

In a sensitive age of important regulation and calls to see corruption stamped out, it’s legally and ethically sensible for businesses to have an anti-bribery and corruption compliance strategy. Having a good compliance programme can help protect a company if one of its employees is found to have paid a bribe. And anti-corruption policies are not only about risk mitigation; they carry an ever-more-important moral imperative.

In this article we’ll ask what compliance is, why it’s necessary for businesses, and how this need presents during a global pandemic.

What is compliance?

Compliance is a policy or strategy that ensures a business is operating within the law in all its activities. It’s not just a passive checklist of standards, but an active process that should prevent and remove corrupt practices within the organisation.

Although most anti-bribery laws take a proportionate approach, and risk varies according to both the sector and size of operation, most businesses, large and small, will need some kind of anti-corruption compliance policy.

Ignorance of regulation and legislation is no excuse. Understandably, more sophisticated businesses often hire compliance officers or whole departments to minimise their risk.

Why do global businesses need an anti-corruption strategy?

The aim of business compliance strategies and anti-corruption measures is not only to protect the company and its directors from trouble. The laws and regulations that organisations must comply with ensure the health and safety of workers, customers, and the wider public and environment.

Beyond these essential safety standards, governments have a duty to prevent corrupt activities, which harm the business sector and the economy as a whole. That’s why countries with tighter regulations tend to have less corruption and are able to attract more foreign investment. Anti-corruption is a sign of strong national institutions and makes a country safer and a more appealing place to do business.

Anti-bribery and corruption compliance

Most of the major exporting countries have laws against the payment of bribes to foreign public officials, and even companies from other countries can find themselves liable under anti-bribery laws if they have a business link to the United States or United Kingdom, for example.

If a company is implicated in bribery, most enforcement authorities will treat it more leniently if the company can show that it had a good compliance programme in place. This helps the company to make the case the bribe was caused by one ‘bad apple’, rather than the whole ‘barrel’ being rotten.

That’s why more and more companies are introducing anti-bribery and corruption compliance programmes. A good programme involves risk assessment, clear rules and procedures for oversight, requirements to do due diligence on agents and suppliers, and a comprehensive training provision.

Risks to businesses failing on compliance

Breaking the law isn’t always intentional, but the penalties can be steep. And aside from fines and even penal sentences for the most egregious lapses, it’s not just consequences from regulatory bodies that companies have to be careful about.

Businesses who fail in their compliance responsibilities can face damage to their reputation, loss of employees and customers, costs of legal defence, downtime, and reduced productivity.

Today consumers and employees are demanding more accountability from corporations. Companies who fail on their ethical standards can risk loss of business through debarment or public censure, bad news going viral on social media, falls in share prices, and even whistle-blowers and walkouts from their own staff.

Nowadays people are more informed and less inclined to accept any level of corruption or failure in corporate responsibility. For any business that cares about its reputation, a compliance strategy is vital.

The importance of compliance during a global pandemic

Besides the shock to physical and mental health that Covid-19 has caused throughout the world, it’s brought fresh challenges to businesses that they’ve hardly or never faced before.

Stretched supply chains, new working practices, government rescue packages, and many more impacts from the pandemic have brought new compliance issues to bear. In the early days of the outbreak, many businesses had trouble and may have overlooked certain areas of their compliance duties for the sake of survival. Some 20 months later, emergency measures are no longer excusable.

Regulators are coming fully back to operation, and risks from employees working from home or cyber criminals taking advantage of Covid-related technology all leave businesses at risk of non-compliance.
When there are big shifts in working practices it’s easy for things to slip through the net. That’s why now more than ever, as we emerge slowly from pandemic restrictions and new ways of working it’s crucial to have compliance teams putting in place robust strategies.

Many UK businesses are facing the double hit of pandemic weakness and financial constraints and supply chain issues as a result of Brexit. At a time when things are tough, the last thing companies want to deal with is an investigation for corruption.

One thing Covid has taught us is it’s impossible to predict what’s coming up next. Something as internationally significant and devasting as the coronavirus pandemic was not on anyone’s calendar. In times like these compliance teams have an important role to play to make sure that trust in institutions and the global economy can stay strong and we can emerge with more ethical and compliant businesses.

Brush up on anti-bribery compliance at Sussex

Anti-bribery and corruption compliance has become a top priority for international businesses. Global capitalism asks companies to comprehend and fulfil corporate requirements in all the territories in which they operate. This can create a highly complex web of regulatory functions that businesses need to be on top of.

Corruption can be deliberate, but in these global markets, it can just as easily be down to negligence. We teach a module on corruption in international business on our online Corruption and Governance MA course. Find out more about tackling compliance issues in your organisation by contacting us today.

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