In March we discussed adequacy in relation to compliance programmes (Organisations' compliance programmes - a question of adequacy), and what is expected now given that almost 10 years has passed since the Bribery Act 2010 came into force. Under increasingly stricken economic times we expect to see a rise in financial crime.

As Covid-19 continues to affect businesses during the Brexit transition period, UK and international entities will need to ensure their compliance regimes take into account potentially diverging systems at a time when there is a greater risk of corruption.

Economic pressure cooker

Following the UK Referendum result in 2016, businesses have been seeking to “Brexit Proof” their operations without clarity as to what the relationship will look like in 2021. This uncertainty combined with the continuing effects of Covid-19 is increasing the risk of financial crime. Financial crime usually rises following an economic crisis, and the decentralisation of tasks to our living rooms has created a unique opportunity for crime to take place in all sectors, with an even greater risk in particular sectors (e.g. financial services) where very strict rules have had to be eased in some respects.

It is crucial that organisations, regardless of size and structure, ensure they do not disregard red flags or loosen compliance regimes at this time, even if products are needed as a matter of urgency. It is vital that organisations continue to undertake due diligence on suppliers, with enhanced due diligence in respect of high risk countries to protect themselves from being the victim of fraud or inadvertently involved in corruption and breaches of sanctions. If your organisation has been affected, or has potentially been affected by corruption during the pandemic, it is essential that internal procedures are followed and disclosures are made to the relevant authorities in accordance with the applicable regulatory regime.

Compliance programs should be stress-tested, ensuring they are preventative and responsive, allowing for swift corrective action if issues are identified. Whilst corrective action may not prevent prosecution, it will demonstrate adequate procedures were in place, providing a defence if the program as a whole is sound, and assist with sentencing.

All organisations, regardless of size or type (including NGO and charities) must have procedures in place. The impact on brand, investment and consumer relations is potentially irreversible if companies get it wrong now.

Follow these links to our sound bites on compliance developments:

• Update on the Impact of the Modern Slavery Act 2015
• Update on Sanctions
• Update on Money Laundering – Unexplained Wealth Orders

What should organisations be doing?

• Check compliance with the relevant industry standards, where applicable. Even if the organisation is not a member of a particular industry body, following industry codes can assist in mitigating risk, especially in highly regulated sectors.
• Ensure your anti-corruption policies are clear, have been implemented, communicated and are effective and enforced, with bespoke training in place.
• Post Covid-19 review the effectiveness of systems to respond to economic pressures and increased risks of corruption.
• International companies should review their policies and procedures to ensure they fully meet the UK regime following the transition period, especially in relation to the enforceability of extra-territorial sanctions.
• Commission bespoke risk assessments when undertaking activities in high risk jurisdictions.
• Stress-test compliance procedures and ensure board level commitment can be demonstrated.

How can we help?

We can assist with:

• commercial contracts to ensure that contractual protections are in place regarding financial crime and labour standards;
• stress-testing your compliance programmes including well-led reviews from a corporate compliance perspective
• policy drafting
• full compliance training