Compliance and integrity for businesses
Businesses, companies and organisations must comply with Dutch and international legislation. Respecting, implementing and complying with valid laws and regulations is summarised by the term “compliance”. Governments monitor whether companies and institutions comply with all laws and regulations. An adequate compliance policy, supported by an experienced compliance advisor, is crucial to avoid fines from regulators and even criminal prosecution.
What is compliance?
Compliance refers to adherence to applicable laws and regulations within the specific context of an organisation or company. The term is derived from the verb “to comply” (to adhere to or satisfy). It involves implementing appropriate policies and procedures to ensure that the organisation’s activities comply with established standards. Compliance ensures ethical and responsible conduct within organisations, minimises legal risks and potential violations (non-compliance). Good compliance safeguards the trust of stakeholders and contributes to a culture of integrity.
Compliance meaning and compliance risks
The literal meaning of the word compliance is “adherence”. Compliance is a very important aspect of good corporate governance. It helps companies reduce risks, protect their good reputation and ensure the protection of consumers, employees and partners. Compliance with laws and regulations is a continuous process. Large companies therefore employ a compliance officer, whether mandatory or not. The compliance advisor is responsible for ensuring compliance with laws and regulations, internal policies and regulations, ethical standards within an organisation, and for enforcing and implementing compliance policy.
Compliance with laws and regulations
Proper compliance with laws and regulations is of great importance to organisations in many sectors. A well-thought-out compliance policy is indispensable for dealing with compliance regulations effectively. A compliance investigation is carried out to draw up or review the policy. The investigation can be carried out by both internal and external investigators. The aim of the compliance investigation is to reduce compliance risks and to assess whether a company complies with the law and its own compliance policy.
Why is compliance important?
Installing and maintaining an effective compliance policy helps organisations meet complex compliance obligations. Think of protecting the rights and interests of consumers, employees and investors. This not only ensures legal compliance, but good compliance also reduces various risks and promotes ethical behaviour. Active internal and external compliance with compliance guidelines strengthens stakeholder confidence and lays the foundation for sustainable integrity within organisations.
Examples of compliance and obligations
There are different types of compliance. Some examples of compliance are:
- Regulatory compliance: compliance with laws and regulations established by the government.
- Internal compliance: compliance with internal policies and procedures established by a company itself.
- Professional compliance: compliance with standards and rules that apply to a particular profession or specific industry.
To set up the compliance process and compliance policy, companies must take the following steps:
- Identify relevant laws and regulations: companies must first determine which laws and regulations apply to them.
- Assess the risks: companies must assess the potential consequences of non-compliance with laws and regulations.
- Implement controls: companies must implement controls to ensure compliance.
- Train employees: companies must train employees on compliance issues.
- Monitor compliance: companies must continuously monitor and evaluate compliance programmes.
Is a compliance officer mandatory?
In the Netherlands, not all companies are required to appoint a compliance officer. The Financial Supervision Act (Wft) requires financial companies, such as banks, insurers and investment institutions, to establish a compliance function. This function can be fulfilled by a compliance officer or by a team of compliance professionals.
In addition to the Wft, other laws and regulations may also impose an obligation to appoint a compliance officer. For example, companies operating in the healthcare sector are required to appoint a privacy officer.
In practice, however, it is wise for many companies to appoint a compliance officer, even if there are no legal obligations to do so. A compliance officer can play an important role in helping companies reduce compliance risks and protect their reputation.
In general, companies that find themselves in one of the following situations may consider appointing a compliance officer:
Ø A company is subject to complex or strict laws and regulations.
Ø A company operates in an industry with a high risk of compliance violations.
Ø A company has a large number of employees or transactions.
Ø A company wants to reduce compliance risks and protect its reputation.
More than just complying with the rules
Compliance is often perceived as a burden by companies. A wide variety of guidelines and forms that can significantly slow down or disrupt business processes, close supervision by financial regulators such as the Financial Markets Authority and De Nederlandsche Bank, and to make matters worse, compliance is based on an impenetrable forest of rules. The AFM and DNB, as well as the Personal Data Authority (AP), can revoke licences or impose fines on companies in the event of non-compliance and violations.
In short, compliance is a necessary evil. Right? At first glance, this may seem to be the case, but compliance is more than just ensuring that organisations comply with rules. Compliance within the legal and financial sector therefore often refers to the entirety of measures, reporting and accountability for the day-to-day running of the company in financial or legal areas. In the same way, companies may have to deal with compliance in the areas of safety, privacy or hygiene.
A major stumbling block here is recording the efforts of companies and organisations. Many organisations do comply with the rules. However, failure to submit protocols or insufficient reporting of efforts can still be a reason for enforcement. That may not sound positive, but when used correctly, compliance can give a boost to business activities. The compliance solicitors at Fruytier Lawyers in Business see plenty of opportunities and are happy to assist you in efficiently and effectively organising your compliance as an (external) compliance officer.
Opportunities through compliance: competitive advantage
The regulatory burden in the Netherlands has increased significantly. Consider, for example, the Financial Supervision Act (Wft), the Tabaksblat Code, the Money Laundering and Terrorist Financing (Prevention) Act (Wwft) and other legislation in the field of fraud prevention and insider trading. But even outside the financial sector, there is compliance in the form of self-regulation, national legislation or codes of conduct. Some well-known examples are:
- Dutch Code of Conduct for Scientific Integrity
- General Data Protection Regulation
- Dutch Advertising Code
Nevertheless, the Netherlands still lags far behind countries such as the United States in this respect. For this reason, having compliance in order can give companies an advantage when doing business abroad. Because American companies, for example, can also be held responsible for their business partners, companies that have compliance in order have a significant advantage over competitors that are less compliant. Within the Netherlands, too, companies build a positive image within the sector in which they operate by being a pioneer in complying with relevant compliance rules.
Compliance without worries
Fruytier Lawyers in Business sees compliance as an area full of opportunities. In order for your organisation to experience as many advantages and as few disadvantages as possible, it is important to identify which rules may apply to you. We can then assist you in integrating the rules and guidelines into your business processes. In this way, compliance and documentation will have a minimal impact on your business, while you reap the maximum benefits.
Call on our compliance officers for help
Because you want to focus on your business and your organisation, we can take care of your compliance for you. We will work to make your company as legally compliant as possible, in line with the latest legal developments. As compliance consultants, we also help you to record agreements correctly. This ensures that you are compliant and that everything is measurable and verifiable. Although rules are “blind and broad”, we provide tailor-made solutions. In this way, we generate maximum effect and take care not to disrupt your business processes.
Our expert compliance department offers legal advice and support in drawing up and implementing a compliance policy. Whether it concerns interpreting complex compliance regulations, conducting thorough compliance investigations or developing strategies to minimise risks, a compliance specialist at Fruytier Lawyers in Business is dedicated to helping clients maintain ethical business practices and comply with all applicable laws and standards. We would be happy to discuss the value of compliance for your organisation with you, without obligation. Please contact us for more information about our legal services.