The Criminalization of Compliance

• In Event: Euroc - Detecting and reacting to Corporate Crime

Abstract

Compliance management is a tool by which companies seek to comply with laws and regulations applicable to them. Following scandals of widespread regulatory violations and corporate crime, establishing or improving a compliance management system is often the industry's response to the deficiencies found. Both national and supranational legislators have discovered and embraced this business-invented tool and, in fulfillment of the original requirements, legally prescribe the establishment of a compliance function or system. Examples are found in the regulation of money laundering prevention, financial fraud, bribery and sustainability. However, when legally mandated compliance measures are not adequately met, compliance management shifts from solving a compliance problem to being the compliance problem itself. Deficiencies in compliance management may qualify as a criminal offence by itself and is as such a basis for criminal prosecution of companies and their executives. In response to the perceived deficiency in compliance management, large companies are moving to create specialized board positions for this purpose, such as the Chief Compliance Officer and the Chief Financial Economic Crime Officer. In doing so, however, these executives themselves become targets of judicial investigations and face increasing risks. This contribution, based on review of available research, explores this trend of the criminalization of compliance.

Author

• Wim Huisman, Vrije Universiteit Amsterdam