05 Aug Legal International Compliance
Legal International Compliance
Inheritestate in Argentina counsels clients on the scope, meaning, administration, and enforcement of cross-border regulations that affect international business transactions. With lawyers dedicated to these matters across our offices around the globe, we have one of the largest and most experienced International Regulation & Compliance teams of any major international law firm in the world.
We are committed to providing responsive and clear advice and legal risk assessments to clients on a real time basis. Much of our practice is assisting clients on a day-to-day business transaction, counseling on the applicability and effect of these regulatory regimes on their existing and prospective trade and investment transactions. Our lawyers assist clients with building effective internal compliance programs to reduce risk and promote business by providing candid and sound legal advice and offering solutions that are practical and sensitive to business objectives while keeping in mind the subtleties of these regulatory requirements. These compliance programs can address one or several of these regulatory regimes, but we also offer integrated solutions that cover multiple regimes.
Our practice includes conducting due diligence in mergers, acquisitions, financial offerings, and complex transactions. Our lawyers are frequently engaged by clients to conduct internal reviews, prepare voluntary disclosures, and to defend companies and individuals in civil and criminal enforcement matters.
We also assist clients with these issues under various international or multilateral arrangements. In many of these areas of cross-border regulation, multiple national regimes, compliance requirements and enforcement risks can be present in a single transaction, and thus we provide integrated and comprehensive solutions.
Inheritestate also recognizes that local law is an increasingly important element of any effective global anti-corruption, export control, or sanctions program.
The workload and complexity of issues encountered by law firm compliance officers and managers are increasing daily as a result of both the regulatory regime and the increasingly dynamic nature of the legal services business and the risk scenarios which arise as a consequence.
The introduction of the role of the Compliance Officer for Legal Practice (COLP) and Compliance Officer for Financial Administration (COFA) in law firms has focused attention on the ever increasing need within firms to comply with requisite regulation and best practice and to ensure that their staff is appropriately trained.
This certificated program designed by legal compliance practitioners provides a comprehensive overview of the legal regulatory environment, the role of compliance professionals, their functions and position within the regulatory regime and their relationship with the business and other members of the firm.
Regulatory frameworks are constantly evolving across sectors and around the world. As transparency rises in importance and the costs of non-compliance with laws and regulations increase, businesses everywhere strive to adapt to the growing pressure from regulatory bodies.
With our extensive knowledge of local regulations and our multi jurisdictional capabilities, we are well-positioned to help clients around the world deal effectively and creatively with regulatory and compliance issues. As business has globalized and cross-border transactions have become more complex, the ability to provide appropriate counsel across jurisdictions becomes all the more important.
Our clients come to us to understand their responsibilities, manage risk and lessen the impact of complex regulatory regimes on their transactions or day-to-day operations. Our strong relationships with members of oversight agencies give us the basis to counsel clients with a current and fully informed perspective. We commit our global resources to helping them meet regulatory requirements and keep their businesses running smoothly, no matter where they are based.
We have extensive experience in banking and financial services where we advise on all aspects of regulatory compliance and contentious issues involving the banking, capital markets, and investment fund sectors. Our objective is to create sophisticated strategies that safeguard our clients’ assets and reputations and enable them to concentrate on pursuing their business objectives with confidence, which is helped by the substantive involvement we have had in the development and implementation of the different countries legislation and related guidance.
We have pioneered strategies to protect market participants from the vagaries of an unstable market design and have helped our clients navigate the resulting market failures. We assist clients with regulatory issues, energy project financings, energy company or asset sales and acquisitions, work out assessments, restructurings or bankruptcies and bet-the-company litigations. We work hard to find goal-orientated solutions to the challenges that our clients face based on our extensive understanding of Law International Compliance.
Our lawyers excel at what they do because they are passionate about law and people.
They help businesses expand their teams by sourcing lawyers and compliance professionals with tailored skill sets.
The fact that our professionals have legal backgrounds and understand the legal environment, means they intuitively come to an understanding of what clients require.
Our international presence means we have a comprehensive understanding of legal practices across the world.
A day in the life of a Compliance Officer
It is his job to ensure all activities of the business are carried out within the regulatory framework. In discharging his role he also needs to ensure that his advice to the business takes account of the business objectives and that he demonstrates business acumen. It means that he provides solutions that are business friendly. At best this means that he can advise on potential opportunities to be gained through regulatory change and at worst he can advise the business not to undertake certain activities if it means the business would be exposed to a level of risk that would be difficult to manage
It is important that he understands the business so he gets involved at all levels, including arranging and attending investment committee meetings and reporting on a regular basis. His team should know that they can go to him whenever they have a compliance issue and he will happily help, whether that is giving advice or be reviewing their work.
It is important to note that he doesn’t know everything there is to know about compliance, after all, views and opinions on what is good practice are evolving every day, but he does know where to find the information needed and he has the external support that he can call on for a second opinion.
Much of his time is spent monitoring the controls he has put in place to mitigate compliance risk. He will use this information to identify any trends or new risks to the business and give advice on whether they need to take any remedial action. Remedial action can come in the form of amendments to policy and procedures and/or training and development of the firm’s employees.
He must also ensure that he keeps abreast of regulatory developments; after all, this molds the way we do business. Keeping a track of what the regulator is saying is a good start, so he reads speeches and corporate documents. Enforcement actions on other similar firms are also useful in showing how not to do things. Not only does this keep them compliant but hopefully future proof to changes, and most importantly sustainable.
What does the term ‘compliance’ describe?
The term compliance describes the ability to act according to an order, set of rules or request.
In the context of financial services businesses, compliance operates at two levels.
Level 1 – compliance with the external rules that are imposed upon an organization as a whole.
Level 2 – compliance with internal systems of control that are imposed to achieve compliance with the externally imposed rules.
Compliance stands for following national and international laws and regulations as well as internal policies, guidelines, and procedures.
Limeres has a strong interest in preventing corruption, fraud, misstatements of financial transactions, conflicts of interest, abuse of market power and intellectual property, or theft.
Therefore we implemented a compliance program, which is addressing as well legal requirements.
What does duty, objective and responsibility a Compliance Officer fulfill?
DUTY – The Compliance Officer has a duty to his employer to work with management and staff to identify and manage regulatory risk.
OBJECTIVE – the overriding objectives of a compliance officer should be to ensure that an organization has systems of internal control that adequately measure and manage the risks that it faces.
RESPONSIBILITY – The general responsibility of the Compliance Officer is to provide an in-house compliance service that effectively supports business areas in their duty to comply with relevant laws and regulations and internal procedures.
What are the five key functions of a Compliance Department?
- To identify the risks that an organization faces and advice on them (identification)
- To design and implement controls to protect an organization from those risks (prevention)
- To monitor and report on the effectiveness of those controls in the management of an organization’s exposure to risks (monitoring and detection)
- To resolve compliance difficulties as they occur (resolution)
- To advise the business on rules and controls (advisory)
What is Corporate Governance?
Corporate governance is a highly inclusive concept that covers a number of different aspects about the way in which an organization is managed, directed and governed.
It can be described as a set of relationships between a company’s management, board, shareholders, and other stakeholders, which provides the structure through which the objectives of the company are set. Furthermore, it provides the means of attaining and monitoring performance against those objectives.
What does the term ‘regulation’ mean?
The term ‘regulation’ generally refers to a set of binding rules issued by a private or public body with the necessary authority to supervise compliance with them and apply sanctions in response to the violation of them.
What are five generally accepted key core objectives of financial services regulation?
Although there is no unified theory of financial services the key objectives of regulation is as follows.
- The protection of investors/consumers
- Ensuring that the markets are fair, efficient and transparent
- The reduction of systemic risk
- The reduction of financial crime
- The maintenance of consumer confidence in the financial system
What are three key attributes of effective regulation?
Effective regulation is the regulation that:
- Contributes to the fulfillment of one or more of the core objectives of financial services regulation.
- Maintains an open market that can be participated in by the widest range of appropriate participants with no unnecessary barriers to entry and exit and
- Provides an equal regulatory burden on all participants that meet minimum criteria.
What is primary legislation?
Primary legislation refers to the Law, Act or Ordinance passed by the legislative of a particular jurisdiction.
What is secondary legislation?
The legislature in many jurisdictions has the power to delegate or subordinate law making powers to other agencies that may then make delegated or subordinate legislation often referred to as “secondary” legislation. In the context of financial services, secondary legislation is generally legislation that has been drafted by a regulatory body empowered to do so pursuant to the primary law by which it is established.
What are regulatory codes or rules?
Codes generally set out the broad principles by which a regulated business is expected to conduct its business.
Rules are generally very detailed and relate to every regulated activity and function.
What are regulatory guidance notes?
Guidance can either be in the form of a statement of best practice or a statement of minimum best practice.
Occasionally a regulatory authority will feel compelled to issue detailed guidance to regulated businesses on how it expects them to actually discharge their legal and regulatory obligations. Anti money laundering and terrorist financing is one area where most regulators around the World have issued guidance.
What functions does a regulator usually fulfill?
In broad terms regulators fulfill the following seven functions:
- They lay down rules or principles that determine who can conduct financial services business
- They authorize financial services businesses
- They lay down the rules by which regulated financial services businesses must conduct their business (both prudential and conduct of business rules)
- They supervise compliance with the rules either through desk based supervision or on-site inspections or a mixture of the two
- They conduct investigations into suspected breaches of the rules sometimes in conjunction with other law enforcement bodies
- They enforce the rules
- They co-operate and exchange information with other regulators
What steps does a regulator utilize in its supervisory process?
Many regulators adopt a risk-based approach to supervision and follow a process of supervision that can be divided into the following four steps:
Step 1. Defining the objectives.
Step 2. Obtaining information from regulated businesses.
Step 3. Assessing the risk that regulated businesses face and pose.
Step 4. Taking action in response to the risk assessment
What do two key methods the regulator utilize in supervising regulated businesses?
There are essentially two methods by which compliance with regulatory rules is monitored – Onsite supervision and Offsite desk based supervision.
- On site, supervision entails visits by the staff of a regulator to the offices of a regulated entity, with the objective of satisfying, etc.
- Offsite desk based supervision requires regulated financial services businesses to provide relevant information by means of ‘supervisory returns’ normally prescribed within legislation and or license conditions.
What are the two commonly accepted objectives of prudential regulation?
- To maintain a low probability of insolvency and any consequential loss to an organization’s ultimate customers; and
- To ensure the resolution of the position of any organization whose viability is impaired, while protecting the interests of their customers to the maximum possible extent.
What is the conduct of business rules?
Conduct of business rules govern the manner in which a business conducts itself in its relationships with consumers. Conduct of business rules imposes minimum standards of acceptable conduct upon regulated businesses.
What aspects of the activity of a financial services business would be subject to the conduct of business rules?
- Customer communications
- Customer agreements
- Conflicts of interest
- Customer understanding and suitability
- Customer dealings
- Customer due diligence
- Client assets and money
- Breaches, errors and/or near misses.
What is regulatory enforcement?
Enforcement is a necessary product of the process of authorization and supervision, in the sense that a regulator must enforce compliance with rules. Enforcement is as much about investigating, gathering and sharing information as it is about imposing penalties.
What five processes does regulatory enforcement normally entail?
Enforcement generally entails the following:
- Investigation powers
- Surveillance powers
- The imposition of corrective or remedial action
- The imposition of penalties
What are the common enforcement powers of a regulator?
- Power to inspect and request information
- Power to seek orders to compel a business to comply
- Power to remove directors and auditors;
- Power to appoint an administrator
- Power to impose administrative sanctions and/or to seek orders from courts or tribunals;
- Power to initiate or to refer matters for criminal prosecution;
- Power to suspend operations or trading
What should six basic factors you consider when looking at risks in your organization?
- The nature of the operation
- The diversity of its operations
- The complexity of its business
- The scale of its business
- The volume of transactions
- The size of the transactions
What is our advantage if we are compliant?
Compliance is necessary for a sustainable business – having a clean Compliance record supports continued business and profitability.
A strong Compliance program instills trust in our customers, (potential) employees, investors, and the authorities, and can be an effective marketing tool. Compliance protects all of us and our business.
What are risks of non-compliant behavior?
Non-compliant behavior creates considerable risks. Potential sanctions include exclusion from tenders or requests for proposals, damage claims from customers and competition, penalties from authorities and lawyer fees associated with defending against such sanctions. All of this can result in multi-million payments. Furthermore, individuals can become subject to sanctions including termination of employment, and in certain jurisdiction, individuals can be subject to criminal prosecution. Anyone behaving in a non-compliant manner puts him/herself, his/her colleagues at risk!