Temitope Fadeyibi

Lawyer and Global Compliance, Ethics & Policy Professional

A lot of businesses going international have been surprised to find that the global business environment is highly regulated contrary to initial expectations and some businesses have compared it to navigating a complex maze. A friend told me all he expected to do was buy his raw materials, process, and supply to his international clients, but he has been overwhelmed with the requirements, particularly regulatory compliance steps he needs to comply with, including sourcing high-tech equipment and certifications.

This article is from my experience as a lawyer of over 20 years and I have worked extensively on international compliance matters over the last 18 years. I also have experience as senior counsel in two multinationals listed on stock exchanges in the United States and operating in over 70 countries globally.

It should no longer be news that businesses with global aspirations have realized the need to develop effective compliance programs to assist executives, managers, professionals, other employees, and service providers, to understand the laws and regulations applicable to their business operations, both locally, in the United States, and globally.

It is essential that an effective program should cover each element in the compliance process based on the business risks of each organization. The owner of the compliance program should also be clear (e.g., the audit committee), to ensure that it is prepared, formally issued, communicated throughout the organization, and reviewed at intervals.

There have been extensive discuss on the elements of an effective compliance program, but from my work and involvement in several investigations of compliance breaches across the African continent, at the minimum, a compliance program must prevent, detect, and mitigate risks to avoid significant financial and regulatory exposure.

I have identified the following 5 critical elements essential for the successful implementation of a compliance program, based on my experience developing and managing compliance programs for companies with over four thousand employees and contractors, and also from my involvement in the investigation of a major European logistics company by the US Department of Justice:

1. Written policies and procedures. The compliance policies and procedures should be written and accessible to all employees. There should be periodic reviews of the policies based on the compliance environment, violations, and implementation of improvements.
2. Communication. Compliance policies and procedures should be detailed and communicated to all employees and other stakeholders. It is important that notice of any revision is issued and updated policies and procedures are read by all employees at set intervals. The onboarding plan for new employees should also include a requirement to review compliance policies and procedures. An important consideration under communication is to take into account cultural differences and understand local customs.
3. Training. All personnel should undergo frequent compliance training, especially employees on the frontline of regulatory compliance matters. Building fluency is one of the guardrails for an effective compliance program. Compliance training must be culturally appropriate to be effective, especially during the rollout phase.
4. Monitoring and audit. Compliance policies and procedures should be regularly appraised for efficacy. There will likely be an inclination to focus on high-risk topics, but it is essential to review all topics as the risk level may not have an impact on the potential exposure. A monitoring process can be built into the procedure to review the strengths and gaps. An audit should also be conducted at intervals for an independent assessment of the effectiveness of the policies and procedures.
5. Violations and disciplinary guidelines. There should be a procedure and conducive environment to encourage reporting of violations and there should not be any consequence for unsubstantiated reports. In the event of any violation, it is important to conduct a review, identify any gaps, and make necessary updates to the policies and procedures. The records of any investigation and review should be adequately maintained. Appropriate disciplinary action should also be consistently considered and applied as a deterrence for future breaches of the policies and procedures.

Regulatory compliance is now a critical success factor for many organizations and one of the key considerations for businesses to attract investment, funding, and access to key technology, especially companies interested in doing business in or with United States and European companies. Developing and leveraging an effective compliance program is an intangible investment that should guarantee business sustainability and confer a competitive edge.