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What is compliance?

Author: 360 Factors
by 360 Factors
Posted: Feb 24, 2020
compliance sector

Compliance, which comes from the English verb to comply, is nothing more than being in compliance with laws, ethical standards, internal and external regulations.

The objective is that, with this, business risks are minimized. That is, compliance is the guideline that guides the behaviour of a company in the market in which it operates.

A simple definition of what compliance is to define it as a basic business standard. These are actions put into practice, aimed at ensuring ethical and transparent relations between companies and, mainly (but not only) the Government.

Read also: automated risk assessment

Is it clear what compliance is? Hope so! Now I’m going to talk about how it started.

The emergence of compliance dates back to the turn of the 20th century, with the creation of the Central Bank of the United States to be a more flexible, secure and stable financial environment.

In the 1970s, also in the United States, a transnational anti-corruption law, the Foreign Corrupt Practices Act (FCPA), was introduced that toughened the penalties for American organizations involved in corruption abroad.

Subsequently, with the corruption scandals involving private companies and governments, several companies spontaneously started to adopt compliance practices and had a good reception by the market.

With the recent outbreak of several operations to dismantle corruption schemes, the term compliance is increasingly present in the vocabulary of Brazilian entrepreneurs.

In general, a company starts its compliance sector as follows:


Disseminating to the employees themselves the importance of following the standards established in the code of conduct, always remembering that the example comes from above. Recalling that it is extremely important that the company's management acts impeccably.

Creating internal reporting channels, in which employees themselves can report activities that do not comply with the company's precepts.

Making it clear that, in addition to complying with all regulations, the company does not engage in apparently legal practices, but that can be morally questionable. In this way, passing on the much sought after image of an honest and honest company.

Evidently, this movement towards integrating corporate culture with compliance practices did not start with the Anti-Corruption Law.

However, the novelty that this legal diploma brought was the insertion of advantages to companies that have a structured compliance sector, if they fall under the crimes provided for in that Law.

Monitoring of compliance programs is carried out by periodically reviewing the analysis of legal and socio-environmental risks, reviewing and adapting training, specific actions for sensitive and high-risk areas.

But what about the internal audit companies, what are the differences?

Another important point about compliance is to differentiate it from an internal audit. The big difference between these two figures, which at first glance seem to deal with the same subject, is that an audit is designated for a certain time and occurs sporadically, while a compliance team will always act within the company.

In the global scenario, companies that have an active, independent and well-structured compliance sector, have placed themselves at a different level of competition. Therefore, the use of compliance in the corporate environment is more than a mere luxury, it is a necessity.

You have already seen how compliance and its differences for internal audit companies emerged. Mainly, its definition is clear (the duty to comply with acts, rules and laws, for its effective compliance).

So, it's time to talk about the relationship of compliance with the other branches of law.

Business compliance is also the duty to comply with acts and standards. It encompasses not only internal rules and controls, but also external ones that companies need to adapt to.

It is a fact that all business companies need to guide their actions according to the established rules. Whether by the control bodies or by the company's internal rules, both employees and senior management.

Corporate compliance shows the company that the standards followed are in line with the control standards. This in all areas (labour law, business law, right tax and fiscal).


About the Author

360factors provides SaaS based AI enabled platform for Grc (Governance, Risk and Compliance)

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Author: 360 Factors

360 Factors

Member since: Apr 15, 2019
Published articles: 6

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