A compliance officer (sometimes referred to as compliance agent or compliance manager) is responsible for ensuring that all employees of a company conduct themselves in a “compliant” manner, that is, in compliance with the law. He or she thus assumes overall responsibility to prevent infringements under criminal law within the company, which would otherwise originally be the responsibility of the company’s management.
Advising companies regarding criminal law does not only consist of defending them in court. The defense actually takes effect much earlier, before a criminal offense is even committed. This task is the duty of a compliance officer.
Compliance managers take measures to prevent the occurrence of crimes in the first place. If a crime does occur nevertheless, they will advise the firm on how to deal with the accusations or facts of the crime respectively. The compliance officer’s duties of supervision and control include:
- the implementation of a compliance management system, meaning an organizational structure that minimizes the risk of criminal offenses among employees
- frequent checks of business or production processes
- educating employees concerning the legal regulations relevant to their work, e.g. by developing internal company guidelines, checklists and training courses
Even the best compliance systems cannot avert all offenses. In this case, it is up to the legal compliance manager to investigate the violation, provide advice on the imposition of sanctions and introduce measures to prevent future violations of similar nature.
If an investigation has already been launched, the compliance officer cooperates with law enforcement authorities to ensure that the matter is resolved consensually and at an early stage so that no proceedings are initiated against the company in front of the general public.
If employees commit administrative offenses or criminal acts in the course of their employment, a corporate fine may be imposed on the company in accordance with Section 30 of the German Administrative Offenses Act (Gesetz über Ordnungswidrigkeiten, OWiG).
The fine can amount to up to EUR 10 million (plus forfeiture of profits) for willful acts. This means that even a single infringement could threaten the very survival of the firm.
Generally, courts and law enforcement agencies may view the lack of a compliance structure as organizational negligence. Conversely, the existence of a compliance officer has a mitigating effect on the amount of the fine.
Managing directors can also reduce their personal liability risk by delegating their supervisory duties to a compliance and legal officer. Due to stricter regulations, a significant increase in the imposition of (high) fines on companies is to be expected, so that the appointment of a compliance officer will become a de-facto duty.
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Many small and medium-sized companies cannot fill up a full-time position for an internal compliance officer. An external compliance officer (similar to an external data protection officer), on the other hand, can significantly reduce the risk of fines without causing excessive expenses.
Additionally, in our experience, fewer ties to the client usually have a positive effect because the compliance officer can evaluate certain events more objectively. This, in turn, means that external compliance specialists can work with authorities at eye level.
WINHELLER is there to provide you with an external compliance officer for your company in Germany. We are also happy to support you in implementing a compliance system tailored to the individual needs of your company.
In addition, we are also at your service for the development of internal control systems (ICS) and tax compliance management systems (TCMS). TCMS ensure that organizations comply with all tax obligations, thereby reducing the risk of liability of those responsible.
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