Compliance Policies and Procedures for small Business

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Information about Compliance Policies and Procedures for small Business
Business & Mgmt

Published on February 19, 2014

Author: b2b-compliance

Source: slideshare.net

Description

As a result of new anti-bribery laws (i.e. UK Bribery Act), multinational companies are under increased pressure to carefully select their Business Partners in critical countries. The standard procedure is a "Compliance Due Diligence" that combines a questionnaire process, background checks and the data evaluation. Small businesses must prepare for these check and implement at least a basic Compliance framework in order to qualify for multinational business partners. The framework must include most relevant Compliance policies and procedures as well as Compliance training.

Why small business needs a basic Compliance Framework Applying compliance questionnaires for selecting Business Partners © b2b-compliance.com 2013 1

Your benefits from this presentation  Understand the Business Partner Compliance Due Diligence  procedures that are applied by more and more multinational companies for selecting their third party providers How can small business set up a basic Compliance framework and remain competitive in international business © b2b-compliance.com 2013 2

Due Diligence within the Business Partner selection process is key to demonstrate effective compliance procedures • • • Multinational companies are under increased pressure to demonstrate adequate procedures for the proper selection, management and monitoring of their Business Partners. Failure to do so can result in civil and criminal liability (e.g. under the United Kingdom Bribery Act of 2010) and can lead to severe reputational damages. Implemented measures must be proportionate to the risk environment a company faces. The higher the risks related to an industry, country or go-to-market strategy are, the stricter must be the Due Diligence procedures applied. © b2b-compliance.com 2013 3

What does Due Diligence in the context of the Business Partner selection process exactly mean? • • • • • To apply a questionnaire procedure to obtain relevant stakeholder and company information directly from the source. To let the Business Partner certify that he will comply with all legal requirements and desired business conduct standards. To obtain information on the Business Partner from an independent source. To conduct a screening of company stakeholders and legal entities against most relevant international sanction-, PEP and terror-lists. To be able to recognize and analyze “Red Flags”. © b2b-compliance.com 2013 4

Why is a Compliance questionnaire so important? 1. 2. 3. To obtain all relevant master data from a potential Business Partner. According to our experience it is extremely difficult to get reliable information from service providers when it comes to smaller entities and certain regions/countries. To document that you have clearly communicated the rules and expectations on compliant business conduct to your potential Partner. A web-based questionnaire is a great instrument to let the Business Partner certify that he will meet all legal requirements in the course of the services he intends to render for you. © b2b-compliance.com 2013 5

What is a Compliance questionnaire and what should it be used for? • • • A Compliance questionnaire must be used for critical Business Partners before a contractual obligation is made. Critical Business Partners are “associated parties” under the definition of the UK Bribery Act, section 7. In general, these parties are able to influence the decisions of third parties in the interest of the principal (e.g. sales intermediaries). The questionnaire must be designed to (1) obtain all relevant master data on the company and its stakeholders, (2) detect typical Red Flags (indicators for potential Compliance violations), (3) instruct the Business Partner on the expectations in terms of compliant business conduct and (4) obtain a compliance certification. © b2b-compliance.com 2013 6

Example: Business Partner Questionnaire content Key data 1. Legal name of company 2. Address of legal registration 3. Invoicing address 4. Foundation date 5. Name(s) of legal representative(s) 6. Name(s) of shareholder(s) 7. VAT / company registration number 8. IBAN used for bank transactions with principal 9. References 10. …. © b2b-compliance.com 2013 7

Example: Business Partner Questionnaire content Compliance questions 1. 2. 3. 4. 5. 6. 7. 8. Stakeholders: PEP / public official involvement Acceptance of principal’s code of conduct and/or other principles Does Business Partner provide regular Compliance trainings? Does Business Partner have a Code of Conduct and/or an Anti-BriberyPolicy? Does Business Partner have a whistleblowing procedure? Does any stakeholder have a conflict of interest when being engaged for principal’s business? Will core services be outsourced to third parties? … © b2b-compliance.com 2013 8

Data evaluation 1. The completed questionnaire must be checked by knowledgeable staff who is able to recognize and analyze “Red Flags”. • Example for a “Red Flag”: Country of company registration, territory of service and country of bank account do not match 2. Additional information from the internal Business Manager who is in charge for the Business Partner selection should be obtained. • Example: compensation structure, nature of service 3. Additional background checks (via internet, open source or service providers) and a sanction list screening must be conducted. 4. The system should automatically calculate a risk score based on the information provided. © b2b-compliance.com 2013 9

Resume • • Compliance questionnaires have become a wide spread tool to assess compliance and ethics of potential Business Partners To implement an effective procedure (that goes beyond windowdressing) organizations should consider the following watch-outs: • • • • Effective implementation begins with the right questions, based on a riskassessment (e.g. you need other questions, if you have no FCPA exposure etc.) Effective implementation needs proper system support: do not even consider managing the volume of information via Excel (!) by sending files back and forth Effective implementation requires training. Employees involved in the process must be able to recognize red flags among the information provided Effective implementation requires skills and resources to scrutinize and manage critical cases once red flags have been identified (exception and approval flows) © b2b-compliance.com 2013 10

Implications for small businesses • • • • Be prepared to answer Compliance questionnaires from multinational companies Multinational companies will not engage into business with partners showing “Red Flags” (e.g. matches in watch lists, public officials as stakeholders, in- transparent company structures, trustees as legal representatives etc. ) The best way to pass Compliance checks is your reputation and a history of compliant and ethical business conduct Make sure, you have implemented - at least – a basic Compliance framework (Code of Conduct and other policies, Compliance Training to employees etc.) © b2b-compliance.com 2013 11

Thank you B2b-compliance.com is the web resource center for Compliance training material and policies Ready-to-go solutions include for example • Code of Conduct templates • Anti-Bribery Policies • Anti-Trust Training • Conflict of Interest Training • Proper Behavior at the Workplace Training © b2b-compliance.com 2013 12

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