What is compliance?
When it comes to compliance, there is a common consensus that companies together with their managers and employees achieve in accordance with the rules of law or moral and ethical principles through all their transactions.
The word compliance, which is a concept, institution and principle of Anglo-Saxon origin, is derived from the verb to comply (i.e., to comply with consent, to obey) in English. This concept, which we can define as “acting according to certain accepted standards”, is not only in the field of law. It has applications and terminological equivalents in many topics such as medical, telecommunications, trade, informatics and the environment.
When we think about the term compliance, the first thing that comes to mind is the field of law; the equivalent of the expression compliance is compliance with the law, that is, compliance with the law. In other words, it is the implementation of these provisions under all circumstances, in accordance with the provisions determined by the legislator. Therefore, it is to comply with laws, statutes, regulations, communiqués and other regulatory legislation, namely the regulations in positive law or universal law, as well as moral and ethical rules. Of course, the list of those covered by these obligations is not limited to real persons. Public or private legal entities are also included in this scope. Again, this includes the legislative and executive branches, and even the judiciary. In this context, all of the relevant institutions and organizations must comply with all the legal regulations in which they are in the field of application; they have to carry out all their actions and transactions in accordance with the provisions of the relevant legislation, as well as the universal rules of law, moral and ethical principles. In addition, another phenomenon that is meant when compliance is mentioned is undoubtedly the expression of institutional compliance. True to its name, this term refers to the actions and programs an organization follows to ensure compliance with internal policies and procedures, or rules and external regulations adopted by authorities. Because institutionalism is based on the relationships between all the stakeholders of a company. Simply, with a corporate management approach, guidelines are defined and it is determined who has the authority to make decisions and manage the organization. A healthy corporate governance structure is essential at the point of corporate compliance.
The concept of compliance was first coined in the United States of America (the US), both as an expression and as a legal tool. In the context of legal and/or commercial means, there is not yet a complete consensus around the concept. When it comes to compliance, there is a common consensus that companies together with their managers and employees achieve in accordance with the rules of law or moral and ethical principles in all their transactions. As such, due to the increasing number of regulations and the need for transparency, companies and even government agencies are increasingly adopting the use of consolidated control sets (e.g., Ethics and Compliance Policy or Compliance Program). However, the phenomenon of compliance varies not only according to the sector but often even according to the place where it is applied. This is often the result of responses to changing goals and needs in different countries, industries and policy contexts. On the other hand, the standards titled ISO 37301:2021, published by the International Organization for Standardization (ISO) in the past months not only underline how compliance and risk managers should work but also fills a very important gap in standardizing compliance management systems.
Although compliance is a concept that has not yet been internalized within some important jurisdictions with regard to legislation, it is gaining more and more importance. Although this concept means to act in accordance with all the rules in force in general, it also means that it is necessary to act in accordance with international agreements such as the United Nations Convention Against Corruption and the OECD Anti-Bribery Convention. Therefore, in order to protect its international reputation, all countries have to ensure that the violations committed by real and legal persons are supervised and sanctions are imposed on them.
The main purpose of the concept of compliance is the protection of human rights. In this context, it is the use of a compliance agency as a deterrent in order to prevent unlawful and immoral acts such as child labour, forced labour, discrimination, sexual harassment and mobbing. In parallel, what is meant by compliance in the context of commercial law is to ensure that companies and their managers or employees are informed and trained about legal regulations and act in accordance with the aforementioned rules. Another major branch where the concept of compliance finds application is labour law. Theories developed in this context; are supposed to comply with all kinds of legislation such as improving the working conditions of the workers, taking measures to prevent work accidents, and protecting the material and moral interests and other rights of the workers. Moreover, it imposes duties and responsibilities on employers in these matters. Another basic discipline in the concept of compliance embodies is criminal law. In this context, the main purpose of the compliance phenomenon is bribery, it is the prevention of crimes such as money laundering, financing of terrorism, tax evasion, cartel and other violations of competition, disclosure of trade secrets, insider trading, and crimes against the environment.
Another principle that the concept of compliance is similar to is the institution called due process of law in Anglo-Saxon thought. The source of this principle is the Magna Carta Libertatum declaration dated 1215. So much so that this principle, which aims to prevent political powers from misusing their power and therefore to protect the rights and freedoms of citizens, is a constitutional guarantee. Similarly, the Fifth Amendment to the US Constitution states that political power cannot deprive anyone of their life, liberty, and property without proper legal procedures. This principle is binding not only for political powers but also for judicial organs that administer and distribute justice. In summary, this principle is a reflection of the concept of compliance within the political and administrative fields.
This article has been first published in JUNSHU Ethics & Compliance Newsletter. In case you shall receive further volumes, please feel free to subscribe through the embedded link.
