From the Economic Crimes Act to the Karin Act, how the culture of compliance is advancing and the challenges it poses for companies

There are several milestones that this year will mark a before and after in companies in terms of compliance. The first of these occurred on August 1 with the entry into force of the Karin Law, which seeks to prevent and punish sexual and labor harassment.

This week, moreover, the Personal Data Protection Law has just been passed, which aims to regulate the form and conditions under which personal data is processed, while expectations are growing regarding the implementation of the second part of the Economic Crimes Law, which as of September 1 will extend its scope to companies.

In the latter case, the concern is not only anchored in a specific area of the organization, but is perhaps one of the biggest headaches for the boards of directors, due to the implications of the expansion of the catalog of crimes to more than 200 (from twenty) and that may be criminally prosecuted.

Experts agree that it is this body of law that triggered the interest of corporate governments in taking charge of compliance issues within organizations, moving from a reactive approach to a preventive model.

“Today, boards of directors are talking about compliance. Most are motivated solely by fear, by the risk of liability and exposure to potential sanctions, but some are also beginning to form the conviction that compliance and an ethical culture can become a strategic advantage, a differentiator with respect to the competition,” says AZ partner Rodrigo Albagli, who adds that in this sense consumers, investors and employees prefer to be linked today with responsible companies.

Avalanche of regulations

For lawyer Yoab Bitran, who recently signed on as director of Albagli Zaliasnik’s compliance group, precisely because each of these laws has particularities and specific obligations for companies, “the efficient and effective management of compliance becomes fundamental in order not to duplicate processes. For example, the compliance officer must work in coordination with the company’s data protection officer”.

But also, he says, it is necessary to see how the inconsistencies of the new laws are resolved. “One example is that while the Economic Crimes Law does not contemplate (or rather eliminates) the certification of prevention models, the Personal Data Protection Law encourages the certification of infringement prevention models”.

The good news, Bitran points out, is that all these laws converge in building and sustaining an ethical culture. “This will make it possible to mitigate all risks, whether labor, free competition, data privacy, corruption, etc.”, in a context in which the tools are also common: risk matrices, training, due diligence, policies and procedures, whistleblower hotlines, among other actions.

There are also differences with respect to specific industries. Rodrigo Albagli argues that “although there are risks common to all companies, such as those related to data protection, the level of exposure is very different for companies that handle personal data, for example, healthcare”, and adds that, in general terms, multinationals seem to be better prepared because they have established compliance programs, structures and dedicated teams.

Source: Diario Financiero, August 29, 2024.

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