Compliance Officers Play Crucial Role in Germany’s New Business Integrity Law

Germany is set to introduce significant changes to its corporate compliance landscape with the implementation of the “Law to Strengthen Business Integrity” later this year. The law will have a profound impact on German companies, and it is essential that they take immediate action to ensure they are prepared.

Definition of Company and Criminal Liability

The new law defines a company as any legal entity, association or partnership with a commercial purpose, and regulates their criminal liability for the first time in Germany. This means that company-level sanctions can be imposed if offenses are committed that either violate obligations affecting the company, enrich the company, or are intended to do so.

Increased Sanctions Framework

One of the key changes introduced by the law is an increase in the sanctions framework. Companies can now face fines of up to 10% of their average worldwide annual revenue, a significant departure from the current Administrative Offences Act which caps fines at EUR 10 million. The law also introduces the possibility of skimming off up to 100% of the profit earned through the offense itself.

Relevance of Internal Compliance Measures

The new law emphasizes the relevance of internal compliance measures, making it clear that companies without a compliance management system may be found guilty of a punishable criminal offense. The establishment or absence of such a system will also be taken into account when determining sanctions. Internal investigations can play a crucial role in mitigating penalties, with companies that cooperate fully able to reduce their fine by up to 50%.

Foreign Elements

The law also addresses cases involving foreign elements, allowing German companies to be sanctioned for offenses committed abroad if they would have been punishable under German criminal law had they occurred in Germany.

Key Takeaways

• The new law increases the sanctions framework, with fines of up to 10% of a company’s average worldwide annual revenue
• Companies without a compliance management system may be found guilty of a punishable criminal offense
• Internal investigations can play a crucial role in mitigating penalties
• German companies can be sanctioned for offenses committed abroad if they would have been punishable under German criminal law had they occurred in Germany

Conclusion

Germany’s new business integrity law is a significant development in the country’s corporate compliance landscape. To avoid penalties, it is essential that companies conduct a thorough review of their existing compliance structures and expand them where necessary to ensure they are prepared for the new law’s implementation. Compliance officers will play a crucial role in ensuring that companies comply with the new law, and their guidance will be essential in helping companies structure their compliance management systems to limit or avoid penalties. With the law’s implementation due imminently, corporate leaders must take immediate action to ensure they are prepared for the demands of an internal investigation.