Corporate Risk and Compliance Management Failures: Key Consequences

Consequences for Members of Governing Bodies and Senior Management

When corporate risk and compliance management failures occur, individuals in key positions may face severe consequences.

• Administrative or Regulatory Consequences: Responsible individuals and companies may be subject to massive fines (section 130 Act on Regulatory Offences).
• Senior Manager Accountability: Despite lacking authorization, senior managers who manage a business or perform duties as the owner may still face administrative consequences (section 9 German Act on Regulatory Offences).

Criminal Liability

Individuals in governing bodies and senior management positions can also face criminal liability for their roles in corporate risk and compliance failures.

• Member of Governing Body: Failure to prevent further infringements due to a corporate entity may lead to criminal proceedings.
• Senior Managers and Supervisory Board Members: Those responsible for supervising or maintaining the compliance system may be held criminally liable.

Corporate Compliance Defence

While there is no general statutory corporate compliance defence in Germany, an appropriate compliance system can influence the determination of responsibility and penalties for infringements.

• Consideration by Public Prosecutor or Court: A public prosecutor or court may take into account a company’s compliance system when deciding on fines.
• Correcting Compliance Deficiencies: Companies that address deficiencies in their risk management framework may receive lower fines.