Compliance-Management-Systems / Compliance-Checks

Labour law compliance risks include violations of regulations pertaining to working hours, occupational safety regulations, illegal employment, income tax and social security contributions, and minimum wage requirements. These risks can be minimised through sound and carefully designed HR and procurement processes, regular compliance training and, if necessary, internal audits. By thoroughly analysing your status quo, the legal requirements relevant to you and taking your business needs into account, such risks can usually be addressed at an early stage and resolved effectively.

In the area of foreign trade law, export controls and capital and payment transaction regulations are of utmost importance to businesses. Violations can result in substantial fines and enormous reputational damages. Effective compliance management in this area includes the implementation of sound control mechanisms and specific training for your employees.

It is well known that the processing of personal data is subject to strict legal requirements. Data protection violations can result in considerable fines and claims for damages and can permanently impair the trust of your customers and stakeholders. Good data protection compliance therefore includes, among other things, the collection and analysis of all relevant data, the creation of comprehensive documentation and the optimisation of the internal processes in question. Trustworthy handling of personal data strengthens the image of your business and offers a competitive advantage that should not be underestimated.

The Trade Secrets Act (Geschäftsgeheimnisgesetz – GeschGehG) is a central set of regulations for the protection of confidential business information. It protects trade and business secrets from unauthorised access, unauthorised use and disclosure by third parties. Businesses must prove that they have implemented appropriate confidentiality measures in order to enjoy effective legal protection under the Act. If businesses cannot prove that they have proactively taken steps to protect their secrets, they risk losing this legal protection. Effective protection of trade secrets is therefore an essential component of a modern compliance management system (CMS) and crucial for protecting your know-how and thus your competitiveness.

Money laundering is the concealment of the illegal origin of assets. The Money Laundering Act (Geldwäschegesetz) obliges certain companies, particularly banks, financial service providers, commodity traders and estate agents, to introduce appropriate risk management measures and to identify and monitor their business partners (know-your-customer principle). Central obligations in this regard include appropriate risk analyses, internal security measures, documentation, data storage and the submission of Suspicious Activity Reports. Violations of these requirements can result in severe sanctions by the supervising authorities. It is therefore essential to implement all obligations in this area without exception. A systematic analysis of your risk exposure, the definition of clear responsibilities (e.g. by appointing an anti-money laundering officer), smart and regularly reviewed preventive measures, sound processes and controls, and an effective reporting procedure for suspicious cases are not only mandatory, but also ensure the long-term integrity of your company and protect it from liability and reputational risks.

Cyber risks and extortion are on the rise with the growing use of AI in the workplace and the simultaneous escalation of the geopolitical situation – with sometimes fatal consequences for businesses. Good cyber compliance in this area relies on a comprehensive analysis of existing risks, good technical protective measures, regular reviews and the ability to respond quickly in case of an emergency. Good preparation for various emergency scenarios, well-coordinated and, ideally, tested crisis plans, and taking out cyber insurance can be vital in such an emergency.

Corruption, both in private business transactions and in relation to public officials and elected representatives (both nationally and internationally), poses a considerable risk if the applicable rules and best practices in this area are not known. The most effective way to address compliance risks in this area is to have clear anti-corruption rules for dealing with invitations and gifts, transparent approval procedures and regular training as an integral part of your compliance management system.

The German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengfesetz – LkSG) obliges companies to fulfil human rights and environmental due diligence obligations in their supply chains. This includes identifying and assessing risks, implementing preventive and remedial measures, and establishing a complaints procedure. Typical compliance risks within this context include human rights violations, environmental violations, and reputational risks due to negative media coverage. To avoid these risks, businesses should conduct regular risk assessments, implement preventive and remedial measures, and establish a complaints procedure that allows employees, business partners, and other stakeholders to report violations anonymously. Many of the measures required to fulfil the legal obligations can be combined with other elements of a compliance management system (risk analysis, whistleblower system, know-your-customer processes). As a rule, a thorough analysis of your supplier portfolio and the involvement of your business partners in the implementation usually greatly simplifies your compliance processes in this area.

In Germany, companies are obliged to comply with environmental regulations to minimise negative impacts on the environment. Typical compliance risks in environmental law include violations of emission limits, improper waste disposal and illegal deforestation. To avoid these risks, companies should conduct regular environmental audits, use environmentally friendly technologies and offer training for employees on topics relevant and specific to their business. To ensure compliance with environmental regulations and continuous improvement of environmental performance, companies can also seek relevant ISO certifications (e.g. ISO 14001 and ISO 50001). By integrating these management systems, which tend to be more operational and technical in nature, into your compliance management system (e.g. as integrated management systems (IMS)) or by interlinking the systems effectively, you not only ensure adherence to legal compliance requirements, but also increase process efficiency and conserve your internal resources.

Antitrust law prohibits agreements between businesses that could restrict or distort competition (e.g. price fixing, market sharing or agreements on sales volumes). Competition law (or fair-trading law) prohibits unfair business practices. Therefore, the way in which your business and your employees behave in the market, interact with cooperation partners or in associations entails considerable liability risks. Violations can result in fines of up to 10% of annual turnover at group level, and the individuals involved can also be fined. In addition, there is a risk of considerable reputational damage. A good compliance management system thus includes regular risk analyses and a system for identifying and reporting possible violations. Regular training of employees, especially those in the procurement and innovation departments of the business, as well as employees who are active in industry associations on your behalf, is an absolute must in this field.

The MeToo movement has fundamentally changed the way suspected cases of sexual assault are handled in German businesses for some time now, creating a need for action in terms of prevention and investigation of suspected cases. We will gladly advise you on the specifics and pitfalls of these sensitive investigations, which are particularly important for the reputation of the business.

The rapid development of “artificial intelligence” is comprehensively regulated for the first time by the EU AI Act (KI-VO), which obliges businesses of all sizes – including those outside Europe – to implement strict, risk-based compliance management. Violations of these new regulations can be punished with heavy fines of up to €35 million or 7% of global annual turnover. We support you in assessing your AI systems according to risk class and implementing the necessary governance and cybersecurity measures to protect your company from these significant liability risks.