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The challenges of the fight against corruption

According to a 2019 report by the International Monetary Fund (IMF), corruption accounts for 20% of global wealth.

In French law, corruption refers to the fact that a person invested with a specific function, public or private, solicits or requests a gift or any advantage in order to perform or abstain from an act within the framework of his functions. So there is active corruption and passive corruption.

The penalty can be up to 10 years in prison and a fine of 1,000,000 euros (Criminal Code, Article 433-1).

What are the challenges of corruption?

1. The issue of sovereignty

The fight against corruption is indeed an element of diplomatic strength

and economic power.

For example, the United States imposes the extraterritoriality of American law on European Union (EU) companies. The American authorities have already condemned European companies.

It therefore appeared necessary to develop a European and national corpus, which was difficult for the EU because of the heterogeneity of its law.

However, France has a significant legal arsenal, consisting in particular the Sapin 2 law of 9 December 2016, which entered into force on 1 June 2017, and other elements such as the regulatory framework for corporate CSR, which includes an anti-corruption component, or the provisions of the Commercial Code. France also has institutions that meet the needs of the fight against corruption, namely the National Financial Prosecutor's Office (PNF), the French Anti-Corruption Agency (AFA), the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and the Autorité des Marchés Financiers (AMF).

Similarly, the United Kingdom has adopted the UK Bribery Act of 8 April 2010 and which entered into force on 1 July 2011, as well as institutions such as the Serious Fraud Office (SFO), the Financial Conduct Authority (FCA), the National Crime Agency (NCA) and the National Economic Crime Centre (NECC).

Apart from France and the United Kingdom, the other EU states have not adopted a specific legal framework for the fight against corruption. However, some States seem to have taken the measure of the importance of such a device, such as Germany, whose anti-corruption law is currently under discussion.

As for the United States, it adopted the Foreign Corrupt Practices Act (FCPA) in 1977, which is indirectly linked to other notable pieces of legislation such as the Sarbanes-Oxley Act of 2002.

2. Financial issues

The legal framework for corruption is accompanied by potentially high penalties. In France, the penalty can be €200,000 for a natural person, and €375,000 to €2,000,000 for a legal person.

In the case of the United States, companies can be subject to penalties of up to $2,000,000 per violation.

In the United Kingdom, fines are unlimited, which is not the case in the United States or France because of the caps. Hence the importance of strictly applying the principle ne bis in idem according to which no one may be prosecuted for the same acts, even under a different classification.

3. The challenges resulting from the health crisis

The coronavirus crisis is an unpredictable risk with significant consequences for stakeholders.

Several alerts were issued in this regard as early as April 2020. GRECO as well as the network of anti-corruption authorities specified by the AFA and a working group set up by the OECD highlighted the increasing risks of corruption in the context of the pandemic.

The sectors exposed to risk are health but also trade, hotels and transport. There are also risks of facilitation payments from public actors in order to accelerate or obtain authorizations for the resumption of activities, such as construction sites or public events for example.

This observation therefore involved operational and financial consequences, such as updating the risk mapping, strengthening procedures and liability clauses, and training teams.

As a result, it is already possible to consider risks of contract renegotiation in the private sector, as well as to see suppliers solicit or accept undue advantages in order to prioritize certain customers.

For public purchasers, the granting of certain public aid could be conditional or favoured by undue advantages offered to public decision-makers.

Compliance constraints

First, there are regulatory requirements, including the implementation of the 8 pillars of the Sapin 2 law, the need to control relations with partners, particularly in countries at risk, the contractualization of commercial relations, the control of financial flows and the necessary articulation of the anti-corruption procedure.

These regulatory requirements also involve organizational constraints, i,e. regulatory monitoring and revision of procedures, risk mapping, internal training, the 3-level internal control system, the internal investigation and whistleblower protection mechanism as well as the outsourcing and automation of the control procedure.

However, all of this has a cost, however, and involves operational, recruitment, training, tools and process investments. The accounting impact is also to be taken into consideration since it is necessary to provision for risks. Finally, it is important to underline the need to take into account the risks of administrative and criminal sanctions.

About Flaminem

Flaminem is a software company that offers a cloud-based platform to digitize the KYC processes of your customers and/or suppliers.


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