Global Expansion is Challenging Compliance


“We can’t change human nature, or the pressures of business and the economic/political backdrop, but we can change how we deal with compliance” states Crispin Rapinet,  partner at Hogan Lovells, in the 2020 report providing an overview of the challenges for multinationals on all aspects of anti-bribery & corruption.

The report highlights how multinationals in Europe, the U.S., and Asia are dealing with the pressure of global growth while balancing  ABC's concerns when investing in Africa, Asia and Latin America.

Regulatory pressure is increasing constantly, and ABC demands are growing with it. Nevertheless, most of the organizations are cutting the overall budget or not increasing it according to the demand of work requested by the ever-moving regulatory landscape. Compliance teams have not grown in recent years – only 42% of the compliance teams had the budget increased in 2019/2020 compared to the same study in 2016.


compliance department budget in 2020Compliance officers feel the pressure to grow to emerging markets, such as Argentina, Brazil, China, and Indonesia but due to a history of corruption scandals executives raise concerns around transparency in these countries. Pressure for compliance is also high, risk and compliance budgets should not be reduced as anti-bribery and corruption repercussion can cost a lot to the business.

In sum, organizations need to have a great understanding and be prepared before entering a new market. The potential growth requires companies to take a risk-based approach and develop an ABC program to combat corruption. In Latin America and Asia, corporations will face cultural challenges, such as a culture of non-compliance and corruption, to address that companies must prioritize staff training. In addition, policies must be dynamic and regularly refreshed as there is no one-fits-all program especially when the culture of the country is so different from its headquarters.

Sustainable growth requires a strong compliance program administered by an individual with enough authority, expertise, and resources. The program should be endorsed by the board of directors to be successful. Seek legal and compliance advice and experts in these markets will drive the organization to grow, preventing and detecting acts of corruption.


Risky Markets

The research suggests that the riskiest markets for these companies according to compliance officers are Asia, Latin America, and Africa. However, due to the correlation between bribery and corruption in these regions law enforcement has been increasing in the last 10 years to improve reputation and attract businesses.

The fear before entering these markets is that corruption is in live demonstrations after so many scandals in the past years. And perhaps, U.S. and European multinationals find difficult to manage ABC effectively with poor anti-bribery and corruption enforcement. In many cases, government corruption is causing the burden in the emerging markets, 82% of compliance officers would avoid these markets due to government corruption.

Among compliance officers, ABC concerns vary by region according to Hogan Lovells study:


  • China 57%
  • Japan 35%
  • Hong Kong 34%
  • Indonesia 20%
  • Malaysia 18%

Latin America

  • Brazil 44%
  • Colombia 37%
  • Mexico 35%
  • Venezuela 27%
  • Argentina 25%


  • Egypt 33%
  • South Africa 28%
  • Nigeria 24%
  • Morocco 23%
  • Congo Brazzaville 21%

Compliance risks are high but implementing ABC procedures and regular training in local language drive the teams to comply and reduce the risks. Multinationals should not expect local operations to operate just in English as it might lead to misunderstanding and increase the risks of non-compliance among the team. “When it comes to instruction and supervision of employees, sending around the policy or posting it on an intranet is not enough,” says Desiree Maier when enforcing the importance of quality face to face training and revised policy.

Compliance Challenges

According to Hogan Lovells study, 52% of compliance leaders say that many people in their business fail to follow ABC procedures. "Compliance teams are dealing with increased complexity and intensity, as new layers of AB&C legislation are introduced. While companies could previously adopt a ‘one size fits all’ approach by adhering to the strictest legislation, different laws now require different behaviors. Complying with the U.S. Foreign Corrupt Practices Act or the UK Bribery Act does not necessarily mean compliance with France’s Sapin II legislation…”

Further, compliance teams have also to deal with data privacy and regulatory changes, increasing the pressure. According to specialists, separate teams to look after different aspects of compliance is the most indicated approach as it may avoid corruption or other aspects being neglect due to high pressure in another area of compliance.

Senior compliance staffs have to deal with all the regulatory changes and increasing pressure from regulators to enforce joined up ABC compliance strategies. In Latin America, regulators are working on new rules for fintech. Government and regulators want to help new technologies gain traction and limit the risks of the business. Asia regulators have been looking at the use of technology and innovation to reduce the risks and taking steps to put financial crime at the top of their agenda.

Worldwide, people are pushing towards more transparency as they have noticed that risk and compliance matters, particularly when their countries have been hit economically negative due to corruption scandals. They are pushing government and regulators to act faster and requiring accountability for corruption and non-compliance.

Compliance leaders seem anxious about the advance as they need to hit their growth targets and make compliance less challenging in emerging markets. Organizations have been observing these changes and need to be prepared to apply a continuing approach to anti-bribery and corruption compliance in the years to come, particularly in emerging countries where the changes are happening but at a slower pace than in the US and Europe.

Navigating bribery and corruption risk in 2020 was published at Hogan Lovells website on February 2020.

MCO understands the risks and challenges of the compliance function. To learn how we can help your organization avoid risks and mitigate potential misconduct, review our Anti-Bribery and Corruption Resource Center. Or see our integrated solution designed to meet ABC obligations, contact us today to learn more.