In 2024, the compliance landscape is rapidly transforming, shaped by stringent regulatory updates, technological advancements, and the complexities of global interconnectivity. To stay competitive, organizations must anticipate and adapt to these changes proactively. In this article, we want to show you how it was in the year to date.
Navigating the Compliance Evolution in 2024
In this part, we delve into the pivotal compliance trends and provide actionable strategies to help businesses align with new standards and maintain resilience.
1. Strengthened data privacy regulations
In 2024, expanding privacy laws like the GDPR are reshaping compliance, requiring refined data management due to new measures like the CPRA and regional policies. AI's rise demands more transparency in data processing. Updates to the EU-U.S. Data Privacy Framework challenge cross-border data governance. Organizations must stay informed and adaptable. To navigate 2024's compliance landscape, organizations should map data to ensure transparency, embed privacy-by-design in products, and establish strong cross-border data governance. These strategies help align with new standards and maintain resilience.
2. ESG compliance takes centre stage
ESG compliance developments are reshaping corporate strategies. The EU’s CSRD requires climate risk disclosures, while the SEC enforces climate-related reporting. Germany's Supply Chain Due Diligence Act demands oversight of suppliers' practices. These regulations highlight the need for transparency in corporate sustainability. Compliance with ESG regulations means integrating ESG metrics, setting sustainability objectives, and collaborating with supply chain partners. These strategies enhance resilience and competitiveness in a sustainability-driven market.
3. Emerging technology regulations
In 2024, technology regulations impact compliance. The EU's AI Act imposes strict requirements on high-risk AI. In the U.S., guidelines promote responsible AI use. The EU's DORA mandates financial institutions to bolster IT against cyber threats. These measures emphasize ethical tech deployment. To handle 2024's technology rules, companies should check for AI risks, create fair AI usage rules, and invest in strong internet security. These plans strengthen companies and ensure compliance.
4. Heightened anti-money laundering (AML) standards
In 2024, financial compliance shifts with tighter AML standards, driven by cryptocurrency controls and ownership disclosure mandates. Advanced monitoring technologies like AI are crucial for detecting suspicious activities. Organizations must adopt innovative solutions to navigate the evolving AML landscape. To meet AML standards, organizations use AI for transaction monitoring, train compliance teams, and audit AML protocols. These strategies enhance defenses against financial crimes and ensure compliance.
5. Enhanced third-party and supply-chain risk management
In 2024, third-party and supply-chain risk management evolved, requiring greater vigilance. Companies must assess third-party risks, focusing on corruption and fraud. Modern slavery laws enforce transparency in labor practices. Automated risk management technologies improve vendor screening. Organizations must adapt by integrating risk management strategies. To manage these risks, organizations should establish vendor risk assessment protocols and use automation tools. Formalizing contracts with third-party partners is essential. These strategies enhance risk management and ensure compliance.
6. Cybersecurity compliance as a critical priority
In 2024, cybersecurity compliance reshaped digital defenses. The EU's NIS2 directive enforces stricter measures, emphasizing incident reporting. The SEC requires cyber incident disclosures. Regulators focus on ransomware preparedness. These efforts protect data and maintain integrity. To enhance cybersecurity compliance, organizations should align practices with frameworks, conduct penetration tests, and train employees on cyber threats. These strategies bolster cybersecurity and safeguard operations.
7. Whistleblower protections and programs
In 2024, enhanced whistleblower protections boost corporate accountability. New laws require anonymous reporting channels and thorough investigations. Incentive programs offer financial rewards for reporting misconduct. These changes promote ethical practices and transparency.
Organizations should create clear reporting procedures and foster a trusting environment to enhance whistleblower protections. Prompt investigations and transparent outcomes are recommended. These steps align businesses with new legislative standards.
Building a resilient compliance framework
2024 marks a year of significant transformation as compliance requirements become increasingly complex and far-reaching, affecting industries across the globe. Companies are now compelled to adopt a proactive and technology-driven approach to effectively meet these evolving regulations, manage emerging risks, and maintain the trust of stakeholders. This involves not only understanding the intricacies of new laws but also implementing advanced technological solutions that can streamline compliance processes and enhance operational efficiency. By prioritizing key areas such as data privacy, environmental, social, and governance (ESG) criteria, artificial intelligence (AI) governance, anti-money laundering (AML) measures, and cybersecurity protocols, organizations can construct a robust compliance framework. Such a framework is essential for ensuring long-term resilience and success in an increasingly regulated world.
The key to thriving in this dynamic and challenging environment lies in fostering a culture of compliance within the organization, where every employee understands and values the importance of adhering to regulatory standards. Additionally, investing in innovation is crucial, as it allows businesses to develop and implement cutting-edge solutions that can address compliance challenges more effectively. Staying informed about the global regulatory landscape is equally important, as it enables companies to anticipate changes and adapt swiftly. Businesses that embrace these challenges with a forward-thinking mindset and a commitment to continuous improvement will be well-positioned to navigate the uncertainties of 2024 and beyond, securing their place as leaders in their respective industries.
Global Advancements in Whistleblower Protections and Programs in 2024
United States
In August 2024, the Department of Justice (DOJ) launched a three-year Corporate Whistleblower Awards Pilot Program, offering financial incentives for reporting corporate misconduct. Whistleblowers can earn up to 30% of the first $100 million in forfeited proceeds and up to 5% between $100 million and $500 million. National Highway Traffic Safety Administration (NHTSA) finalized its whistleblower award rules, granting 10% to 30% of fines from enforcement actions for tips on violations over $1 million. A $24.3 million award was previously given to a former Hyundai engineer.
United Kingdom
The new Serious Fraud Office (SFO) head, Nick Ephgrave, proposes financial rewards for whistleblowers, inspired by the U.S. model, to boost fraud investigations. However, there are concerns about misuse and ethical issues.
European Union
On July 3, 2024, the European Commission adopted a report assessing the transposition of the Whistleblower Protection Directive. The report evaluates compliance with the directive across member states, aiming to ensure robust protection for whistleblowers within the EU.
Australia
The case of Richard Boyle, a former Australian Taxation Office employee who exposed alleged misconduct within the agency, has garnered significant attention. Despite his disclosures, Boyle faces legal charges, highlighting concerns about the effectiveness of whistleblower protections in Australia and prompting calls for comprehensive reforms
It's been a great year for whistleblower protections in the Middle East!
United Arab Emirates
On July 5, 2024, ADGM implemented two significant regulations: the Employment Regulations (Amendment No. 1) 2024 and the Whistleblower Protection Regulations 2024. These regulations aim to safeguard individuals who disclose information in good faith regarding legal violations or financial crimes within Abu Dhabi Global Market (ADGM). Key provisions include protection against retaliation—such as dismissal or unfavorable employment terms—and immunity from civil or contractual liability for whistleblowers. Employers are mandated to establish mechanisms by May 31, 2025, to facilitate protected disclosures, assess and escalate concerns appropriately, and ensure the confidentiality of whistleblowers' identities. Non-compliance may result in sanctions, including fines or license suspensions.
Saudi Arabia
Saudi Arabia has been enhancing its legal framework to encourage whistleblowing, particularly concerning anti-corruption efforts. The Saudi National Anti-Corruption Commission (Nazaha) has been instrumental in promoting transparency and accountability. The legal landscape emphasizes the importance of good faith in making disclosures, aligning with global standards to protect individuals who report misconduct.
Iran
In June 2024, Iran imprisoned prominent whistleblower Yashar Soltani, sentencing him to 13 months for "spreading lies to disturb the public mind." Soltani is known for exposing corruption in public bodies and has faced imprisonment previously for his revelations.
Landmark reversal
In 2024, the U.S. Supreme Court issued a landmark decision in Murray v. UBS Securities, LLC, significantly impacting whistleblower protections under the Sarbanes-Oxley Act (SOX). The unanimous ruling clarified that whistleblowers are not required to prove that their employer acted with "retaliatory intent" to establish a violation of SOX's anti-retaliation provisions. Instead, it suffices for whistleblowers to demonstrate that their protected activity was a "contributing factor" in the employer's adverse action against them.
This decision lowers the burden of proof for whistleblowers, making it more accessible for employees to seek protection under SOX when reporting corporate fraud or securities violations. The Court emphasized that the focus should be on the employer's knowledge and the role the whistleblower's actions played in the adverse employment decision, rather than the employer's intent.
This ruling is expected to encourage more employees to come forward with information about corporate misconduct, knowing that the legal standards for proving retaliation have been clarified in their favor. It also serves as a reminder to employers to carefully evaluate their actions concerning employees who engage in protected whistleblowing activities.
Supreme Court Expands Whistleblower Protections
In 2024, whistleblower programs in the United States have seen significant activity, with numerous awards granted to individuals who provided valuable information leading to enforcement actions.
Securities and exchange commission (SEC):
- Awards and amounts: In Fiscal Year 2024, the SEC awarded over $255 million to 47 individual whistleblowers, marking the third-highest annual amount since the program's inception.
- Notable awards: Among these, a notable award of $98 million was granted to two individuals, underscoring the substantial incentives available for reporting securities violations.
Commodity futures trading commission (CFTC):
- Awards and amounts: The CFTC awarded over $42 million to whistleblowers in Fiscal Year 2024, issuing a record-breaking 12 awards, including the first-ever to a compliance officer.
- Notable awards: One significant award was over $4 million granted to two whistleblowers who provided information leading to successful enforcement actions.
Global developments:
- Ukraine's anti-corruption efforts: Ukraine has intensified its anti-corruption measures by offering financial rewards to whistleblowers. For instance, businessman Yevhen Shevchenko received $320,000 for reporting and facilitating a sting operation against a former top official involved in bribery. Whistleblowers in Ukraine can receive 10% of the amount involved in their cases, with rewards capped at $500,000.
Navigating the evolving compliance landscape of 2024 requires businesses to embrace a proactive and tech-driven approach. By prioritizing key areas like data privacy, ESG compliance, AI governance, AML standards, and cybersecurity, organizations can build a resilient compliance framework. Coupled with fostering a culture of accountability and staying informed about global regulatory developments, these efforts will empower companies to meet challenges, maintain stakeholder trust, and secure a competitive edge in an increasingly regulated world.