Is the Code of Ethics a key element of the compliance management system?

The Code of Ethics could be defined as the normative constitution of an organisation, that is, the fundamental regulation from which all others are derived. It will also be the soul of the organisation, a document that sets out the principles and values that should govern it, and which each and every member of the organisation must comply with.

Functionally, the Code of Ethics is a very useful tool for business management, whose objective is to ensure that employees comply with the regulations to which the organisation is subject and that they carry out their activity in accordance with the values it has established and which constitute the essence of the corporate culture.

It is important that the Code of Ethics is alive, that it is not merely a document or a proclamation of good intentions, and that it is binding for both employees and managers of the organisation. It is now common practice that third parties, especially collaborators and suppliers, are also bound to comply with the fundamental principles of the Code of Ethics (to a greater or lesser extent and sometimes through a specific Code of Conduct for third parties and/or specific contractual clauses).

In order to proclaim the fundamental principles of the organisation, it is highly recommended that the corporate Code of Ethics is published on the website and accessible to third parties.

In terms of content, the Code of Ethics must be able to offer guidelines, orientations and be the synergy of all the existing sectoral multi-regulation that applies to the specific organisation. In other words, it must contain the principles on which the organisation’s internal and specific regulations are developed.

In any case, and despite the fact that it is binding for the members of the organisation, including third parties, and is published on the website, for the Code of Ethics to be truly a code, and, moreover, an ethical one, it is essential that it is supported by the vertical structure of the organisation, that it reaches all areas of the organisation. This cannot be achieved without the active participation of the organisation’s administrative and management body, through what is called an appropriate tone from the top.

It is these management bodies that must promote a true culture of compliance. In order to aim for efficient risk management, it is necessary to influence top management, generating an organisational culture that tends towards absolute compliance with the legal system.

As a result of the above, it may be recommended to establish a qualitative remuneration system for compliance with the Code of Ethics and, in general, for compliance with Compliance regulations. This requirement is imposed in most legal systems (United States, Chile, Italy) and is also noted in national and international Compliance technical standards.

Last but not least, although the Spanish Criminal Code does not mention training among the requirements established for an “organisational and management model” in Article 31 bis 2º, experience shows the importance of continuous training and awareness as an essential element to guarantee the experience of Compliance and, as far as this article is concerned, of the Code of Ethics and its principles.

Regular and ongoing training and awareness is one way to ensure the proper functioning of the Code of Ethics and the Compliance structure and rules.

In any case, training and awareness-raising measures are highly efficient tools insofar as they are cost-saving for the organisation, that is, the more the experience and compliance with the Code of Ethics is ensured, the less costs the organisation will need to develop controls to ensure compliance.

Compliance Department of Molins Defensa Penal.

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