An Increasing Global Enforcement Landscape

Tara Petterson, Lawyer, Freshfields Bruckhaus Deringer LLPAli Sallaway, Partner, Matthew Bruce, PartnerAt the end of 2021, US agencies indicated their restored - post-Trump - intention to pursue the investigation and enforcement of the full spectrum of corporate wrongdoing. Such intentions have been backed up by surge resources within the US Department of Justice (DOJ), and a real ramping up of activity is expected during the course of this year.

Enforcement agencies throughout Europe have also made clear that they intend to review and proactively enforce their corporate enforcement laws. French and German legislatures are actively taking steps in this regard whilst their law enforcement agencies continue to pursue corporate wrongdoing aggressively, and some long-considered reforms to corporate criminal liability are still under review in the UK.

Particular areas of focus – namely issues that continue to rise up the political agenda - include the tackling of illicit money flows, corporate culture and risks associated with ESG. Indeed, many countries are considering how the criminal law can now be used to drive compliance in areas such as human rights as well as addressing the green agenda - which may result in increasing the powers of, or tools available to, individual agencies throughout the continent.

As a consequence of this reinvigorated focus, corporations should not only be thinking about (and mitigating the risk) of traditional drivers of criminal enforcement –such as bribery, money-laundering, fraud and tax – but also those which are gaining increased traction, such as enforcement of sanctions and trade violations (including trade laws relating to human rights), breaches of environmental rules and data misuse.
Data privacy and cross-border impact
One area which continues to merit focus, and may be of particular interest to readers, concerns data privacy, amid the tightening of data privacy laws worldwide.

Getting data protection and privacy issues right in investigations is crucial for companies to mitigate the risk of having the admissibility of evidence challenged or hefty fines being levied. Under the GDPR regime, for example, regulators have already imposed more than €1.29bn in fines for a range of issues.

But the diverging approaches and procedural rules in different jurisdictions and the impact of geopolitics also adds layers of complexity for global companies this year.

For example, the escalating US-China trade war will continue to heighten regulatory and enforcement risk for global companies operating in China. Just at a time when anti-bribery and other enforcement agencies have wrongdoing relating to China in their cross-hairs, companies facing such investigations in relation to their China-based operations are likely to feel the pull between conflicting enforcement regimes – on the one hand perhaps needing to produce documents and information stored in China to foreign authorities such as the US and, on the other hand, abiding by China’s increasing restrictions on cross-border transfers of data.

China’s new Data Security Law (DSL) and Personal Information Protection Law (PIPL) have tightened China’s data regulations significantly. Under these new laws, companies are no longer able to transfer documents and information stored in China to a foreign jurisdiction without first obtaining approval from Chinese regulators. The DSL states, in broad terms: ‘Without approval from competent PRC authorities, any organisations and individuals within the PRC must not provide data stored in the PRC to foreign judicial or enforcement authorities.’

In 2022, companies can expect to face a renewed global investigations and enforcement landscape due to an increasingly fractured geopolitical landscape

Amongst such challenges, there is a renewed push for cross-border cooperation by many enforcement agencies. The US has made it clear that it will be looking to supercharge enforcement through greater intelligence sharing and international cooperation, including via the G7’s Financial Action Task Force. We can expect a focus on countries that fall within the DOJ’s Kleptocracy Asset Recovery Initiative, including China, Russia and Venezuela. Given the DOJ’s strong links internationally, the trend of multi-agency investigations and enforcement is set to continue and grow.

In this complex landscape, global companies need to be aware not only of their obligations to meet continually developing standards, but also how they can meet the demands from competing enforcement regimes and jurisdictions.