“Compliance is not only recommendations for the implementation of certain procedures and policies, but also a regular test of their efficiency,” said Andrei Pronchenko, Managing Partner at PwC Legal
— What were the reasons for distinguishing the compliance trend as a different practice within the frame of PwС Legal: is it following Western trends or a considered business decision adapted for the Ukrainian market?
— It is rather a symbiosis. It is in reason to follow trends and practices, which have traditionally been practiced within the PricewaterhouseCoopers network and to which compliance relates, and at the same time to adapt compliance for Ukrainian business realia and use it as a business decision. A year ago we decided that compliance is an interesting top trend for us. This decision-making was greatly influenced by changes in legislation. What is meant here is the adoption of anti-corruption laws, effective anti-corruption programs as well as the improvement of legislation in connection with money laundering. These statutes indeed require companies to implement programs and procedures in accordance with applicable legal requirements. Compliance is an essential part of it, as it is not only recommendations for the implementation of certain procedures and policies, but also a regular test of their efficiency. In addition, PwС Legal is able to attract not only lawyers to this process, but also colleagues from the tax administration, business consultants, auditors, thereby offering the client a comprehensive decision.
— Which compliance trends are topical and most popular at present? What range do they cover?
— It is necessary to distinguish several trends. The first one is the AML-Compliance (AML — Anti-Money Laundering). The requirements of the Anti-Money Laundering Legislation are, above all, relevant to the financial sector, which should have the appropriate procedures.
Outside consultants manage to perform independent evaluation of these procedures and programs against all necessary statutes much more effectively. Besides, being a law union we are entities of financial monitoring, and several lawyers from our team have completed appropriate training and are certified AML-compliance professionals.
The second, and no less important trend, is the FATCA-Compliance (FATCA — Foreign Account Tax Compliance Act). The FATCA is an act aimed at the identification of U.S. persons. Any bank operating on the territory of Ukraine and having correspondent accounts in American banks, must meet the statutes of this law. Otherwise, it would have difficulties transferring money. Currently, Ukrainian financial institutions are quite responsible in this matter and try to adapt their procedures in accordance with the FATCA requirements. However, the practice shows that the internal bank compliance service is not always able meet the challenge on its own. Therefore, we offer services not only for the implementation of programs and procedures, but also for an annual check of the working efficiency of these programs.
— Does Anti-Trust Compliance continue to hold its positions?
— Yes, Anti-Trust Compliance is popular now. Anti-Trust Compliance issues are relevant to the overwhelming majority of companies representing various industries. Thus, our clients in this field are both companies of the pharmaceuticals sector and single-brand companies, which have exclusive rights to sell their goods (for example, automobile manufacturers). The former have to strictly adhere to the statutes of the Anti-Trust Laws in the process of competitive struggle; the latter, to examine agreements with dealers for compliance with Competition Laws. As a general rule, companies go to lawyers for help in cases when the AMCU has already exposed non-compliance and the company needs help and protection from lawyers. We believe that such an approach is not effective. Business gradually realizes the need for changes and, willing to avoid previous mistakes, arrives at decisions not to fight against circumstances, but to prevent them.
Another new trend, Anti-Corruption Compliance, is also becoming popular. Ukrainian Anti-Corruption Laws are at the formative stage; therefore, this type of compliance is, largely, relevant to Western companies governed by American or European laws. Besides, having an Anti-Corruption Program is a mandatory thing for companies taking part in government tenders.
Yet another trend, Public Sector Compliance, is associated with the procurement process. It is not just important to comply with the laws, but to comply with the principles enshrined in the laws.
— You say that at the moment Compliance services are relevant primarily to foreign companies. Is there any demand for conducting compliance audit on the part of Ukrainian business?
— In general, of course, it is foreign companies. However, there are also Ukrainian companies determined to receive borrowed assets or consider the participation of foreign partners, and the latter, certainly, want to feel confident about Ukrainian business.
We are well aware of Western investors – they come and take interest in particular processes. Therefore, Ukrainian companies need to create such programs that will not only demonstrate to investors the absence of any problems, but also demonstrate the mechanisms that help to evade possible complications.
— What proportion, do you think, does compliance make up in the general PwC Legal service portfolio?
— A minimum of 20%. There are quite a few law firms offering a wide range of services. In our department four experts practice compliance now. They are practicing lawyers with significant experience, who have long realized that it is easier to prevent a problem than wait till it appears, and then to handle the consequences. For instance, among the lawyers of this practice, there is a dedicated expert in securities, banking and financial laws, who has AML-legislation certification. My other colleague has completed FATCA-Compliance training at PwC in Frankfurt and has successfully implemented several compliance projects in Ukraine.
A profound examination by experts and the opportunity to enlist an expert from related departments give us a distinct advantage and chance to propel this practice to the top. We not only offer the client a statement on how much the company meets the requirements of any particular laws, but provide recommendations on how to improve applicable procedures. Our team comes in during the year and, using its own unique program, checks how efficiently it works.
— What are your predictions for the further development of the compliance trend on the Ukrainian legal services market?
— Of course, it is too early to talk about a compliance boom. Tax compliance offers have long been in the market, but legal compliance services are in some way know-how. However, I believe that there are prerequisites for the development of this practice in our country. Taking into account the interest of Ukrainian clients in close cooperation with Western investors, the chances of compliance being in demand on the Ukrainian legal services market are quite high.