Aug. 25, 2021

Publications

🚧 Monumental Goals, beating heart of Compliance Law

by Marie-Anne Frison-Roche

ComplianceTech®. Pour lire ce document de travail en français↗️ cliquer sur le drapeau français

♾️ follow Marie-Anne Frison-Roche on LinkedIn

♾️ subscribe to the Newsletter MAFR Regulation, Compliance, Law 

____

► Full Reference: Frison-Roche, M.-A.Monumental Goals, beating heart of Compliance Law, Working Paper, August 2021

____

📝This Working Paper is the basis for the article, "Les buts monumentaux, cœur battant du droit de la compliance", constituting the introduction â¤µ

📕in its French version, of the book Les buts monumentaux de la Compliance, in  the Series ðŸ“šRégulations & Compliance

 ðŸ“˜in its English version, of the book, Compliance Monumental Goals, in the Series ðŸ“šCompliance & Regulation

____

► Summary of the Working Paper:

Compliance Law can be defined as the set of processes requiring companies to show that they comply with all the regulations that apply to them. It is also possible to  define this branch of Law by a normative heart: the "Monumental Goals". These explain the technical new legal solutions, thus made them clearer, accessible and anticipable. This definition is also based on a bet, that of caring for others that human beings can have in common, a universality. 

Through the Monumental Goals, appears a definition of Compliance Law that is new, original, and specific. This new term "Compliance", even in non-English vocabulary, in fact designates a new ambition: that a systemic catastrophe shall not be repeated in the future. This Monumental Goal was designed by History, which gives it a different dimension in the United States and in Europe. But the heart is common in the West, because it is always about detecting and preventing what could produce a future systemic catastrophe, which falls under "negative monumental goals", even to act so that the future is positively different ("positive monumental goals"), the whole being articulated in the notion of "concern for others", the Monumental Goals thus unifying Compliance Law.

In this, they reveal and reinforce the always systemic nature of Compliance Law, as management of systemic risks and extension of Regulation Law, outside of any sector, which makes solutions available for non-sector spaces, in particular digital space. Because wanting to prevent the future (preventing evil from happening; making good happen) is by nature political, Compliance Law by nature concretizes ambitions of a political nature, in particular in its positive monumental goals, notably effective equality between human beings, including geographically distant or future human beings.

The practical consequences of this definition of Compliance Law by Monumental Goals are immense. A contrario, this makes it possible to avoid the excesses of a "conformity law" aimed at the effectiveness of all applicable regulations, a very dangerous perspective. This makes it possible to select effective Compliance Tools with regard to these goals, to grasp the spirit of the material without being locked into its flow of letters. This leads to not dissociating the power required of companies and the permanent supervision that the public authorities must exercise over them.

We can therefore expect a lot from such a definition of Compliance Law by its Monumental Goals. It engenders an alliance between the Political Power, legitimate to enact the Monumental Goals, and the crucial operators, in a position to concretize them and appointed because they are able to do so. It makes it possible to find global legal solutions for global systemic difficulties that are a priori insurmountable, particularly in climate matters and for the effective protection of people in the now digital world in which we live. It expresses values that can unite human beings.

In this, Compliance Law built on Monumental Goals is also a bet. Even if the requirement of "conformity" is articulated with this present conception of what Compliance Law is, this conception based on Monumental Law is based on the human ability to be free, while conformity law supposes more the human ability to obey.

Therefore Compliance Law, defined by the Monumental Goals, is essential for our future, while conformity law is not.

________

Read the developments below⤵️

Compliance Law can be defined as the set of processes requiring companies to show that they comply with all the regulations that apply to them. It is also possible to define this branch of Law by a normative core: the "Monumental Goals". These explain the new technical legal solutions which make them clearer, more accessible, and easier to anticipate. This definition is also based on a wager: the caring for others that human beings can have in common, a universal principle. 

Through the Monumental Goals, there appears a definition of Compliance Law that is new, original, and specific. This new term "Compliance", even in non-English vocabularies, in fact designates a new ambition: that a systemic catastrophe shall not be repeated in the future. This Monumental Goal was designed by History, which gives it a different dimension in the United States and in Europe. But the core is common in the West, because it is always about detecting and preventing what could produce a future systemic catastrophe, which falls under "negative monumental goals", and even to act so that the future is positively different ("positive monumental goals"), with the whole being articulated in the notion of "concern for others," the Monumental Goals thus unifying Compliance Law.

In this, they reveal and reinforce the always systemic nature of Compliance Law, as management of systemic risks and an extension of Regulation Law, outside of any sector, which makes solutions available for non-sector spaces, in particular digital spaces. Since wanting to prevent future impacts (preventing evil from happening; making good happen) is by nature political, Compliance Law by nature materializes ambitions of a political nature, particularly in its positive monumental goals, and especially the effective equality between human beings, including geographically distant or future human beings.

The practical consequences of this definition of Compliance Law by Monumental Goals are immense. A contrario, this makes it possible to avoid the excesses of a "conformity law" aimed at the effectiveness of all applicable regulations, an extremely dangerous perspective. This makes it possible to select effective Compliance Tools regarding these goals, to grasp the spirit of the material without being locked into its flow of letters. This leads to not dissociating the power required of companies and the permanent supervision that the public authorities must exercise over them.

We can therefore expect a lot from such a definition of Compliance Law by its Monumental Goals. It engenders an alliance between the Political Authorities, who are legitimate to enact the Monumental Goals, and the crucial operators, in a position to concretize them and appointed because they can do so. It makes it possible to find comprehensive legal solutions for global systemic difficulties that are a priori insurmountable, particularly in climate matters and for the effective protection of people in the now digital world in which we live. It expresses values that can unite human beings.

In this, Compliance Law built on Monumental Goals is also a wager. Even if the requirement of "conformity" is articulated with this present conception of what Compliance Law is, this conception based on Monumental Goals is based on the human ability to be free, while conformity law supposes more the human ability to obey.

Therefore, Compliance Law, defined by the Monumental Goals, is essential for our future, while conformity law is not.

 

I. MONUMENTAL GOALS, A NEW AND ORIGINAL CORE SPECIFIC TO COMPLIANCE LAW

This definition proposed in 2016📎footnote-2463 , normatively focusing compliance law on "monumental goals," reflects a new legal concept, which was built on a new ambition, itself the fruit of History, with the term "compliance" able to reflect this new feature (A). These monumental goals at the core of Western Compliance Law give it a substantial definition (B). They can also form the legal core of a new and unified compliance law (C).

 

A. "COMPLIANCE": A NEW TERM TO REFER TO A NEW AMBITION: MONUMENTAL GOALS CONCEIVED BY HISTORY

Because all the obligations and duties, powers, institutions, and characters are new, it is appropriate, if only to be able to understand some of it, to use a new word: compliance offers this linguistic advantage, as the term regulation presented it before it.  

We never start from zero. In the same way that mechanisms of compliance have echoes in the branches of classical law and fit in with them, compliance law did not just appear overnight. Like all the other bodies of law, it has a past and will have a future. Events led to its appearance. It was born a long time ago in the United States. Not to invade the world, but in reaction to a catastrophe that struck this country: the crisis of 1929, just as compliance law took shape in Europe when technological performance appeared to be a systemic danger for people.

 

1. Birth of American Compliance Law to prevent a repetition of the crisis of 1929, rekindled by each new crisis

Compliance law appears to have emerged from nowhere and seems "strange." Independently of its roots in the classic mechanisms of the legal system, we can situate its more identifiable and factual appearance both in the United States and in Europe. In both cases, these were reactions to a sort of aggression: in the first case, the crisis of 1929, in the second, the danger that digital technology constitutes for individuals. Compliance law bears strong traces of these autonomous but connected histories.

The major crisis of 1929 was largely due to behaviors within companies which the public authorities could not detect. People used the information that they had, because of their positions within these companies, to act for their own benefit on the financial markets. The systemic effect of this exploitation of the asymmetry of information was colossal, as it led to the economic and social crisis of 1929, the monetary dimension of which was felt in Europe, particularly in Germany, converging with other major difficulties which led to the Second World War.

Based on this observation of the possible origin of systemic crises within companies, Roosevelt decided to establish an authority, prohibitions, and obligations to prevent a repeat of a crisis of such phenomenal scope as the crisis of 1929, by forbidding not just the use of privileged information (insider trading) but also by requiring that companies detect and prevent market abuses to prevent a new systemic crisis.

 The systemic dimension of the crisis justified that the new law be adopted on the federal level, a rare phenomenon in the United States, where banking law remains at the state law, for example. The law of 1933 established the Securities and Exchange Commission (SEC) which has authority over all of the US financial markets and monitors the effectiveness of the prohibition of financial market abuses, particularly breaches by insiders and the dissemination of false information.

The idea is to require that companies exposed to the financial markets be transparent and act themselves so that information is shared or, if it is not, that it is not used on the markets by "insiders." The idea is to protect the financial markets from a failure that could cause their collapse. The prohibition of market abuses, leading to Ex Post sanctions, goes hand in hand with Ex Ante obligations focused around on-going and Ex Ante information for investors. This justifies the procedural principle of transparency, which characterizes the financial markets with respect to the competitive markets for ordinary goods and services. The SEC centralizes and disseminates information and controls its quality. This justifies in particular its determining role in the protection of whistle blowers inasmuch as they restore the full information of the financial markets.

American law kept this systemic dimension, reaffirmed with each crisis, inasmuch as it revealed a failure of the aptitude of American federal law to know the effective states of companies drawing on public savings. The bankruptcies of the Enron and WorldCom companies demonstrated that a listed, specialized company could fool the markets not only despite abundant financial communication but because of it, particularly through accounting manipulations. In 2002, the US Congress passed the Sarbanes-Oxley law which adds to professional accounting standards compliance requirements to make the information given to investors more reliable. Because of the global nature of the financial markets, the scope of this law is extraterritorial. The law requires that the CEO and the CFO certify the financial statements, which makes them legally liable.

These must be supplemented by various pieces of information, particularly the report of the auditors and the off-balance-sheet commitments, the extent of which is such that we could say that the financial statements are now just the appendix of their appendices. In a continuous fashion, an audit committee must verify the processes. The choice of the outside auditors is more organized, particularly their rotation. The Public Company Accounting Oversight Board (PCAOB) was established to supervise auditing firms, while the SEC itself regularly verifies the behavior of listed companies, without there necessarily being a suspicion of misconduct. This last point shows the fully Ex Ante dimension of the system and the penetration of the authority in the company, going from the regulation of the market to the supervision of companies that draw their financing from it.

 The financial crisis of 2008 triggered an analogous reaction. To take the title of the European Commission report regarding the audit, the idea was to draw "lessons from the crisis," because, as in 1929, the financial crisis of 2008 stemmed from the bankruptcy of a company, the investment bank Lehmann Brothers, more because of a crisis of liquidity than a market manipulation. The systemic effect was still major because, as in 1929, the devastating effect was worldwide. It was less severe because the States were there to break the cascades produced by "the domino effect," but there are lessons of three orders. Firstly, the information had not been sufficient, otherwise investors would have reacted in an appropriate way, as the regulation authorities were unaware. Secondly, it is necessary to find mechanisms that do not favor those who caused the systemic difficulty ("moral hazard") and then benefit from public aid which draws on the resources of taxpayers who did nothing. Thirdly, the structural conflicts of interest that allow a market operator to be both a market intermediary and a lender generated harmful conduct and fragility of the systemic enterprise.

It was again on the federal level that the Dodd-Frank law of 2010 arrived to prevent this repetition by better managing this systemic risk lodged in the asymmetry of information inherent to the financial system. Because American law remains faithful to the liberal principle, the idea is to protect the investor not by a direct intervention of the government, but by giving him the means to react in his interest, which best protects the whole system. The law based on behavioral economics thus gives investors, referred to as "consumers" of financial products, new powers and new rights to obtain information and to hold directors accountable. Furthermore, to reinforce the solidity of the operators and to compensate for possible conflicts of interest, the so-called "Volcker rule" was included to structurally distinguish activities and to have them supervised in-house by the compliance department, or even to forbid banks from undertaking certain activities on their own accounts which played a role in triggering the crisis. Because of its structural nature, the Volcker rule has an extraterritorial effect.

The systemic dimension of the corruption which harms an economic system even when the corrupt act is committed abroad justified the adoption of the Foreign Corrupt Practices Act (FCPA), American federal law of 1977, because the corruption of public agents abroad has a systemic impact which deteriorates the entire economic system (which ignoring an embargo does not do). This dimension justified the extraterritorial effect of the FCPA, which companies complain about because, as legal entities, they are not covered by the American legal order. The confusion that often exists between the application, particularly by the Office of Foreign Assets Control, of the FCPA, and of the rules of compliance in the system for compliance against money laundering, particularly by the SEC, which are justified by this global systemic dimension, with the questionable using of international embargo sanctions, where this systemic dimension does not exist, greatly damaged the perception and the understanding of compliance law.

We see however a continuity of the monumental goal of American compliance law, aiming to detect and to prevent systemic risks. The overly complex laws have a common point: they all have the goal of preventing the triggering of a systemic banking and/or financial crisis and, if this should occur, to manage it and then find a way out of it. The complexity and the attention to detail of most of the provisions contrast with the simplicity and the unicity of this "monumental goal": preparing for the future so that the catastrophe does not happen, and if it begins, to have immediate and effective means, non-standard if necessary, to get out of it.

Europe took on this conception while it felt the harmful effects of the damaging behaviors of American companies and the insufficiencies of American regulation law.

But because Europe has its own history, it produced a compliance law from its own catastrophes. 

 

2. Birth of European Compliance Law to protect individuals from the systems built on the information that concerns them

European compliance law is also anchored in history and is also the result of catastrophes. But they are quite different. That is why its core is in the law applying to "personal data", a memory of the European catastrophe that occurred in the Nazi legal and administrative system. In a closer and less tragic way, Koen Lenaerts places the birth of compliance law in Europe in the defending of people through the right against the use that a power entity can make, thanks to technological sophistication, of the personal information that concerns them📎 !footnote-2464. .

As in the United States when the shock of the crisis of 1929 triggered the drafting of the first laws, it is also the war which allows us to understand the European evolution. It is remarkable that at present the systemic event that compliance law could allow us to avoid, particularly in its connection with the detection of terrorism, is still war. But the angle is quite different because the history is different.

Europe was marked by what we would call in modern terminology "data files of a personal nature." The atrocities of the Second World War and their incommensurability are connected to what Jewish people suffered. This specific "personal information" was in particular collected, concentrated and used, and the files, particularly the "Jewish files," contributed to the atrocity. The files were not prepared secretly: The State officially established them, the legal doctrine commented on the "Jewish decree", etc. It probably only saw it as a process. The Nazi technocracy deployed whatever it efficiently could from this processing of personal data. The technology did not allow for anything further.

When, starting in the 1970s, computer systems were deployed, both French and German law identified the danger that the files could represent for individuals when they contain "information concerning them." As the law is a work of memory, the idea was to prevent a monumental catastrophe like the Shoah, or anything similar, from ever happening again. In France, the law of January 6, 1978, instituted the Commission nationale de l'Informatique et des Libertés (CNIL - National Commission for Computer Files and Liberties). Even after the transposition of the GDPR regulation, this title was kept so that everyone would remember that the liberties of human beings must be protected in a space in which computer power is being deployed, including cases when this power is used by the State.

 Information technology was deployed not so much by the State but by companies, and particularly American companies, in a new space: the digital space. Because judges defend human beings and must answer the questions that they ask them, the Court of Justice of the European Union (CJUE) in a ruling of July 13, 2014, Google Spain, set forth that a search engine must prevent internet users from being able to access the personal information of another person without that person's consent. To justify such a solution, the Court purely and simply invented a subjective right which people have: the "right to be forgotten", a new formulation of what was only the right, in the aforementioned national legislations, to request that holders of files remove the mention of the person's name and the information connected to it.

Then the Regulation of April 26, 2016, organized the protection of people with regard to the collecting and use of information concerning them. The entities that do this must include this primary concern in their very conception, privacy by design being a form of compliance by design, and must themselves demonstrate this concern for protecting others by not taking advantage of the valuable objects that personal data represent. The American laws, particularly the Californian law of 2018, provided greater protection for consumers, while the market for the purchase and sale of this type of information prospered. This is connected to the different histories: each continent has its own traumas.

 

 

B. MONUMENTAL GOALS, COMMON CORE OF THE SUBSTANTIAL DEFINITION OF COMPLIANCE LAW

What is the purpose of this mass of regulations? This simple question is not outside of law. In economic law governed by its purposes (teleological law), it is the goals which legally govern the various instruments, particularly regulations. Compliance mechanisms are governed by Monumental Goals. Having made this concept explicit (1), we must distinguish the "negative" (2) and "positive" Monumental Goals (3), the whole being subsumed in that which connects them: concern for other people (4).

 

1. The concept of "Monumental Goals"

As Law is a practical art, there has always been a goal, but it is traditionally placed outside of the branch of the law. For example, the goal for which the law organizes families does not constitute the normative center of family law. But in a more recent conception, particularly in economic law, the things for which the various legal instruments are ordered are on the contrary that which constitutes the normative core of the branch of law: these branches of law referred to as "teleological" are legally governed by their goals. It then becomes technically essential to determine them. The various branches of law that make up "economic law" are of this nature. For example, we can claim that the purpose of competition law is the development of markets through the free meeting of supply and demand, but if we orient the rules of this branch, without even changing the rule, towards other goals, the solutions can radically change.

The goals can be not just highly varied, but also of diverse strengths. For example, it may just be a question of better serving another rule. This was the former conception of the procedure, designed to serve the substantial branches of law; it is still developed for conformity law, which only has the goal of making a given branch of law more effective. It is thus a minimum goal because it is not even autonomous. This can involve goals that are autonomous but truly diverse, stemming from the particular will and varying over the time of parliaments which decide to use the legal instruments of compliance.

It can be a question of influencing the future so that it will be different from what it would be if the law did not intervene Ex Ante: this immediate intervention which changes the future and builds it to be as we wish is a "monumental goal." A "goal" because the entire legal system rests on this will having an effect on the future; it is "monumental" because it mobilizes a set of new and powerful legal instruments so that the future appears in a form that it would not have had otherwise: it is thus compliance law which builds the future, as one would build a monument, as an architect does, using all of his strength by calling on the builders, who are companies.

This can only involve certain goals because building the future by mobilizing companies and public authorities, through a novel legal force, is only justified for certain specific goals: the "negative" monumental goals and the "positive" monumental goals.

 

2. Concept of "negative monumental goals"

Compliance law was historically designed so that in the future certain events would not happen that is why it is referred to as "negative." The systemic crisis is its paragon: if companies are required to detect its risks, it is so that the catastrophe for the entire system does not happen. This greatly feared "domino effect" has always been known and feared in the banking system, explaining why compliance law has its oldest and deepest hold in this sector. Because of the interweaving between banking and financial activities, the "negative" goal is to avoid the occurrence of the catastrophe: for example, the failure of the systemic establishment (through supervision), and/or breaking the domino effect (by resolution).

Negative monumental goals, established for the economic and financial systems, bring coherency to the mechanisms which detect and prevent behaviors not because they are reprehensible in and of themselves, but because of their fraudulent systemic effect. Thus, money laundering, corruption, and terrorism are all three behaviors which corrode societies and create a risk of destabilization and finally war. That is why they are the subject of compliance law while homicide, a behavior more serious than corruption for example, is not, because it is not systemic.

The evolution of the world justifies however that climate issues now be under the influence of compliance law because the effects are systemic and a will is emerging to make sure that the future is not catastrophic, which it will be if compliance instruments are not used.

The systemic nature and the will to protect societies so that they do not degenerate in the future is linked above all to technical considerations, established by technical disciplines, the economy for market failures or science for climate issues. This facilitates more the adopting of global rules because the repercussions of the elements to be fought are themselves a territorial. This is less easy for the "positive" monumental goals.

 

3.  Concept of "positive monumental goals"

The will carried by compliance law for a future that is different from what it would be without the power of this law can be "positive": making sure that a systemic event occurs, while it would not occur without the compliance instruments set in motion. This is the case if we want, for example, effective equality between human beings, particularly men and women, starting with salary equality.

The "positive" monumental goals are more political, ethics are more present in them. The systemic risk in them is less immediately present and it is more the idea of a better future which guides the rules. They are thus less imperative, more open to challenges, often more anchored in a culture of a particular society, of even of a part of its population, or are linked to a political opinion. They can however constitute a later stage of the negative monumental goals. 

 

4.  Articulation between the monumental goals: concern for others 

The fight against the systemic risk of the banking and financial markets, constantly threatened by collapse, becomes itself more sustainable if the compliance systems take as their goal no longer so much avoiding collapse, but the structural and behavioral organization of sustainability. In the same way, the monumental goal of climatic compliance law is the conservation of the climatic and biological equilibrium, which pertains to the same notion of sustainability. In this sense, we can say that in a more dynamic conception, all the monumental goals are above all positive goals.

If we want to reduce the diversity further still, not only do the goals normatively sought become positive, but we can stop putting in radically distinct categories that which pertains to the economy and that which pertains to human beings. We remember that this summa divisio had been done for regulation law in the 1980s, opposing economic regulation and the regulation of public freedoms, which led to categorizing media regulation in the human category, leaving aside the essential economic dimension that the media present. As Compliance law is the extension of regulation law, and it is conversely appropriate to measure the share that the consideration of human beings must have in the concern for the efficacy of economic systems.

It is in this way that compliance law, in terms of data, as the exact title of the European regulation still called GDPR underscores, targets not just this protection of data concerning people, but also the circulation of the data. In the same way, the protection of nature through climate compliance is aimed to ensure that future generations will still be able to live in it.

It is therefore still concern for others, which we find in all the compliance systems, which aims to make the systems sustainable. In this sense, the definition of compliance law through monumental goals expresses the humanism of which the law is itself the guardian, which distinguishes it strongly from the definition of conformity law, presented as a company’s respecting of all the regulations that apply to it.

 

C. MONUMENTAL GOALS, THE LEGAL CORE OF A NEW AND UNIFIED COMPLIANCE LAW

This concept of monumental goals makes it possible to give coherency to a multitude of mechanisms that are so complicated and variable that no one really understands them anymore. Because of the teleological nature of compliance law, by shedding light unitarily on mechanisms that are so heterogeneous and in such a constant way on mechanisms that are so changeable, the monumental goals technically simplify the whole thing: beyond still more complicated words, its spirit is simple. In the United States, the preservation of the system so that it remains solid in the future; in Europe, that this solidity benefit above all individuals and if necessary that their interest be preferred over that of the group. In China, that the interest of the group remains served over time. All regulations that could challenge the systemic future must be guided, in their adoption, not just by companies but still more by the public authorities, and in their interpretation by both, not just by companies but still more by the courts, by these monumental goals, which legally justify this branch of law.

Through monumental goals, compliance law seizes the future.  While conformity law is only Ex Ante to operate the respecting of the regulations rather than to sanction its violations Ex Post, which is a justified conception but is not a new conception, compliance law conceived as having its normativity in the monumental goals is radically new in that its object is the future. In this sense it expresses an expectation, imposed by the public authorities on the companies that are in a position to materialize it, shared by them, to make sure that the future is different from what it would be without this Ex-Ante action. This legal normativity contained in these monumental goals constitutes the novelty of this branch of law.

The monumental goals also give the uniqueness of this branch of law. By giving it contours, they limit its hold. This does not mean developing compliance instruments for all regulations, only for what is at stake in a systemic way for the future. As such, the power developed by this new branch of law finds a unicity, because many rules are not linked to it, and gives it its measure: it does not mean enforcing all the regulations, in advance and over everything. It does not mean replacing the principle of individual freedom, other than responding to its action by the mechanism of responsibility but being required to act effectively when the future is already at stake in a systemic fashion. In that respect, the monumental goals give a negative unicity (in what it isn't: it doesn't target all the regulation) and a positive unicity (in what it is: obtain a sustainable future in conformity with a political will).

 

 

II.  MONUMENTAL GOALS, THE CORE OF THE SYSTEMIC AND POLITICAL NATURE OF COMPLIANCE LAW  

 Because compliance law preserves the sustainability of systems Ex Ante, it can impose unprecedented constrains on and grant new powers to companies, justified by this systemic nature (A). Moreover, because it carries the ambition of outlining the future thanks to companies, thereby continuing regulation law, it thereby materializes choices of a political nature (B).

 

A. MONUMENTAL GOALS, THE CORE OF THE COMPLIANCE LAW SYSTEM

 Monumental goals take part directly in the compliance system because they place compliance law in the management of systemic risks (1).  They can carry this systemic concern beyond sectors, which is particularly precious in spaces that do not constitute sectors, which is now the case for the digital space (2).

 

1. Compliance Law, management of systemic risks

Compliance law is a system for the management of risks that are themselves systemic. The unprecedented constraints that weigh on companies, particularly through the extraterritorial effect of compliance law, are justified by the global scope of the risks themselves, because health and climate risks spread without consideration for borders. Furthermore, the financial and digital spaces are intangible. It is remarkable that the expression "digital regulation" is now standard, although it doesn't involve a sector. Risk mapping is thus the means of detecting and preventing systemic catastrophes, which explains its longer history of use in the regulated and supervised sectors, particularly the banking sector, than in others.

It is frequent that in banking establishments the department in charge of compliance is also in charge of risks. This means that the function is not effectively in charge of all of the regulations applicable to the company but, and this is something completely different, the appreciation of the risks that the company runs and which it itself places on the system, if it is itself systemic. We then see the link between compliance law and the supervision mechanisms which apply to the company.

 

2. Compliance law, a-sectorial deployment of regulation law

Because monumental goals converge, or are even identical to those of regulation law, compliance law appears as the relay, or even the amplification of regulation law, particularly efficacious for global or non-sectoral spaces. As Compliance law imposes on certain companies the obligation, the power, and the rights necessary to ensure that crises do not occur and that the systems have quality, now legal, sustainability, a concern that the companies themselves share by interest and/or by conviction, it can be deployed as soon as it enters the companies without any need to establish a specific authority in advance. This is particularly useful when the risks are inherent to world spaces that public authorities have difficulty regulating because they are themselves unable to be global (case of the financial space) or because the space is intangible: this is the case for the financial space, which is by nature a digital space. Requiring that companies take on the protection of the systems, and as the digital system can be considered the first system in the world, allows for the use of legal means with a systemic scope, which requires an Ex-Ante viewpoint.

 

B. COMPLIANCE LAW, LAW MATERIALIZING POLITICAL AMBITIONS

The Monumental goals situate compliance law as having as its object the Future, so that it differs from where the course of events would lead it. In this sense, they make Compliance law into a choice for the future, which is by nature a political exercise (1).  This dimension increases when positive Monumental Goals are involved (2).

 

1. Choosing your future, an exercise that is political by nature

Choosing what the future should be is an expression of a will which is political by nature. Even if we simply say that the system must not go into crisis in the future, this is already a choice of a political nature, because many works show on the contrary the salutary nature of crises, a factor for innovation and learning. The taste for that which breaks and renews the whole, through the term "disruptive", shows the relevance of this conception.

If the institutions and the law aim to exclude this hypothesis, in banking, finance, energy, and digital matters, etc., this means that they make a choice, consisting of favoring a certain state of the future, particularly so that certain people do not pay so that others reap the benefits of the changes brought on by the crisis. This politically decided permanence puts the cost on the actors present. The power to make this political choice is generally given to the State, in the name of the general interest, in that it is legitimate to make choices for the future of the social group, with these choices furthermore expressing sovereignty.

 

2. Growth of the political dimension in compliance law defined by positive monumental goals

Normatively establishing that certain future events will not happen, such as the failure of the banking and financial system being already the expression of a political will, this dimension is still more perceptible if the teleological law that constitutes compliance law formulates the ambition that must exist in the future of the situations which if not, without this will expressed beforehand, would not exist. This is the case first when industrial policies are implemented, particularly in terms of data infrastructures.

Compliance law thus makes a junction between industrial policy and regulation law, in the effective protection that it can apply for rights of intellectual property, which competition law cannot do because they constitute monopolies.

This political dimension appears still more clearly when it directly involves use of the power of companies, because they are in a better position than other entities to materialize the normative core of compliance law for the protection of human beings. This is expressly said in the law of March 23, 2017, the "Vigilance Law," of which the object is the prevention of the violation of human rights, i.e. the taking charge by companies of their effectiveness. Furthermore, addressing the equality of rights between people expresses a political will which is distinct from the prevention of a catastrophe.

The political dimension of compliance law explains the interest that political science has in it. It also strongly justifies that political authorities, whether parliaments or governments, remain those which establish the contours of these monumental goals, because these political authorities, in that they have their powers to make choices for the future of the social group, from the election by the people whom they represent, are very present in compliance law.

It is one of the major practical consequences of this definition of compliance law by its monumental goals.

 

 

III.  PRACTICAL CONSEQUENCES OF COMPLIANCE LAW HAVING ITS MONUMENTAL GOALS AS ITS CORE

The first practical consequences of compliance law putting at its core its monumental goals are to exclude the excesses of a conception, often called "conformity law" targeting the total effectiveness of all the applicable regulations (A). Conceived this way by the monumental goals, an extremely ambitious conception, the practical advantage is on the contrary its limitation, which makes it bearable. Compliance law, because it draws its legal normativity from the monumental goals that it must materialize thanks to the power of its systems, is ipso facto limited to the sole domains involving these monumental goals, to the exclusion of others, the prevalence of the goals, which constitute the spirit, allow us to limit the tsunami of the innumerable words of the regulations (B).

 

A. AVOIDING THE EXCESSES OF A CONFORMITY LAW TARGETING THE EFFECTIVENESS OF ALL OF THE APPLICABLE REGULATIONS

 

1. The conception of Compliance, as a requirement that companies demonstrate that they "conform" to all the regulations that apply to them

We can conceive of compliance law as a set of legal systems which ensure that an agent, more specifically a company, "conforms" to all the regulations that govern it, i.e., that it obeys and demonstrates that it is obeying. We could then call this branch of Law "Conformity Law", because it involves conforming to the rules, to all applicable rules.

This obedience is mainly obtained by the efficacy of the sanctions incurred in the event of disobedience and/or by the interest that the agent has to follow all of the regulations that apply to it. This procedural definition defines compliance law as a sort of path of fulfillment of the rules, a fulfillment which is moved from Ex Post to Ex Ante, with the agent demonstrating, willingly or not, that it is conforming to the regulation that applies to it. The content of the rule to which the subject of law "conforms" does not belong to compliance law, which is why it was still less used: the branch of law would be focused on the efficacy of this "conformity."

In practice, sanctions, procedure, and proof are at the core of this definition which appeals in practice to both universal rules (efficacious obtaining of obedience) and technological solutions (in the handling of the regulatory mass and information). Algorithms are the solution to manage such "regulatory complexity." Of course, algorithms cannot "understand" the rules, but this is not an obstacle, because conformity law would only be a sort of efficacy method which applies to rules, and not the rules themselves.  

 

 2. Escaping the consequences of a neutral and mechanical definition of "conformity" through another definition of Compliance law by the Monumental Goals 

Having only this definition, as an internalization in companies of the demonstrated submission to the regulations which apply to them, a guarantee of their efficacy, would have as a drawback, paradoxical in this very regulatory environment in which there are abundant decisions and texts of all genres, taking Compliance out of the Law. 

The first drawback is the strangely non-legal character of the entire system. All sorts of norms, from the Constitution to traffic law and including contracts and guidelines are swallowed under the term "regulation" and everything in it is mechanically treated as "data", a mass of processed information. What the systems were made for remains outside; the constitutional norms or the contracts are considered as in fact having the same value, the point of view being not vertical but rather "horizontal," the flexible law being moreover more important than Constitutions, because it is more rapid, better suited and more efficacious; with efficacy being the only criterion. Many people present compliance as being not a law, but rather only the management or risks or international policy, to be welcomed or to complain about. Inasmuch as it is associated with a great power, it seems important that it remain a part of law, if we want countries to remain anchored in the rule of law.

Defining conformity as the anticipated and active respecting of the rule with no regard for its content presents a danger which is often highlighted to go to a sort of "resistance" or in any case a reaction: totalitarianism. If the principle is no longer freedom of action, then the Ex Post responsibility in the event of an acknowledged violation of the rule but rather the obligation to demonstrate that the agent is conforming with all of the regulations that apply to it, it is necessary but sufficient to put in the aforesaid regulation a will for power to obtain the benefit of the power of companies which in a sense march mechanically with the authors of the regulation. That is why, in the same way that American compliance law is often denounced as constituting a new mode of expansionism, or even colonialism through law, conformity law is associated with a submission of agents and a harnessing of their power of action for a design in which freedom is not the first concern.

We then see the major drawback of a compliance law defined by the sole requirement of conformity but a total requirement of conformity: its omnipotence. Because it is necessary that the company itself be the entity which guarantees the full effectiveness of the slightest rule, compliance law thus defined, in which everything would be an "obligation of results," would be an "implacable law." That is moreover why, ideally, in a successful conformity system, in which the company totally conforms, the judge has no place. But in the rule of law, the judge is the sign of and the guarantor of the freedoms of human beings, limiting all omnipotence mechanisms.

Normatively focusing compliance law on Monumental Goals limits this requirement of obedience in a link with viewpoints of omnipotence; on the contrary, they carry within themselves the limits legally applied to the power of compliance tools.

 

B. LIMITATION OF COMPLIANCE LAW SOLELY TO THE DOMAINS INVOLVING THE MONUMENTAL GOALS 

 In practice, Monumental Goals produce a fortunate limitation of the influence of Compliance Law, because its power is only deployed when these Monumental Goals are involved (1).  A same fortunate effect of limitation comes from the fact that, in the application that must then be made, the spirit – given by the Monumental Goals – must prevail over the letter, so abundant and so difficult. It then becomes, if not secondary, then at least second (2).

 

1. The effect of limitation by the contour of the monumental goal considered

 As Compliance Law is thus defined as the detection of systemic risks and the prevention of future catastrophes ("negative monumental goals") or all the instruments that allow for the obtaining in the future of equilibria more favorable for human beings ("positive monumental goals"), we should eliminate, in the whole multitude of rules that a company must follow, those which are relevant for this.

 

2. The effect of limitation by the prevalence of the spirit over the letter

Because all branches of teleological law take as their very goal this normative object, compliance law does not aim to control all the regulations which apply to companies, nor even the regulations which are focused on the prevention of catastrophes (negative goals) or the construction of new future equilibria (positive goals), which would already be quite difficult. This indeed implies technical knowledge of market abuses, implying technical mastery of competition law, and the laws of the various regulated sectors (banking, financial, energy, telecommunications, transport, post, aviation, aerospace, etc.).

We should only use the letter of these multiple regulations to understand and master their spirit. This could appear limited, but it is also a more classic conception of the law, in which we affirm that the spirit is more important than the letter, that it is only of value for leading to the spirit and that, when in doubt, the spirit must prevail over the letter. It is therefore the spirit that we must understand. It is doubtful that an algorithm could do it.

 

 

C. SELECTING COMPLIANCE TOOLS AND SUPERVISING THEM TO EFFECTIVELY REACH THE MONUMENTAL GOALS

Because the normativity of compliance law is in its monumental goals, the various legal systems are instruments which take on their meaning regarding these goals. This supposes that the various mechanisms used by companies are selected with this outlook (1) and that this use, or even this creation, cannot occur without the supervision of public authorities, because of the political nature of the monumental goals involved (2).

 

1. Selection of the compliance instruments required to reach the Monumental Goals

Because we ask companies not to be passively in conformity with the regulations but rather to be actively able to improve the future, for example to prevent corruption and money laundering or to effectively establish equality between human beings, they must use their power to this end. It is even for this reason that the public authorities, through various laws, sought them out. It is therefore necessary that they be able to use their technical innovation capacity and their position, for example the fact of being able to have information and to centralize it. Thus, compliance systems, which are also power systems, via for example compliance by design or via the duty of vigilance or via codes of good conduct, legitimate for the various normative creations or quasi-jurisdictional functions that companies exercise.

The Sanctions Commission of the Agence française anticorruption (AFA – French Anti-Corruption Agency) issued a reminder that companies are free to choose the way in which they detect and prevent corruption, beyond the ways recommended by the AFA.

In this conception, which is based on the power of companies, the public authorities in Ex Ante most often have an incentive role more than a constraining role. In this respect, like Regulatory Law, Compliance Law is thus adjacent to public policies. Companies can also develop technical norms and standards of behavior which are common to them, to create ecosystems, such as Gaia-X. All of this is only allowable on the condition of associating with its supervision by public authorities on the one hand and the always open possibility of an Ex-Post control by a judge.

Because the monumental goals concern the future of humanity (avoiding war, restoring climate equilibrium, protecting against hatred, etc.), to reach this, it is above all human beings themselves who must be the actors. This definition of Compliance Law is more strongly adjacent to ethics and social responsibility. It explains the insistence with which the public authorities request that company directors be publicly "exemplary." In this conception, training within companies, particularly within compliance programs, whether these are mandatory or voluntary, is essential.

Because the formulation of the Monumental Goals is the responsibility of the public authorities, which companies can possibly join, while the fact of being able to reach them rests above all on the power of companies to do it, because they are in a position to do it, the essential is not just the establishment of structural systems (which generally involve obligations of results) but also behaviors (which generally involve obligations of means). This imperative need for a "culture of compliance" is underscored on all sides, whether by public authorities, companies, practitioners or the doctrine.

This “culture of compliance” is difficult to detach from the "company culture" itself. It is even a means for the former in its good development: that it articulates with the culture of the specific company. For example, the care given to nature, if this company is very anchored in a territory, or the care given to each of the clients whose private life is preserved, if this is the primary value of this company. This also allows for the proper internalizing of compliance beyond distinctions of legal systems if the company is international and adopts norms common to the entire group, through guidelines or a code, for example with respect to suppliers, which will facilitate the effectiveness of its duty of vigilance, and its contractualization.

 The systemic dimension of the monumental goals rarely contains them in a territory. The will to reach these systemic goals (ensure that an event does not occur in the future; ensure that an event does occur in the future) legitimizes that the instruments of compliance law, which fortunately do not apply to the entire regulation applicable to the company, be given a territorial effect corresponds to the negative propagation of the event from which we exclude the occurrence or to the positive scale of the event of which we want to see the arrival.

It is indeed because the issue of embargos does not correspond to this definition, that these economic sanctions defined by a particular authority to serve its own interest by constraining third parties is a circumvention of compliance law. However, the detection and prevention of harm to integrity, the fight against money laundering, the fight against climate change, against human trafficking, etc., are not very effective if they remain within borders. Compliance law is thus extraterritorial in a consubstantial way.

 

2. Public supervision required

But in exchange for this necessary freedom left to companies whose power is sought, and not countered, the public authorities are not only in Ex-Post, thanks to courts which sanction their breaches or infractions. Companies are supervised by public authorities which, beyond any indication of a breach, can control the proper fulfillment of their compliance obligations.

 In this sense, compliance law made an extraordinary qualitative leap. Fortunately, compliance law does not require that all companies demonstrate that they are respecting all the regulations that apply to them. But as soon as the future is at stake and an ambition is carried by this new branch of law so that the future does not occur as the mechanical progression of things would have it, companies– whether regulated or not – will become transparent, with the public authorities monitoring the way in which they implement their obligations and powers of compliance, in the absence of any disputes. Only companies in charge of a public service, or to speak in more modern terms, of an essential infrastructure, or to use a still more recent term, the "crucial companies", were up until now supervised in this way. The banking sector was its paragon, because it is a sector in which the structures are regulated, and its actors are supervised. Compliance law borrows its principles and techniques. For example, the obligation of vigilance that applies to banks is transformed into a duty of vigilance which now applies to all companies. 

 

 

IV. TOMORROW: THE EXPECTATIONS IN LIGHT OF COMPLIANCE LAW BUILT ON THE MONUMENTAL GOALS

We can expect a great deal of such a definition of Compliance Law based on its Monumental Goals (A). That creates an alliance between the Political Authorities and the crucial economic operators. But we probably must first make a sort of wager for tomorrow, still believing that concern for others can guide human action (B).

 

A. WHAT WE EXPECT FROM COMPLIANCE LAW BUILT ON MONUMENTAL GOALS

 We can expect from this definition of Compliance Law by its Monumental Goals a reinforcement of the alliance between Politics and the crucial operators (1).  This definition can produce global solutions for difficulties which are for the moment difficult to resolve, particularly in Climate Law (2). As this definition contains at its core the Monumental Goals, it gives priority to values that can be common to human beings (3). 

 

1. An alliance between Politics and the crucial operators 

Through the use of incentives and because of the development of a culture of compliance shared between the human beings who make up companies, with Compliance progressing at the same time as the raison d'être based on a definition of the company more as a group of people than as a group of financial assets, companies tend to apply the rules more because the people for whom they are responsible know their purpose.

This rule, which is so trivial but underscored in economic and managerial sciences, leads the company to no longer be "subjected" to compliance law, to no longer even take it on through a better calculation of the "reputation risk" but simply because the people involved themselves believe in the normative goals involved: this is "agreed compliance." As these goals are designed by the political and public authorities, with companies taking responsibility for people who have the same goals, the conditions are then in place for an alliance between companies and authorities.

We can even then conceive of compliance law as this alliance between the political authorities, legitimate to legally formulate these goals, and companies, in a position to reach them and free to subscribe to these goals, particularly because the people whom they are responsible for favor them. The legislative movement on the raison d’être goes in this direction.

 

2. Finding some Global Law solutions for difficulties which are a priori insurmountable

The second practical advantage of thinking about compliance normatively through its Monumental Goals is to really place the corpus in Ex-Ante, with the constraints not being at the center of the system, and criminal law once again becoming what it should be in classic law which conceives of it as an exception to the principle of freedom. Indeed, the abovementioned procedural conception aims to subject companies, i.e. human beings, to the rule; it therefore opposes their freedom. It is also for this reason that Compliance Law was so vigorously criticized.

On the contrary, if we conceive of Compliance Law normatively through its Monumental Goals, not only is the freedom of human beings who form the company possible, it is even required, because companies develop mechanisms of which they freely design the form, reporting on the effects produced with respect to the goals, according to the principle which becomes both central and positive: proportionality. 

As these norms and mechanisms are, on the one hand, more internalized through the training of human beings who are in the company or who work with it in one way or another or are concerned by its action, and are, on the other hand, deployed by companies which depend less on borders than States do, particularly thanks to the flexible law that they produce, for example through codes of conduct, the global reach is achieved, not through the neutrality of the norms produced but through the global nature of its issuer: the company. When the monumental goal is global because the subject itself is global, it may happen that international institutions are already present (as for banking and finance), but this is not the case for corruption, nor for the climate, nor in terms of equality between human beings. Companies can compensate for the absence of global law, particularly for the climate.

 

3. Around a definition of Compliance Law founded on values that can bring human beings together

The monumental goals present a technical dimension, especially when they are negative, but also express values. The values are always present in them, even when the idea is not directly serving human beings (example: the fight against hate speech), but it involves preserving an economic and financial system because, even in this latter case, if the failure of the system is ruled out, it is by a refusal to sacrifice the human beings who must pay the cost of the crisis which would move the collapsed system to a new system, an outlook to which people could be favorable.

It is true that values are more present when positive monumental goals are involved rather than negative monumental goals, as they are when it is the distant future which is involved more than the immediate future.

Independently of the choice that everyone makes for what the Law should be used for regarding human beings, it is more efficient to make people understand and to bring together diverse human beings around values that directly concern them than around a regulatory mass which is difficult to understand. The efficacy is on the side of the values when the rules must be made concrete by the people themselves.

 

B. THE WAGER OF COMPLIANCE LAW BUILT ON MONUMENTAL GOALS

 This definition allows us to better understand substantive law, and to learn it better. It articulates with the general requirement that we must "conform" to the Law (1). But, because Compliance Law concerns the Future, its Monumental Goals represent in its beating heart the wager that human beings can ensure that concern for others prevails in Law (2).

 

1. The articulation of conformity and Compliance

The idea is not to say that one of the definitions is true and the other is false. Substantive law, which this work restitutes by organizing it, carries traces of both. They are superimposed. For example, algorithms have their place, but they cannot be sufficient to exclude the place, central and decisive, of humans. The political side of compliance law must be allowed but this branch must not become an access road to technological totalitarianisms. The first definition is easier to make universal than the second one, because it is more technological and mechanical; the second one is more humanist, referring to the reason for which rules are developed: "Laws are made for people and not people for laws." We should keep these words of Portalis in mind.

 It is more an inclination. Either we continue to trust human beings, and the ethical part that we believe exists within them, the concern for others which can guide them, and we are inclined towards not just the first definition, but we superimpose onto it the second, and when there is an interpretation to make or a contradiction, we will prefer the second one. If we lose hope in human beings, driven by calculations, in this sense a sort of machine, then we should stay with the first definition and consider that the second definition is just hot air, or "meta-law" and that it should not be considered when practical solutions must be chosen or imposed.

 

2. Compliance Law, a wager on the human aptitude to be free

If we have this conception of human beings, then we must recruit engineers and ask them to develop algorithms which will carry out their work in data banks, which will handle all of the regulations that govern us, and human beings will strictly conform to them. If we have a conception of human beings as free beings, then compliance law is what allows us to protect this freedom in a systematic way so that it continues. That is why compliance law has such a deep relationship with Democracy, which expresses itself over time. It is true that this constitutes a wager. A wager on governments, on companies, on regulators, on courts and on human beings.

This wager is transparent in the conception of a legal normativity placed in the monumental goals of compliance law. This is because I am wagering that human beings are capable of being free and that the Law is what can allow them to be so, now and in the future.

It is for this reason that compliance law is essential, while conformity law is not.

________

 

1

Frison-Roche, M.-A., Le droit de la compliance, 2016.

2

Lenaert, K., ..., in Pour une Europe de la Compliance, 

comments are disabled for this article