Welcome to Compliance & Corporate Ethics In Practice!

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Bill proposes that Brazilian General Data Protection Law (“LGPD”) comes into force in 2022 – Although LGPD would originally come into effect from August 2020, the law may become enforceable only in 2022. At least, this is the proposal of the bill submitted by congressman Carlos Bezerra (MDB/MT), under the argument that Brazilian companies are still not ready to conform to the new legislation. According to the congressman, another excuse for the extension is granting to the Federal Executive Power more time to incorporate, to organize and to select the officers of Data Protection National Authority (“ANPD”), which will be responsible for supervising the application of LGPD in the country.
Nevertheless, experts on this matter sustain the preservation of the original effective date and allege that the Congress should opt for other measures instead of postponement, such as demanding explanations from the Executive Authorities for the delay on the composition of ANPD and adopting a politic that looks towards the awareness of entrepreneurs in the first months of law’s validity. Furthermore, in a prior opportunity, the Congress had already decided, by unanimity in both Chambers, that the term would not change, even with the delay on ANPD’s approval. According to experts, while LGPD is not in full force and effect, cases regarding data protection and virtual privacy will be kept under the regimes of the Code of Consumer Protection and Law No. 12,965/2014 (“Brazilian Civil Rights Framework for the Internet”), which is an undesirable situation in terms of legal security – especially for companies. (Estadão, 10.31.2019)

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Disparity between federal law and state laws about marijuana creates compliance quandary for broker-dealers in the United States – Although the use, sale and possession of marijuana are illegal practices according to the United States Federal legislation, 11 states have already legalized the recreational use of such drug for adults and more 22 states allow it to be used for treatment of certain diseases, with medical prescription.
This framework of legal uncertainty has created challenges for the American brokerages that, when in doubt, are requesting their broker-dealers to bar trades of current clients evolving securities related with marijuana businesses and to refuse new clients with investment on this sector. Besides this, the brokerages are avoiding investors whose income derives, even if indirectly, from the marijuana industry. Some companies are managing the accounts of these investors but adopting a very cautious interpretation of laws. The main question concerns how to determine to what extent brokerages are obliged to dig information to vet their clients, without incurring in breach of Compliance rules. Some of them are working on their own policies and restrictions, such as Oppenheimer & Co Inc., which only accepts transactions of marijuana-related securities if carried out on one of the three major exchanges: Toronto, New York and Nasdaq. So much caution is justified by the brokerages’ fear of being accused of facilitating the transfer of proceeds of a crime, because of their transactions with investors connected to the marijuana industry, which may cause serious penalties to the companies and some time in jail for their professionals. (The Wall Street Journal; 11.04.2019)

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Brazilian Minister for Infrastructure, Tarcísio Freitas, affirms that compliance problems in Brazil move away from foreign investors – During the Brazilian Institute of Autoregulation on Infrastructure Sector debut, Brazilian Minister for Infrastructure stated that investors praise the country’s infrastructure projects, but they still fear joining Brazilian companies. According to the Minister, the compliance is key for foreign investments to return to Brazil. At the beginning of the Integrity and Transparency on Infrastructure Sector Workshop, the Minister affirmed that Brazil is moving towards to return to investment grade. (G1; 10.09.2019)

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Law No. 6,308/2019, on Brazilian Federal District, imposes strict conduct rules to companies to participate in biddings – On January 1st, 2020, when it comes into force, all companies that have contracts with the District Government to provide products and services to public authorities must adhere to compliance standards, creating ethical patterns. Otherwise, they won’t be able to participate in public biddings. Besides this, the companies shall answer a quiz to inform if they have connections with members from public agencies or the Judiciary. If there is any irregularity and the company proves that it has a compliance program, its penalty will be mitigated. It is important to highlight that these rules are applicable to legal entities that have contracts greater than R$ 5 million and maturity of 180 days or more. (Correio Braziliense; 10.07.2019)

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Bill that requests the creation of Compliance Programs for companies that retain with the Estate is presented to the Brazilian State Goiás Legislative Assembly -Alego – The Governor of the State of Goiás, Ronaldo Caiado, sent to Alego a bill that creates the Integrity Program. Being broader, the new Integrity Law will supersede Law No. 20,489/2019, which regulates the Public Compliance Program. This program ensures the effectiveness and guarantees Public Administration transparency. The companies which retain Public Administration agencies’ obligation to adopt the Compliance Program is still going to exist but will be more specific. The bill also proposes some novelties, such as: (i) the act of considering the size of companies – small, medium or large; (ii) the specification of the forms and list of companies that contract with the Public Administration; (iii) the implementation of parameters for assessing the existence and application of the Compliance Program; and (iv) to set values for engineering works and services, procurement and services in accordance with the Bidding and Contracts Law (Law No. 8,666/1993). From this initiative, the State of Goiás will be the first to systematically impose Integrity Program in every Public Administration agency. (Rota Jurídica, 10.28.2019)

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A partnership between Google and health services company worries the United States – According to an article published at the Wall Street Journal, an investigation has been opened on the “Nightingale” project, a partnership between Google and Ascension that consists on collecting and analyzing medical data – which can be identified or laboratory preceding – from patients to help doctors to establish better treatments and administrative monitoring. The transfer of digitalized information by Ascension to Google Cloud, allowed by Google in the contract, has been the target of critics, because nobody knows exactly who will have access to such information. Besides this, Google did not notify the involved people that their information will be shared. (IstoÉ, 11.13.2019)

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First national Chinese law about encryption is published – The new law, published on October 26, 2019 will come into force on January 1st, 2020. It approaches the encryption regulation, especially on the commercial scope, presenting an orientation regime for the industry. Foreign companies and those which receive foreign investment shall have the same rights and the same treatment to access the Chinese encryption market. (Lexology, 11.12.2019)

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To learn more
Due to the compliance program implementation on companies, the number of professional contracts to this area has been growing. In this edition, we recommend the text “The compliance executives’ personal responsibility”, which approaches the discussion about “compliance officers” responsibility when illegal actions occur.

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Compliance Desk