One of the areas articulated in the 2020 Update was around payments and payroll. For the both the compliance professional and the corporate payroll function, there is a significant role to play in the operationalization of a corporate compliance program. The 2020 Update was replete with references to payment and its critical nature to any best practices compliance program.  This includes references to payments to foreign officials, payments to third parties and hiding bribes in payments to distributors. The 2020 Update begins with an admonition to stop wasting time on low hanging fruit when there are much higher risks in your business operations.

The role of payroll in compliance is not often considered in operationalizing your compliance program, yet the monies to fund bribes must come from somewhere. Unfortunately, one of those places is out of payroll. All CCOs need to sit down with his or her head of payroll, have them explain the role of payroll, then review the internal controls in place to see how they facilitate the goals of compliance. From that review, you can then determine how to use payroll to help to operationalize your compliance program.

The DOJ has now provided its clearest statement on how it expects a company to actually do compliance going forward. Long gone are the days where the DOJ simply considered the inputs of a written program as sufficient to protect companies from compliance violations. Yet the mandate to operationalize a corporate compliance program drives home the concept that compliance is a business process, which should be administered by the appropriate business unit with the requisite SME. When it comes to following the money, payroll is the most well-suited corporate discipline to provide this first level of oversight and controls.

Three key takeaways:

  1. Payroll can be a key prevent and detect control.
  2. The 2020 Update specified the tying of the corporate compliance function to the corporate payroll function.
  3. Offshore payments remain a key indicator for a red flag.