The word compliance has been rapidly making a name for itself in recent months in Poland. 2018 was particularly intensive in terms of the number of new regulations in this matter. It is worth mentioning the Anti-Money Laundering/Combating the Financing of Terrorism Act (AML), the General Data Protection Regulation or introduction of the Mandatory Disclosure Rules (MDR). The introduced regulations create an obligation on the entrepreneur to apply due diligence or to apply appropriate compliance procedures which are adapted to the activities of the business, as well as oblige entrepreneur to use them all effectively .
    The new laws that have been announced, namely, Act on the Collective Entities Liability (OPZ) and the Act on Public Life Disclosure, provide for the extension of this trend including further areas of compliance and ultimately to cover all aspects of these entities' activities with a system of legal security.
    In most of the large, international companies there are applied procedures which are used for proper management , as well as for securing the assets held by the business entities. However, those procedures, which are imposed by the stock exchange regulators or are introduced by the management boards, usually through the recommendations of the head office, are not usually fully compliant with the Polish regulations. In smaller companies, compliance has not functioned so far. However, the lack of procedures has not resulted in any direct legal sanctions up to now.
    The newly-introduced regulations offer a different approach to the internal control and the prevention of irregularities in the Companies. The lawmakers are forcing business entities to operate proactively and preventively instead of reactively. The authorities want to transfer the safe, controlled business trading area to the limits of the companies’ activities and even to the entities they cooperate with (financial liability for the illegal activities of subcontractors and entities working with the enterprises – according to the Act on Collective Entity Liability).
    Companies from the financial, pharmaceutical and other regulated sectors have already had compliance officers for years. However, especially in the entities that were controlled by private equity funds or entities from outside the regulated market or small and medium-sized enterprises, it has only been the current changes in the legal regulations that directed their attention to the matters of compliance.
    It should be underlined that soft areas of business activity, such as corporate governance, ethical principles, or selected business sectors are no longer subject to due diligence in process management but are starting to be required and enforced with respect to all entities conducting business. The failure to apply due diligence (VAT settlements and withholding tax – WHT), as well as the lack of procedures required by the specific Act of law (the Tax Ordinance on the Mandatory Disclosure Rules) results and will result in fines and sanctions. The tax authorities are consistently using new tools to impose fines on audited entities.
    How to defend against such restrictive authorities?
    The simplest solution is to conduct a complex review of procedures and to document these procedures which operate within the company, namely to write down the customary practice and internal processes which are functioning within the company.
    Subsequently, those procedures should be compared with the currently applicable law, analysing whether the given regulations apply to our organization and whether the procedures and internal system within the company satisfy the legal requirements. In the case of defects or irregularities, the existing system should be updated, having in mind to eliminate conflicts between the different procedures.
    It is also important that those who will follow new or modified procedures to be trained to follow these procedures correctly.
    The essence of new regulations is not only to have procedures, but also to act properly in accordance with these procedures by management staff and regular employees as well as persons or entities cooperating with the organization. With frequently changing and newly introduced legal regulations, it is important to keep monitoring the legislative process. This will enable the smooth and ongoing modification or addition of new procedures, as well as tightening the tax compliance system. It is necessary to consider creating a compliance specialist position or even creating a separate department within the company.
    In developed countries the compliance systems have been established and have been evolving for 20–30 years. Poland, which has recently been acknowledged as being a developed country, is aiming to achieve a high level of development, including the compliance procedures.
    We need to be aware that the word compliance or the phrase - system of compliance procedures, will become regular for the Polish enterprises, for good.