Be Happy About Global Compliance By Michele Honomichl

In the UK, there is a big sigh of relief from payroll professionals across the country as they are checking off RTI and Auto enrollment.  After living through months of agonizing integration, policy writing and compliance reviews, people are humming Happy by Pharrell Williams.  You probably singing in your head right now.

But then along comes afternoon phone call from the US Controller wondering what the company is doing about Office of Foreign Asset Control (OFAC) requirements, Foreign Corrupt Practices Act (FCPA), UK Bribery Act, and EU Data Privacy.

You are thinking “Huh?” but you politely say, “Sorry, but could you please repeat the question?”  While scrambling to grab a pencil to note down the alphabet soup that was just rattled off.  Hoping you spelled everything correctly, you finish the call saying, “Absolutely, I will be happy to look into it for you”.

Happy has evaporated from your brain and in flows the Darth Vader theme, The Imperial March.  So now what?  Obviously, there is more to compliance than locally required statutory processing, filing and regulations if you work for an international company.  So let’s break it down.

Local Compliance:

Typically from a local country payroll perspective this would include calculating payroll correctly, filing local statutory paperwork (in some cases manually by appearing in person) ensuring funding goes out on time both to the employee and tax authorities, and delivering pay slips.

Global Compliance:

Data: Ensure access to data is limited to appropriate parties only.  In some cases, HR professionals will be restricted from certain fields, while payroll professionals often have visibility of the whole data set.  In other cases, sharing data may be restricted across borders and require additional certification of third party providers like Safe Harbor ( for compliance with the European Commission’s Directive on Data Protection.  In other cases, payroll data may be shared across borders, but at minimum the data needed to run payroll and the outputs of those payrolls must reside in the country for which it is being calculated.  Data policies are continually shifting at a global and country level, which require companies to be vigilant.

Watch Lists:  The Office of Foreign Asset Control (OFAC) is a division of the US Treasury Department that enforces economic trade sanctions based on US foreign policy against specific countries, organizations, and people who are engaged in terrorism, narcotics, money laundering and other threats to the safety of the US and its economy.   This is relevant to payroll because any company that has ties to the United States is required to run all employees, partners, and third parties against the OFAC list to prove they are not doing business with any of the aforementioned individuals/organizations.  Generally, OFAC is monitoring money movement activity (payments to employees, vendors, resellers, third parties) and can impose a fine up to $200,000 per occurrence if a company inadvertently pays someone or some institution that is flagged by OFAC.  Additionally, just doing business in countries or with banks or people (regardless if money is changing hands) can result in a penalty if sanctions exist.  Companies can buy programs to manage the OFAC monitoring process to help maintain compliance.  To learn more about OFAC and to see if someone you know is on the list check out:

Bribery:  Many countries have various regulations to prevent bribery.  Some of the better known are the UK Bribery Act, the Foreign Corrupt Practices Act (FCPA), and Know Your Customer (KYC).  These regulations often require companies to prove their compliance through internal policies and procedures.  Compliance to these procedures must be presented if a case is ever brought up against the company.  Failure to adhere to these regulations carry stiff fines and often jail sentences.

So be Happy because there is a lot of information on the various levels of compliance in the global space.  If you are resourceful and diligent, you will be singing along with Pharrell Williams again in no time.

This article was originally published in Purely Global Magazine, June 2014 edition.


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