Compliance: from corporate crime to human rights

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Within the Ecuadorian business environment, and across Latin America more broadly, compliance has evolved from a legal technicality into a genuine business management strategy. In a landscape where regulation is becoming increasingly stringent and public expectations continue to rise, regulatory compliance is no longer concerned solely with avoiding sanctions; it is also about ensuring that organisations operate with a genuine sense of purpose.

The evolution of compliance: from crime prevention to labour rights

Five decades ago, compliance was primarily associated with the prevention of corporate and financial crime. As the focus shifted from purely economic matters to employment-related issues, attention turned to the responsibilities that businesses owe not only to their own employees but also to the employees of their suppliers.

The traditional State-individual dichotomy, which has long served as the classic framework governing relationships under human rights doctrine, has consequently been expanded to encompass the employer-employee relationship, regardless of whether the employer is an individual or a legal entity.

This development has given rise to a broader range of obligations that companies may assume, requiring them to act in accordance with the law and to remedy any harm that their activities may cause.

A compliance system enables organisations to identify, prevent and mitigate legal risks before they develop into disputes or regulatory sanctions.

Compliance as a system of corporate self-regulation

Although compliance requirements are increasingly being incorporated into national legal systems, whether as mandatory obligations or as mitigating or exculpatory factors in determining liability, it is important to remember the concept’s origins: compliance is, fundamentally, a system of corporate self-regulation.

The purpose of a compliance programme is to foster an organisational culture; that is, a way of conducting business founded upon due diligence and corporate ethics.

Internally adopted rules, including policies, manuals and codes of conduct, should no longer be regarded as mere bureaucratic requirements, but rather as instruments for safeguarding corporate reputation and protecting the rights of all stakeholders connected with the business.

Essential components of a compliance programme

Today, a compliance programme is generally expected, as a matter of recognised best practice, to include, at a minimum, transparent recruitment policies, anti-harassment and anti-discrimination protocols, occupational health and safety measures, and internal whistleblowing mechanisms.

In particular, a whistleblowing channel constitutes an essential compliance tool, enabling employees to report irregularities without fear of retaliation while demonstrating the organisation’s genuine commitment to ethical conduct and to maintaining a safe workplace free from violence and harassment of any kind.

Compliance for micro and small enterprises in Ecuador

It is estimated that approximately 90% of businesses in Ecuador are micro-enterprises or small enterprises, presenting the challenge of implementing compliance frameworks that are proportionate to their size and available resources.

In such organisations, the compliance function may be entrusted to a single individual or to a collegiate body, provided that it enjoys sufficient independence, possesses the necessary expertise and receives appropriate support from senior management.

The effectiveness of a compliance system depends not on its complexity, but on its authenticity.

Building a living and effective compliance system

An effective compliance programme must be dynamic. It requires ongoing training, accessible reporting channels, clear communication to ensure that internal policies are properly understood, and genuine commitment from management, including the allocation of adequate financial resources.

A code of ethics serves little purpose if employees do not recognise it as a practical guide for their day-to-day activities and, indeed, as a set of principles capable of informing their personal conduct.

Compliance, human rights and supply chains

Modern compliance extends far beyond protecting organisations from legal risks; it also protects the individuals who work within them and those participating throughout increasingly complex supply chains.

By embedding human rights considerations into their policies and operational processes, organisations acknowledge that their legitimacy depends not merely upon formal compliance with the law but also upon a genuine commitment to respecting human dignity.

About the author

With extensive international experience, Ernesto Velasco joined the team at Robalino Abogados in 2012 after studying and working in Brazil, the United States and Spain.

He is of counsel at the firm and specialises in compliance & forensics, public law, energy and natural resources, as well as the aviation sector.

Ernesto is also a director and lecturer on postgraduate programmes at Universidad Hemisferios, Universidad Andina Simón Bolívar and the University.

Frequently asked questions about compliance

Why is compliance regarded as a form of corporate self-regulation?

Compliance is fundamentally a form of corporate self-regulation because it involves organisations establishing their own internal policies, codes, manuals and procedures to guide their operations and promote an organisational culture founded upon legal compliance and ethical business conduct.

What should a compliance programme include?

A compliance programme should include, as a minimum, transparent recruitment policies, anti-harassment and anti-discrimination protocols, occupational health and safety measures, internal whistleblowing mechanisms, ongoing training, and clear communication of the organisation’s internal policies.