Compliance systems and regulations for a Reconstruction with Changes project

For some years now, Peru has been implementing measures oriented to the eradication of burdens such as money laundering, financing of terrorism and corruption. This aim has led to the design and implementation of a local regulatory framework with a preventive and reactive sanctioning approach involving state, private entities, companies, citizens and social organisations.

Despite the fact that Peru has adopted the above measures within a broader regulatory system of compliance, its origins are in legal frameworks designed and approved years ago in other jurisdictions. For example, the Foreign Corrupt Practices Act (FCPA) 1977 by the United States, the Australian Standard for Compliance Programs (AS 3806-2006) 2006 and UK norms such as the UK Bribery Act 2010, the Proceeds of Crime Act (POCA) 2002, and the Terrorism Act 2000.

The National Plan of Integrity and Fight Against Corruption 2018-2021 sets out a preventive approach as a priority within its strategy. This includes the adoption by private companies of good corporate practices aligned to national and international regulations such as the ISO 37001. In the same way, the Financial Intelligence Unit (FIU), created by Law N° 27693, is aimed at detecting money laundering and financing of terrorism. The FIU also assists construction and real estate entities, amongst others, to detect suspicious operations. The FIU requires the mandatory designation of a Compliance Officer who shall inform detections of all suspicious operations on an operation and compliance level semi-annually.

The Reconstruction with Changes Integral Plan (RCIP) aims to reconstruct infrastructure in multiple regions, affected by the “El Niño Costero” phenomenon. RCIP is not immune to the abovementioned national policies. In fact, the execution of the G2G Agreement between Peru and the United Kingdom in June 2020 (the G2G-UK) is considered as one of the main advantages of the RCIP.

Through the G2G-UK, the UK will provide technical assistance to the Reconstruction with Changes Authority (RCA) in prevention and reconstruction projects. This is framed within a transparent and contracting system directed at promoting efficiency and avoiding punishable acts. The G2G-UK also includes an anticorruption provision that establishes sanctions upon those British officials and companies presented as strategic partners involved in any corruption acts, in accordance with the national statutes and the United Kingdom’s anticorruption regulations.

The transparency and surveillance sought is complemented by the action of the General Comptrollership of the Republic, which consists of:

• Supervising the entry into contracts within the RCIP
• Verifying the compliance of the respective regulations, and
• Receiving and attending any citizens or public servers’ complaints regarding illegal acts.

The aforementioned controls emphasises the importance for companies involved in the RCIP to adopt preventive mechanisms that reinforce the alignment with the applicable regulations. Thereby, avoiding negative consequences of punitive measures such as the definitive inability to contract with the state, high pecuniary sanctions, and cancellation of administrative authorisations, among others.

To that end, the establishment of a management system through:

• Internal policies and procedures against unlawful acts
• Incorporation of anticorruption clauses
• Internal transparency, and
• Other measures.

is currently required by international management standards, upon which the Peruvian Government relies. These measures offer great advantages to companies in the construction industry with regard to entry into contracts under the Peruvian regulatory framework.

Comment

The execution of the G2G-UK is a great contribution to Peru, since it enables the country to adopt procedures and contracting schemes already incorporated by other jurisdictions. The G2G-UK also adopts compliance provisions that have been successfully implemented by most jurisdictions. The aforementioned procedures and contracting schemes also create more favourable conditions for insurers, by contributing to a lower exposure to risk factors. Thereby, the G2G-UK may encourage the change that is fundamental to this Peruvian reconstruction project.

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