Ed. Note-today we have a guest post from contributor Timur Khasanov-Batirov.
Four Things Compliance Practitioner Should Know About the Eurasian Economic Union
An effective Compliance risk management at emerging markets for any business significantly depends on timeous observation of changes in local regulatory environments. Obviously if regulatory changes simultaneously, influence five nations a Compliance professional should consider at least key implications of such changes for his or her scope.
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The EAEU in a Nutshell
The Eurasian Economic Union (“the EAEU” or “the Union”) is an international organization for regional economic integration. The EAEU goals include free movement of goods, services, capital and labor, along with harmonization of policy in number of sectors. Currently the member-states of the Union are as follows:
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Armenia;
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Belarus;
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Kazakhstan;
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Kyrgyzstan;
A free trade zone between the Union and Vietnam started to function in 2016. Negotiations to conclude free trade zone agreements between the EAEU and number of countries as Israel, India, Iran, and Singapore to name a few already took place.
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Common Rules of the Game for the Common Market
The EAEU concept provides formation of the single regulatory framework. Deadlines for implementation of common rules vary from already approved regulations to processes that scheduled up to 2025. The cooperation efforts in the Union are focused on the following areas:
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Customs;
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Agriculture;
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Technical regulations (i.e. issuance of certificates of conformity);
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Manufacturing;
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IT;
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Trade;
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Transport;
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Antitrust & Fair Competition;
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Financial Policy.
Thus, the significant part of the national legislations, which cover major businesses, will be replaced or supplemented by supra-national rules. Consequently, in the nearest future global corporations, which operate in this region, will face significantly amended or brand new regulatory environment.
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Check Impact on Your Industry
While some integration activities designed in a long-term outlook, certain industries have already faced new regulatory regime. Below we name just a few developments to illustrate how they echo Compliance scope.
Adoption of the new rules is in the process. The mechanism of registration of medical devices for circulation at the EAEU markets is already presented. Fine-tuning of the Union’s legislation (so called “legislative acts of the third level”) is scheduled for 2017. Thus, it is advisable to monitor regulatory changes in order to effectively address brand new regulatory amendments.
Approval (registration) procedures. Pharma companies are granted with grace period for registration of drugs per national rules, however until the end of 2025 each medicine has to be (re) registered per supra-national procedure. This mechanism is described in more than 800 pages document. As a general Compliance trend, we can outline increase of interactions between companies and regulatory bodies aimed on:
– bringing registration dossier for each medicine in accordance with the Union’s requirements
or/and
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expansion of geography for particular medicine’s circulation to some EAEU’s markets.
Pharma inspections. Inspection by industry regulator is a classical priority area for Compliance practitioner. The unified design of such inspections which covers all Union’s countries is already adopted.
Customs clearance traditionally is a matter of high attention by corporate Compliance teams. Thus, any changes in this area should be analyzed. The Сustoms Code of the EAEU will come into force upon completion of national approval procedures most likely in one year. Interestingly the code will replace already effective supranational piece of legislation called Customs Code of the Customs Union (an early predecessor of the EAEU). The new one will introduce a number of positive changes aimed on increase of electronic customs clearance procedures.
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Brief Recommendations for Your Compliance Program
Based on the abovementioned we recommend reviewing impact of the forthcoming EAEU legislative pieces on your Compliance program. Consequently, we believe that at least four hallmarks of you corporate Compliance program for this region (or particular Union’s country) out of 10 per Resource Guide to the U.S. FCPA have to be addressed.
You may want to check, what changes will influence your business and consequently your Compliance risk register for the region.
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Third-Party Due Diligence and Payments
Review relations with current/potential third parties (as for instance outside counsels) which represent interests of your company before regulatory bodies on potential scope of work and conduct fair market value evaluation of their services.
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Codes of conduct and compliance policies and procedures
In case of changes in the business processes (i.e. introduction of cross-border element) or significant increase of interactions with governmental officials, we recommend updating corporate policies.
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Continuous Improvement: Periodic Testing and Review
Conduct on–site Compliance/Internal audit check to ensure that transition to the EAEU’s regulatory regime has been going on with observance of all applicable laws and internal integrity standards.
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About the Author:
Timur Khasanov-Batirov is a Compliance practitioner with 15-year background at high-risk markets. He has experience in structuring FCPA & Antifraud Compliance programs in various industries. Timur graduated cum laude from Tashkent State institute of Law (BhD) and the University of Minnesota School of Law (LLM). He holds Graduate Diplomas from Manchester Business School in Financial Crime Prevention (the UK) and in Compliance (Russia).
The geography of Timur’s roles includes positions in Kazakhstan, Russia, Uzbekistan, the US, and Ukraine. He often speaks on compliance risk management topics worldwide, writes articles, and actively promotes integrity concept in the corporate world.
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