The difference between compliance department and legal department

Legal analysis: First, the work basis is different.

Legal work is based on laws and regulations.

If the legal advice given in legal affairs is not based on effective laws and regulations, we must first question its professional level.

Of course, this does not mean that legal opinions only need to consider laws and regulations, and the actual operation and law enforcement are all factors that need to be considered.

The basis of compliance work is not only laws and regulations, but also internal policies of the company, including industry standards absorbed by the company.

Violation of internal policies and procedures is not necessarily illegal, but it is definitely illegal.

There is a thorny issue here, even if it violates the internal policy process, there is not necessarily a compliance risk.

Compliance risk actually refers to the possibility that a company may be punished by law enforcement departments for violating laws and regulations.

Legal risk not only refers to the risk of being enforced, but also includes broader risks of bearing adverse legal consequences, including payment of liquidated damages and compensation.

Second, the work content is different.

The Compliance Department is only responsible for dealing with specific areas, usually including anti-corruption, anti-bribery, anti-monopoly, anti-unfair competition, network security and data protection, export control, conflicts of interest, and third-party management and bidding management related to these areas. The compliance department of the financial industry should also add one item, anti-money laundering.

For companies established in the Legal Department and Compliance Department, legal affairs outside these areas are managed by the Legal Department, which usually includes litigation, contract review and management, license and official seal management, intellectual property rights and so on.

Although there are some differences in content, it is actually difficult to completely separate the two parties, and something will always happen, that is, things related to compliance and legal affairs. Generally speaking, the two sides cooperate closely.

Third, different job roles.

The role of legal affairs is more defined as a business partner to help business departments achieve business goals.

In addition to the role of partners, the role of compliance has another layer, that is, internal regulators. Especially in dealing with conflicts of interest, internal fraud, false reimbursement and other issues, it has played a supervisory role.

One of the duties of the compliance officer is to help improve the internal policies and processes, which determines that the compliance officer needs to clearly point out the problems and propose improvement measures when he sees them, so as to improve the company's compliance management system.

Legal affairs can certainly give suggestions for improvement, but it is more icing on the cake than due responsibility. This is my understanding. In other words, if the Legal Department doesn't do this, there is nothing to blame, but if the compliance officer sees obvious policy and process problems and doesn't point them out, then it can be said that it is dereliction of duty.

Legal basis: The Notice on Pilot Work of Compliance Management System Construction in Some Central Enterprises officially opened the curtain of compliance system construction of state-owned enterprises. Under the leadership of the State-owned Assets Supervision and Administration Commission (SASAC), several large state-owned enterprises began to carry out compliance construction, from the establishment of compliance departments, the construction of full coverage compliance system and publicity. In the following years, the compliance pilot expanded, and more state-owned enterprises began to engage in compliance work in accordance with the relevant requirements of SASAC.