The French Anti-Corruption Agency (AFA) is a regulatory agency focused on helping both public and private sector entities “prevent and detect corruption, influence peddling, extortion by public officials, unlawful taking of interest, misappropriation of public funds and favoritism.” Passed on December 9, 2016, and coming into force on June 1, 2017, the “Transparency, Fighting Corruption and Modernizing Economic Life” bill, otherwise known as Sapin II, created both the AFA and new requirements for French corporations to develop a comprehensive framework for anti-corruption measures.
Sapin II was built on the foundation of the Sapin Act of 1993, otherwise known as Sapin I. Deepening the French commitment to detecting and punishing corruption, a new draft version of Sapin II — Sapin III — was proposed on October 19, 2021 and is expected to further expand the French commitment to anti-corruption. It will further fortify corruption prevention efforts, strengthen transparency processes, and enhance tools for detecting and punishing corruption.
How will Sapin III change the compliance landscape? Today, we’re examining the steps needed to achieve compliance under Sapin II and what to look out for when Sapin III goes into effect.
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The French Parliament passed Sapin II, Law No. 2016-1691 on Transparency, Fighting Corruption and Modernizing Economic Life, in December of 2016 and it took effect on June 1, 2017. The law was named for its champion, Michael Sapin, the former French Minister of Finance.
To align France with its European peers and other international standards, Sapin II established guidelines for French corporate compliance programs. As one of the eight pillars of Sapin II (detailed below), the law defined a whistleblower reporting procedure. These speak-up procedures are designed to work in tandem with the EU Whistleblower Protection Directive, effective from December 2021, by prohibiting retaliation against whistleblowers.
Three guiding principles drive Sapin II:
Since the AFA began publishing guidance for corporate compliance programs in 2017, they have refined and continuously updated their guidance, with the most recent update published January 31, 2022. The AFA established eight key components of a corporate compliance program, focusing on detecting and preventing corruption at every level within a corporation.
The AFA’s eight key requirements for complying with Sapin II
Establishing higher standards for anti-corruption compliance programs, Sapin II details guidance for program adequacy and effectiveness. It applies to both public and private companies headquartered in France which have at least 500 employees and revenue of at least €100 million. Global companies with their parent organization headquartered in France and employing more than 500 employees are also expected to comply.
Noncompliance may result in a warning from the AFA or the imposition of serious sanctions. Reserving the right to release any decisions to the public, the AFA may also fine individual directors up to €200,000 or a company up to €1 million.
The EU Whistleblower Protection Directive came into force on December 17, 2021. Although Sapin II previously provided France with a whistleblower protection framework, the EU Directive established minimum whistleblower protection standards for all 27 EU member states and replaced the previous patchwork of protections with a unified standard across the continent. The Directive includes additional protections for non-employees and the ability to bypass Sapin II’s internal reporting requirement and report externally in some situations. The transposition of the Directive was seen as an opportunity to further fortify France’s whistleblower protections.
France ended up being the ninth member state to officially transpose the Directive into national law. The French Senate approved the new draft legislation on March 21, 2022, officially called “LOI n° 2022-401 du 21 mars 2022 visant à améliorer la protection des lanceurs d’alerte.” Submitted by French MP Sylvain Waserman and sometimes referred to as “Loi Waserman,” this new law gave French companies until September 2022 to comply.
Key elements of Waserman
Waserman upholds some of the important elements from Sapin II, including the obligation for companies and public institutions with 50+ employees and municipalities with 10,000+ residents to implement a whistleblower system. Other important elements include:
An additional decree from the French Council of State, published in October 2022 includes the following:
Want to learn more about the EU Whistleblower Protection Directive? Read an in-depth analysis in The Ultimate Guide to Complying with the EU Whistleblowing Directive.
Despite the implementation of Sapin II and Waserman, both notable improvements in the fight against corruption, France still ranks 23rd in Transparency International’s Global Corruption Perception Index (down from 2018). An evaluation mission, launched in 2020, with the goal of improving and evaluating Sapin II, took deputies Raphael Gauvin and Olivier Marleix more than five months to complete. Working with French stakeholders, they formulated 50 recommendations into a report. Published in July of 2021, the report aimed to:
Following the report’s recommendations, a new Sapin III bill was proposed on October 19, 2021. Taking up the elements of the report, the three important elements are:
Although France was behind its EU counterparts when it came to anti-corruption legislation, Sapin II jumpstarted their efforts. Sapin III is set to take up that baton. Although the future of Sapin III is still uncertain, especially in France’s current political environment following the turbulent 2022 elections, the nation has clearly demonstrated steadfast dedication to reforming their anti-corruption efforts.
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