Germany: The Compliance Officer’s Function within a Company – The Federal Supreme Court decides on compliance officers’ criminal liability regarding violation of their duties and challenges the compliance organizations within the companies

Last Updated: 7 January 2010
Article by Ralf-Friedrich Fahrenbach, LLM, Dr. Christiane Freund, LLM, Dr. Rainer Markfort and Dr. Christian Schefold, LLM
Most Read Contributor in Germany, September 2016

Originally published 22 December 2009

Keywords: BGH, public law, fraud, board member, corporate duty, criminal law

A Compliance Officer's Responsibility after the BGH's Verdict from July 17, 2009

In a current decision (BGH 5 StR 394/08) the Federal Supreme Court (Bundesgerichtshof, BGH) has taken a stance regarding a compliance officer's responsibility within a company. Furthermore, it has integrated the still new company function "compliance" into the German legal system. The decision gives reason to summarize the legal requirements for "compliance" within the company and the tasks, authorities and legal obligations arising herefrom for the affected employees. Furthermore, recommendations should be issued on how to accommodate the statutory and practical requirements.

The Case

In the case decided by the BGH the defendant held both the position of head of internal audit and legal department within the "Berliner Stadtreinigung" (Berlin's public cleaning service), a company owned by the State of Berlin, an institution under public law. The defendant discovered a systematic error, which led to excessive notifications of charges. He informed the responsible member of the management board. However, the defendant followed the board member's subsequent directive not to correct the systematic error. As a result, the persons liable to the fees were excessively called upon and paid. The defendant was convicted of assisted fraud by failure to act (whereby the fraud was committed by the board member).

The BGH based the conviction upon the infringement of contractual duties arising from the employment agreement and having been taken over by the defendant: to protect both his company from damages, as well as – and this is the important aspect – to prevent damages to third parties through acts from within his own company. Thereby the guarantor's obligations were incumbent upon the defendant to actively and through his own actions prevent fraud, if necessary by informing the chairman of the management board or the chairman of the supervisory board. The BGH used the case to state that a compliance officer in a private commercial enterprise always has the duty to prevent damages to third parties by the own company. Therefore, such an employee is always a guarantor according to criminal statutes.

Compliance as a Compulsory Corporate Duty

Every management, e.g. the management board of a stock corporation (Aktiengesellschaft, AG) or that of a limited liability company (Gesellschaft mit beschränkter Haftung, GmbH) – has the duty to organize the company in such a fashion that both within the company and vis-à-vis external relationships (vis-à-vis third parties and the general public) the legal system's rules are upheld and statutory violations do not occur (Legalitätsprinzip, principle of legality). In particular, it is important to effectively prevent crimes and offenses from being committed from within the company. The term "compliance" has become widely used for in-house precautions to warrant the principle of legality to be upheld.

The compliance's scope, intensity and target depend on the company's circumstances, in particular, its size and the type of its operation. As such, the observance of statutory pharmaceutical requirements for a producer of pharmaceuticals has a different significance than for a machine manufacturer, while similar requirements regarding prevention of corruption in purchasing and sales, as well as the establishment of slush funds in both companies may exist.

Establishing a compliance organization and defining the employees' tasks and authorities and providing them with the means necessary to fulfill their tasks within the company is necessary in mid-sized companies, and in particular also in large companies. Typically, compliance organizations will be lead by an executive employee, the compliance officer (CO) and in larger companies the chief compliance officer (CCO), who reports directly to the responsible member of management; this executive employee is also the supervisor for the employees assigned to the compliance department.

In fact it is not the compliance officer's primary duty to protect the company from attacks and damages, as is the case, for example, with auditing (preventing breach of trust and embezzlement at the company's expense) and measures for the protection of security of the works (preventing unauthorized persons from entering). Rather, compliance's duty – and, therefore, the employees' duty who work in that area – is the prevention of illegal acts having effect within the company (e.g. violation of regulations for the protection of employees) and outside of the company (e.g. cartel agreements or the use of company computers to exchange child pornography). The compliance officer can also take on additional tasks, such as a data security, money laundering or an export control officer. By accepting these duties compliance officers assume a special legal position, which distinguishes them from the other employees within the company.

Criminal Law

Amongst others, a compliance officer's typical duties include the prevention of crimes according to the Penal Code (Strafgesetzbuch, StGB) and the extensive supplementary penal provisions outside the Penal Code from within the company. Therefore, the compliance officer is qualified and obligated to protect legal interests which could potentially be affected by the company. There are many examples for this, such as

  • Protecting the competition from cartel agreements
  • Protecting business partners – and indirectly the competition – from corruption
  • Protecting customers from unfair business practices and dangerous products
  • Protecting company employees (safety at work, data protection, co-determination).

These examples have in common that third party legal interests are at stake here, not the company's legal interests. Accordingly, the company cannot dispose of these, rather, it must protect these legal interests and prevent legal injuries. As a result the compliance officer often only indirectly protects the company itself, such as in the prevention of pecuniary fines or damage to the reputation. The compliance officer's main focus is the protection of third parties and the public from the company or from within the company. Therefore, the compliance officer deals with the defense of dangers in favor of third parties and the public.

By assuming the contractual (employment) duties to prevent dangers, which could affect third parties and the public through the company, the compliance officer is a guarantor within the criminal law meaning, Section 13 StGB. This means that compliance officers must actively prevent statutory violations at the expense of third parties which they notice, as they are obliged to do just that. If they neglect the obligatory intervention then criminal and civil liability are impending.

Position within the Company

In order to recognize and prevent statutory violations from being committed in the future compliance officers must receive the information necessary to fulfill the respective duties and have access to the relevant documents. This information and access right for the compliance department and its employees should be embedded in the company organization, for example in the general organization directives and (company) guidelines.

Detected violations of laws and rules have to be documented, remedied and effectively prevented in the future. The measures necessary must be instructed. However, typically a compliance officer does not generally have authority to give instructions; the necessary instructions shall be initiated by the company's management. As a consequence the compliance officer should have immediate access to the management member in charge of the respective department. The compliance officer may and must report to said member. The consequence hereof is that the management is informed of the compliance officer's knowledge of possibly illegal occurrences in the company. Management boards and managers are then obligated – just as the compliance officer – to adhere to the principle of legality in the company and to terminate breaches of the law which were noticed, in particular criminal and other offenses. Should management not act despite having knowledge thereof then there is a danger of pecuniary fines, other fines and further negative consequences (e.g. loss of reputation) for the company and the person responsible.


In particular unclear facts or uncertain legal situations can lead to difficult situations, in which the compliance officer must decide whether, when and with which recommendation to act the company's management should be informed.

In particular, a delicate issue arises when a management member does not share the compliance officer's opinion regarding the legality of the company's actions (e.g. in a complex foreign commerce issue with possible violations of embargo duties).

If the management member remains passive in this situation and does not eliminate the alleged unlawful condition then there is a danger of criminal liability due to neglect if a criminal offense has in fact been committed. In such a situation the respective management member shall discuss the topic with the entire management board or within the management and effect a resolution regarding this matter, possibly after having received legal advice from a competent third person who is obligated to maintain secrecy. Should the management then make an informed decision based upon this in good faith as to its legality then a criminal allegation will generally not be manifested. What does remain, however, is a possibly strained relation between management and the compliance officer.

Labor Law

Compliance officers are typically employees; this is also true for most chief compliance officers, so long as they are not members of the management board, which would be an exception. Management, or as the case may be, the member responsible for that department then has authority to issue directives vis-à-vis the compliance officer and the subordinate employees.

In this it is clear that unlawful instructions – e.g. not acting despite knowledge of illegal acts within the company (as hidden accounts) – are legally irrelevant and need not and may not be followed. But how should a compliance officer act in such a stress situation? What if the compliance activities are issues which affect the superior management board member personally and directly, such as cartel agreements which are tolerated or have even been initiated at the highest level? In such cases the compliance officer's or the superior's career is at risk.

The BGH has the effective answer: if a management board member commits a criminal offense from within the company then it is possible and reasonable for the compliance officer to inform the management board's chairperson or the supervisory board's chairperson. However, the BGH had to render a decision on the – downright convenient – rare case in which the defendant already knew everything that was necessary for the correct assessment of the situation at hand. Cases will usually not be that simple: intensive investigations are necessary to show whether irregular or even illegal behavior has occurred. These investigations can be directed or even terminated by the boards.

This will lead to the conclusion that compliance officers must – in the core area of their work, i.e. the ascertainment and prevention of criminal offenses – not be subject to directives, provided that the compliance organization within a company is properly established.

The examples described above show that while performing their duties compliance officers can be caught in certain conflicts with the management – and it is obligatory that they are – when the board of directors tolerate or initiate substantial breaches of the law or even criminal offenses. In such cases not only is there a risk of (mis-)guidance of the compliance officer by management's directives but also personal disadvantages. Therefore, it should be in line with good corporate governance to establish the compliance organization and the compliance officer's employment in such a manner that while performing the obligatory actions there is no threat of repression or disadvantages.

A similar prohibition of discrimination already exists statutorily vis-à-vis members of the works council and its candidates, Section 78 Sentence 2 Works Council Constitution Act (Betriebsverfassungsgesetz, BetrVG ), as well as the data protection officer, Section 4f Subsection 3 Sentence 3 Federal Data Protection Act (Bundesdatenschutzgesetz, BDSG). The minimal requirements for the German Federal Financial Supervisory Authority's (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) insider law compliance (Minimal Requirements for Compliance [Mindestanforderung an Compliance, MAComp]) are also headed in that direction, albeit only as a draft. In this the compliance officers' independence and assurance of prohibition from discrimination shall be promoted by appointment for a 24 month period and a 12 month notice period for termination of the employment contract.

Compliance officers should have the possibility of attaining advice from a competent third person who is obliged to maintain professional secrecy. This can be achieved by seeking advice from an auditor or an attorney-at-law. As a result this would reduce the tension stemming from the fact that compliance officers are employees, bound by directives, while at the same time they have the duty to maintain legality within the entire company – including the legality of the board of directors' actions. Independent advice cannot be attained within the company as its hierarchy establishes dependencies – probably from the board of directors. If questioned by the compliance officer about a critical issue, no company member would refuse information to the board of directors regarding the conversation's contents and the advice given. Good compliance must account therefor that and make external advice possible.


Both the compliance officer's criminal, as well as civil law liabilities go beyond that of the other company employees – even the managerial employees. This is a result of the circumstance that normally an employee is neither punishable nor liable via tort on a civil law basis for intentional criminal offenses committed by colleagues without the employee's knowledge. However, this is different for the compliance officer: due to compliance officers' special duties they are guarantors according to criminal law statutes and are obligated to actively prevent criminal offenses within the company. If this duty is violated then generally the compliance officer is punishable – typically for aiding by omission. Civil law liability follows criminal liability without further ado: everyone who was damaged by the compliance officer's failure to act can put forward claims for damages against the compliance officer personally and without limitation. This civil law liability due to intentional criminal offenses is not insurable, Section 81 Subsection 1 Insurance Contract Act (Versicherungsvertragsgesetz, VVG ). Instead, it can be avoided by the diligent fulfillment of duties.

In addition to this increased liability risk vis-à-vis third parties, compliance officers typically also have a higher liability risk vis-à-vis their respective employer: this is, for example, the case when the compliance officer culpably does not recognize or did not prevent an illegal situation within the company – such as a permanent violation of data protection regulations – and, therefore, the company was damaged (e.g. pecuniary fine). The company can here take subrogation against the compliance officer acting in breach of duty. In this the compliance officer cannot invoke labor law liability privileges if the prevention of exactly such a damage was part of the respective contractual employment duties.

Outlook and Recommendation

The current legal situation is characterized by the fact that the legislator naturally assumes the principle of legality – the guaranty of the company's acts being lawful – but has not consistently standardized its implementation within the company. Rather, the legislator restricts itself to set up rules in many laws for selective individual compliance aspects. Examples for this are: money laundering, data protection, immission control, water pollution control, instrument and product safety, etc. Some of these laws – those which aim at averting dangers in favor of the public – envisage officially appointed officers in companies, others do not. In future there will most likely be an increase in regulations within this area. The legislator will increasingly recognize dangers which companies will either cause (e.g. environmentally damaging immissions) or for which they will offer an adequate starting-point for enforcement actions (e.g. money laundering). The legislator will then prescribe in detail how the companies are required to avert these dangers.

Insofar as there are no statutory regulations the company is obliged to determine on its own how the legality of its actions is ensured. In this it should abide by the following central ideas:

  • Compliance is a company's duty. The company's management is obligated hereto.
  • This duty can be delegated within a company to a compliance organization, which has one or more compliance officers, depending on the individual situation.
  • The compliance organization and its members' tasks and authorities shall be clearly defined, documented and communicated within the company, as in general organizational directives and guidelines.
  • Each compliance officers' tasks and authorities shall be clearly agreed upon in the respective employment agreements and shall be congruent with the organizational directives and guidelines and documented. Exactly the contractually agreed upon tasks and duties shall actually be assumed and fulfilled by the actual compliance officer – not more and not less.
  • The particularities of the compliance officer's task and position regarding right to information, freedom from directives within a certain scope, protection from being disadvantaged, the right to use the chain of command, access to external advisors who are obligated to secrecy – is to be ensured via appropriate organizational and employment contractual regulations.

Visit us at

Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and JSM, a Hong Kong partnership, and its associated entities in Asia. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

Copyright 2010. Mayer Brown LLP, Mayer Brown International LLP, and/or JSM. All rights reserved.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.