ARTICLE
15 January 2025

Compliance, Enforcement And Investigations In Asia – 2024 Reflections And What We're Watching In 2025

RG
Ropes & Gray LLP

Contributor

Ropes & Gray is a preeminent global law firm with approximately 1,400 lawyers and legal professionals serving clients in major centers of business, finance, technology and government. The firm has offices in New York, Washington, D.C., Boston, Chicago, San Francisco, Silicon Valley, London, Hong Kong, Shanghai, Tokyo and Seoul.
As we wrap up 2024, we wanted to share a few reflections and observations on what we have seen on the ground in Asia's compliance, enforcement and investigations landscape this year, and what we are watching.
China Criminal Law

As we wrap up 2024, we wanted to share a few reflections and observations on what we have seen on the ground in Asia's compliance, enforcement and investigations landscape this year, and what we are watching for in the year ahead.

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2024 Overview

Market Hotspots: In 2024, our team worked on diverse international engagements, handling matters across multiple regions spanning Australia, China, Dubai, Hong Kong, India, Indonesia, Japan, New Zealand, Saudi Arabia, Singapore, South Korea, Taiwan, Thailand, the Philippines, the United States, and Vietnam.

Growth in South and Southeast Asia: While China continues to be a strong focus, there has been a noticeable increase in investigation matters in South and Southeast Asia, particularly in India, the Philippines and Vietnam. Despite the increasing business activity in Asia's emerging markets of Indonesia, the Philippines, and Vietnam, major business hubs and large economies such as China, India, Japan, South Korea, and Singapore remain dominant, signifying their ongoing importance. In many of these jurisdictions, we are seeing an increase in whistleblowing, a focus by regulators (both local and global), and heightened investigation activity. However, a key issue in many of these countries is the lack of experienced, trained, and available compliance talent, creating compliance challenges for companies in the region.

Matters: Broadly speaking, the matters we advised on involved a combination of investigations (both internal and government), compliance due diligence, monitoring, risk assessments, addressing issues related to bribery, corruption, fraud, and whistleblower complaints, deal due diligence, post-investment compliance monitoring, and portfolio companies' compliance program reviews.

Industries: Our clients' industries that we worked with in 2024 spanned a wide range of sectors:

  • Within health care and life sciences, we engaged with clients in life sciences, health care, pharma/medical tech, and pet veterinary care.
  • In financeand investments this encompassed private equity/asset management, financial services, banking, insurance, commodities trading, and microfinance.
  • Within the technology sector, this included, SaaS systems, information/robotics technology, and telecommunications.
  • The energyand environmentsector included energy, renewable energy, waste management, and environmental services.
  • Infrastructureand realestate included toll roads and data centers, logistics, real estate, and construction, and public works.
  • The manufacturing andindustry sector included manufacturing, light manufacturing, heavy manufacturing, aerospace technologies, and mining/extraction.
  • Trade and commerce involved trading companies, e-commerce, consumer services/retail, and apparel retail.
  • We also worked with clients in the entertainment, agriculture/food, educational institutions, human resources, and outsourcing services sectors.

Our advisory work on matters within information/robotics technology, SaaS systems, and AI reflects how companies across Asia are embracing digital transformation technologies. These innovative new fields bring new compliance and governance challenges as regulatory frameworks mature alongside them and perhaps their own governance and misconduct issues in the future.

Observations and Reflections

Corporate Governance Oversight: Several investigations we undertook highlighted a significant issue we see across the region: corporate governance oversight may not be keeping pace with economic growth. As companies expand and economies develop, the need for robust compliance and governance frameworks becomes even more critical to ensure ethical practices and accountability.

Trends in Government Enforcement: In terms of government enforcement, actions by U.S. authorities have also continued, with a focus not only on traditional corruption cases but on accounting/channel stuffing issues, bid-rigging and related bribery and internal control/accounting offenses, and economic and trade sanctions-related matters. Major corruption sweeps in China and large-scale matters involving prosecution of local social insurance fraud and data privacy violations have also led to additional investigations.

Behavioral Science, Cultural Approaches, and Data Analytics Techniques: Working with R&G Insights Lab and applying behavioral science, cultural approaches, and data analytics techniques has been enjoyable and thought-provoking, adding a further dimension to our work in terms of enhancing interview techniques, drafting compliance policies, and identifying and reviewing data.

In-Person Meetings and Interviews: Although traveling and conducting in-person meetings and interviews is not yet at pre-COVID levels, there has been a noticeable increase. Interacting face-to-face with clients, who are often on site, is highly beneficial. In-person interviews are often more effective, allowing for better engagement, assessment, and empathy.

Varying Compliance Knowledge in Companies: We have seen that executives at different levels within a company often possess varying degrees of compliance awareness and knowledge. Highlighting that training and information sharing are key areas companies that are expanding often neglect. This is further exacerbated by the complexities and nuances of compliance in diverse cultural and organizational contexts, particularly in companies with cross-border operations.

What We're Watching in 2025

Corporate Culture: Regulators are increasingly aware of the impact of corporate culture on company compliance. In 2025, we anticipate more emphasis on this in terms of employee conduct at all levels.

Cultural Context within Compliance Programs: Multinational corporations ("MNCs") have been increasingly aware that compliance programs need to be developed, which apply on both the global and local levels.

Enforcement Environment: The string of cases brought by U.S. authorities involving bribery, bid-rigging, and accounting-related issues, points toward continued activity among domestic regulatory enforcement agencies in Asia. Particularly in China, with high-profile cases in 2024 involving local regulatory, insurance, fraud and data-related violations, their anti-corruption campaign shows no sign of easing. We'll be monitoring potential changes in the U.S. enforcement environment in light of the new administration.

Diplomatic and Economic Changes: We are closely monitoring the impact of an array of new government administrations, diplomatic changes, and economic shifts on businesses and employees in Asia. It is implicit that there will be more regulatory changes, driven by political shifts, which will likely increase compliance work. Additionally, we expect to see an increase in inquiries regarding trade, sanctions and export controls, particularly related to Russia, potentially leading to more diligence, investigations, and risk assessments in these areas.

Technology and Data Analytics: There is an ever-increasing appetite for the use of the latest technology and data analytics in document reviews to enhance efficiency and productivity. In 2025, we anticipate there will be significant investment in AI and advanced technologies to identify and prevent compliance breaches and streamline monitoring processes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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