Morocco: 5 hot compliance topics
The COVID-19 pandemic triggered a chain of events that underscore the crucial importance of compliance. Throughout the emergency, we have seen the risks of noncompliance and corruption increase. This in turn increases the need for businesses to implement and strengthen their anti-corruption policies.
In Morocco, the sanitary crisis has shaped the actions of regulators, who are paying particular attention to economic actors’ compliance in five key areas. Here, we take a quick look at those five areas.
1. Corporate social responsibility
2. Data privacy
The sanitary crisis has opened the way for business methods that were previously almost nonexistent in Morocco – such as remote work – while encouraging the emergence of new workplace practices – such as checking temperatures and vaccination certificates. More customers are shopping online as well.
These changes bring fresh concerns about data privacy. Throughout the pandemic, the National Commission for the Control of Personal Data Protection (CNDP) has addressed numerous issues and provided resolutions that ensure safeguards on data privacy.
Data privacy compliance obligations can be classified into two main categories. The first category includes compliance obligations regarding the implementation of organizational and technical measures, such as access control and restrictions, encryption, and a retention policy. The second category relates to the completion of legal formalities such as authorization requests to process data.
For example, if a company collects customer data from online sales, it must comply with Law no. 09-08 on personal data protection as well as the resolution of the National Commission for the Control of Personal Data Protection relating to the processing of online customers’ data. The aforementioned resolution subjects this type of processing to a standard declaration to the National Commission for the Control of Personal Data Protection and to the data subject’s consent.
3. Preventing corruption
The pandemic triggered an economic crisis, tempting some to turn a blind eye to business partners’ compliance with anti-bribery and anti-corruption regulations.
Corruption is a punishable offense in Morocco under articles 248 to 256 of the criminal code. Moreover, the fight against corruption remains an established commitment of the Moroccan public authorities and has been reaffirmed on many occasions. A National Authority for Probity, Prevention and the Fight against Corruption has been put in place, which is itself a member of the National Commission for the Fight against Corruption. The anti-corruption work of these two authorities is complementary.
In addition, those doing business in Morocco also need to consider various foreign regulations which have an extraterritorial scope, such the US Foreign Corruption Practices Act and the UK Bribery Act.
All these regulations call for companies to implement in-house standards and procedures that aim to reduce the risk of corruption. There is an added advantage to organizations in implementing these procedures: if a corrupt act occurs despite these measures, the company's liability (and therefore the risk of sanctions against it) may be limited or even excluded. In fact, it is considered that if a company has done its best to minimize the risks of corrupt actions, it should benefit from "mitigating circumstances."
4. Preventing money laundering
Money laundering is the process of concealing the criminal origin of money. This crime is subject to Law no. 43-05, which sets out obligations for businesses of vigilance, reporting of suspicions and the establishment of an internal monitoring system. It is a law that strongly encourages compliance.
This Moroccan law was inspired by the recommendations of the Financial Action Task Force (FATF) - hence its similarities with American, British and European legislation. In 2019, FATF’s Middle East & North Africa Financial Action Task Force required Morocco to improve effectiveness of measures to tackle money laundering and terrorist financing. Since then, Morocco has actively worked with FATF to address these issues, making it a top priority. In March 2022, FATF said it “welcomes the progress” Morocco and other countries have made in this area “despite the challenges imposed by COVID-19.”
5. Complying with competition regulations
During the pandemic, we’ve witnessed increased merger activity as well as aggressive competition behavior from various actors. These actions highlight concerns about compliance in competition and dominant positions.
The Competition Council, which investigates entities that might have violated competition regulations. has been making headlines lately as it enforces competition regulations with a sanction-oriented policy, rather than an educational-oriented policy.
It is of the utmost importance for companies that are contemplating a merger to comply with their obligation to notify the merger to the Competition Council in accordance with the applicable regulations. Failure to comply with these regulations could make the companies involved in the merger liable for up to 5 percent of revenues before taxes in Morocco during the latest fiscal year. Indeed, this sanction was recently applied by the Competition Council, when it fined a company MA$11,670.215 (US$1.1 million) for failing to notify a merger.
To learn more about these five key areas of compliance, please contact either of the authors.