Big laws to watch in 2024: What compliance professionals need to know
As 2023 comes to a close, 2024 is already starting a sea change. Big laws are coming to rock the corporate world, and it is imperative that compliance officers batten down the hatches to ensure their companies are protected.
Not all of these laws will come into force in 2024. Indeed, some won’t have teeth for another year or two. However, ensuring alignment with the new legal environment before these laws go into force is key.
Here are five laws to watch in 2024.
Sanctions updates
Sanctions are changing faster than ever. The Office of Foreign Assets Control (OFAC) recently issued its largest fine ever. DOJ leaders have publicly stated that “sanctions are the new FCPA,” and hired resources to ensure that the proclamation becomes reality.
The UK recently set up the Office of Trade Sanctions Implementation to focus on stopping companies from evading export controls, particularly those against Russia.
It’s safe to say that sanctions are here to stay, with upticks likely in 2024.
WHAT TO WATCH: Regularly check for updates from regulators issuing sanctions in countries where you operate.
EU Corporate Sustainability Reporting Directive
The EU Corporate Sustainability and Reporting Directive (CSRD) entered into force in January 2023. Large and listed companies must publish regular reports on the social and environmental risks they face, and on the ways their activities impact people and the environment. It is estimated to affect about 50,000 companies. The first reports will be published in 2025 based on 2024 activities.
WHAT TO WATCH: Draft standards have been published and will be reformed during the period between now and when the first reports are due. Keep a close eye on those reforms.
Modern slavery prevention disclosure laws
Modern slavery prevention is a top priority for legislatures. California led the charge in 2012 with its modern slavery disclosure law (California Transparency in Supply Chain Act), which was followed by the UK’s Modern Slavery Act in 2015. Australia’s 2018 Modern Slavery Act came into force, recently followed by Canada in 2023.
Companies meeting the thresholds in Canada must publish a report detailing what they are doing to prevent modern slavery and child labor in their company and supply chains. Reports must be made available to the public by publishing them in a prominent place on the organization's website, and through a public registry accessible through the website of the Department of Public Safety and Emergency Preparedness.
WHAT TO WATCH: The first reports under the Canada's Fighting Against Forced and Child Labour in Supply Chains Act are due to be published in May 2024. Review early reports to ensure your practices are in line with what other companies are doing for prevention.
The UK government has publicly discussed updating the UK Modern Slavery Act to have more stringent penalties and more guidance. While it hasn’t happened yet, it is important to keep this on your radar.
EU Corporate Sustainability Due Diligence Directive (CSDDD)
In February 2022, the European Commission presented a legislative proposal for the Corporate Sustainability Due Diligence Directive. The EU Council adopted its negotiating position on November 30, 2022. The European Parliament will soon be voting on its negotiating position, at which point the three positions (Council, Parliament, Commission) will negotiate to come up with a final law.
The proposals for this law are important. The current draft:
- Would create a new supervisory authority on a state level
- Allows for civil lawsuits in situations “but for” proper due diligence, the harm wouldn’t have happened
- Creates a new corporate duty to perform due diligence on human rights and environmental outcomes
- Creates individual director-level duty of care
- Gives a detailed description of due diligence activities that must be undertaken, including the requirement to publicly communicate about due diligence
WHAT TO WATCH: Keep an eye on the EU’s progress in finalizing this law.
European Union’s Artificial Intelligence Act
The legislation of AI became a reality in mid-December when the EU government worked at breakneck speed to get to final adoption of the Artificial Intelligence Act. The enactment will be followed by a transition period of at least 18 months before the regulation becomes fully enforced.
The law is groundbreaking because it is the first comprehensive regulation addressing the risks of artificial intelligence through a set of obligations and requirements that intend to safeguard the health, safety and fundamental rights of EU citizens and beyond, and is expected to have an outsized impact on AI governance worldwide.
WHAT TO WATCH: Be mindful of the details of the EU AI Act as the text and rules around the Act are published. Additionally, keep an eye on states like California and Illinois that are leading the way in AI regulation in employment.
2024 looks to be an active and exciting year throughout the world. By preparing properly as laws change, you’ll have calm sailing throughout the year.
