The European Union adopted the Whistleblower Protection Directive in 2019, seeking to establish a uniform complainant protection regime across EU Member States for individuals that report violations of a wide range of EU laws. The Directive lists over 100 laws mandating whistleblower protection, encompassing areas such as financial services, products, and markets; the prevention of money laundering and terrorist financing; public procurement; and consumer protection.
The Directive requires protection for individuals who report breaches affecting EU financial interests and markets. The Directive was to be incorporated into Member State law by December 17, 2021; however, most Member States missed this target.
Spain, an EU Member State, fully implemented the Directive this November by establishing the Independent Authority for the Protection of Whistleblowers (API). The API is a centralized reporting system operating independently from the rest of the Spanish government. It will work in conjunction with the required corporate reporting channels and will have the power to investigate and impose sanctions for the infringement of certain laws. However, the API’s power is limited in that it cannot investigate matters subject to ongoing criminal proceedings in Spain or elsewhere in the EU.
Spain ultimately exceeded the Directive’s requirements by including protection for reports of serious criminal or administrative offenses in Spain, including those involving financial loss to Spain’s social security administration and treasury. The resulting Spanish statute, “Law 2/2023,” requires that companies with 50 or more employees—or any company that provides financial services, regardless of size—implement an internal reporting system for whistleblowers that complies with criteria established in the law. Companies that fail to comply with the reporting system requirements face sanctions under Law 2/2023, which may include fines, public reprimands, and disqualification from government contracts.
Across Europe, other countries are slowly but surely taking similar steps to implement functional whistleblower protection regimes. Overall, European countries appear to be moving toward the development of whistleblower-incentivization frameworks, potentially following a path similar to that of the United States in the 2000s after the Enron and Madoff scandals.
As the protection and support of whistleblowers continues to evolve across Europe, MBM and Cranfill Sumner are exceptionally well-equipped to guide clients through this complex and dynamic legal landscape. With much experience representing whistleblowers in cases of financial fraud and corporate misconduct, MBM brings a deep understanding of how whistleblower protections are intended to function and the pivotal role they play in fostering accountability. Our team is also highly skilled in navigating the intricacies of international enforcement, including cross-border collaboration among authorities to combat financial fraud. We are committed to providing informed, strategic counsel and look forward to expanding our representation of foreign, including European, whistleblowers.
