Glossary term
Self-Reporting to Regulators
Subject: Compliance and Regulation, Regulatory Supervision and Enforcement
Also known as: Self-Disclosure, Voluntary Disclosure, Voluntary Self-Disclosure (VSD)
Self-reporting is when a firm tells its regulator or enforcement authority about a breach or possible breach it has found itself, before the authority discovers it, often in return for lighter treatment.
Explanation
Some breach reports are required by law or licence conditions, for instance incidents above a set size. Others are voluntary, and it is these that regulators describe as voluntary disclosure. In sanctions work the label voluntary self-disclosure (VSD) is common. The firm usually reports promptly, gives the facts it has, explains how it will fix the problem and then cooperates with follow-up questions. Many authorities state that prompt disclosure, together with remediation and cooperation, can reduce the penalty or lead to a settlement instead of prosecution. The credit is not guaranteed, and a report that is late, partial or misleading can make things worse. Legal advice is normally taken first. The practical question for counsel is whether a head start on the regulator's own discovery is worth the exposure of speaking first.
Example
A mid-sized exporter discovers during an internal review that two shipments last year went to a restricted buyer because screening was switched off for a system migration. The company's legal counsel notifies the authority within weeks, describes the cause, repairs the screening gap and offers documents. The authority later treats this as a mitigating factor and closes the matter with a reduced penalty.
Not to be confused with
- Whistleblowing
- A whistleblower is an individual who reports wrongdoing. Self-reporting is made by the firm itself, on its own behalf.