The why and how of international records retention.

For a multinational organization with global business operations, records retention for its overseas business units is just as important as it is for its domestic operations. Unless the overseas units have well-developed and aggressively implemented records retention programs, they cannot control the growth of their records, ensure compliance with records retention laws and regulations, or reduce the legal liabilities that can sometimes be associated with document retention and disposal. Thus, records and information management (RIM) staff for these multinational organizations need workable strategies for expanding the scope of their records retention programs to ensure global coverage.

Multinational organizations are today confronted with explosive growth in the quantities of information they create and retain. This is particularly true for information in digital form which, according to many sources, is growing at rates somewhere between 20 and 60 percent per year. Most IT departments have devoted considerable attention to the capture, processing, and retrieval aspects of data management, but they have given very little attention to managing the life cycle of computer data. Moreover, the quantity of paper records continues to grow in most enterprises, even as a higher percentage of the total information resources of the enterprise exist as digital records. New information technologies have given organizations much greater capabilities to produce records in all formats, and this is exactly what is happening. Because the essential purpose of records retention is to effect the systematic disposal of records as soon as their value for any and all purposes expires, it is the principal tool by which the growth of records can be controlled.

Governments throughout the world impose numerous laws and regulations requiring regulated parties to retain certain records for specified lengths of time, and regulated parties are obliged to comply with them fully, in letter, spirit, and good faith. These government-imposed retention requirements frequently add confusion and uncertainty to questions concerning what an organization's information retention policies and practices should be. They must, however, be carefully considered by every enterprise that wishes to develop a formal program for the management of the information life cycle. A methodology for doing this is prescribed later in this article.

Finally, organizations everywhere must conduct business in a litigation-intensive environment. Because lawsuits are often decided largely, if not solely, on the basis of information contained in records, organizations must be very careful about what information they retain and for how long.

ISO 15489 and Retention

ISO15489-1 Information and Documentation--Records Management--Part I: General, which is the international standard for records management, is the foundation upon which international retention programs should be built. The standard states that "Records systems should be capable of facilitating and implementing decisions on the retention and disposition of records. It should be possible for these decisions to be made at any time in the existence of records, including during the design stage of records systems."

Multinational RIM managers should develop and implement global records retention programs that can claim compliance with the following characteristics.

Cultural Factors in International Retention

In the United States, the systematic disposal of business records under authority of a formal records retention program is a widely known and accepted business practice. While some business managers may be reluctant to agree to the disposal of their records, they generally understand the need for records retention. However, in many countries outside the United States, these factors may not be present.

The best method of dealing with this situation is to obtain a firm commitment from the senior executives of the organization and then conduct management briefings for many or all employees at each overseas location. These briefings should emphasize that all records retention policies will be developed such that they comply with the law and meet the organization's business needs.

Global "Baseline" Retention Policies

The concept of global "baseline" retention policies is increasingly popular among multinational organizations in their efforts to develop records retention policies of worldwide applicability. Under this concept, the corporate office establishes a "baseline" or minimum retention policy that is of mandatory, worldwide applicability for certain types of records. However, the policy provides flexibility for countries to exercise their discretion to lengthen or extend these baseline retention periods, based on valid legal or business needs.

Enterprise-wide Consistency in Retention Policies

Whether or not a company is multinational, it is a good idea to develop consistent retention policies (identical retention periods for the same types of records). If this practice is not followed, the organization may be placed in the uncomfortable position of explaining to legal authorities why a record exists in one location but not in another.

On the other hand, there are frequently valid reasons for developing different retention policies for the same type of records in different locations. For one thing, the records may be used for different business purposes and thus have different retention values in various domestic and overseas locations. Also, the legal requirements to retain records and cultural factors may necessitate differing retention periods.

Multinational RIM managers should deal with this issue by documenting the reasons for the retention decisions contained in the retention schedules for various country locations. Valid reasons would include legal requirements, business needs, and common business practices. For all retention decisions based on a legal requirement, the documentation should show a brief digest of the law, together with its citation.

Compliance with International Retention Laws

First and foremost, records retention must be about complying with the law. When organizations establish business offices in other countries, they are obliged to comply with the laws in those countries as well as the laws in their domestic country.

With the exception of the United States, Canada, Australia, and the United Kingdom, however, most countries have enacted only a few laws related to records retention, and most of those laws apply to accounting and general business records and were imposed primarily for tax administration purposes. This is in sharp contrast to the U.S. regulatory climate with its thousands of records retention statutes and regulations that make compliance much more difficult.

Following is a synopsis of the types of records for which many countries have enacted laws prescribing retention. (Note: The legal retention periods mentioned in this article are based on legal research in the countries mentioned. However, these laws can and do change. Readers are warned to verify any requirements mentioned here before using them to formulate any retention policies for their organizations.)

Accounting and Tax Records

Perhaps the most important reason why governments impose records retention requirements on businesses is to protect their ability to collect taxes. To do this, they must have access to accounting records to scrutinize during tax audits. Thus, virtually every country known to impose records retention requirements has enacted laws that mandate the retention of ledgers, journals and other books of account, and other supporting documentation such as vouchers, balance sheets, records of goods bought and sold, and inventories of stock. These retention requirements are found in the commercial codes of country laws and/or in the tax codes. Typically the retention period is five to 10 years; Argentina's requirement is among the lengthiest with its mandate for retention until the closure of the business plus 10 years.

General Business Correspondence

In addition to retention requirements covering general corporate and accounting records, a number of countries (mostly in Europe and Latin America) mandate the retention of letters, telegrams, and other general business correspondence. These retention periods generally range from 5 to 10 years, but Uruguay's requirement is for 20 years, and Costa Rica's requirement is for the life of business plus four years.

It should be recognized that most if not all these laws were enacted many years ago, in a "pre-technology" era, when business recordkeeping was exclusively paper-based. The first question that leaps out is whether these requirements apply also to correspondence that is created in e-mail environments. If so, these retention periods are greatly in excess of common practices. Consulta-tion with international attorneys should help organizations find resolutions that make sense for them.

General Corporate/Legal Documents