By Sabeena Liconte, Head of Legal & CCO, Bank of China International
What for you are the benefits of attending a conference like the ‘Fraud and Financial Crime USA’ and what have attendees learnt from your session?
In our ever-evolving and fast-paced industry, it is a challenge to stay abreast of amendments in law and regulation and keep pace with new trends and technologies impacting our business activities. Conferences, like the Fraud and Financial Crime USA Conference, help bridge that “knowledge gap.” They also provide us with an opportunity to connect with like-minded individuals who face similar challenges to us and learn from their first-hand experience what they have done to help address some of those challenges.
In the session on anti-bribery and corruption (“ABC”) in which I participated, through my experience working with the investment bank of a foreign banking organization (“FBO”) that is state-owned, I explored the concept of ABC and how it impacts my firm and also share strategies and tools that we, as an FBO, have found helpful in addressing the myriad of laws and regulations impacting the ABC space.
How can risk professionals develop new techniques for sound compliance practices for anti-bribery and corruption laws across jurisdictions?
The laws and regulations impacting the ABC space are not very prescriptive about the kinds of techniques or practices that should be employed to address bribery and corruption. Notwithstanding, there are key practices that have been employed across global financial institutions to address regulatory expectations and guidelines. As many of us know, simply having a robust set of policies and procedures on our books is not sufficient; these policies and procedures need to be evidenced by established firm practice. These practices employed by a firm should cut across a wide arrange of areas, product lines and business units. Some practices that I have found effective and that firms may want to consider adopting and implementing to address laws and regulations in the ABC space include: board-level engagement and clearly defined roles with respect to ABC policy; implementation of a code of conduct; employment of the three lines of defence in the development of company policies and procedures and implementation of practices adopted by the firm; periodic risk assessments, testing and review; third party due diligence; confidential reporting and a strong system for internal investigations; and training on firm practices, policies and procedures with the goal of building a culture that values ethical behavior and fosters a culture of compliance.
Why is vetting sponsorship organisations and people a key concern?
Given the huge penalties that can be levied against firms that violate ABC law, employing robust procedures for vetting sponsorship organizations and people is key. A firm never wants to be in a position where an organization with which it has partnered or an individual it has hired or engaged is used as a subterfuge for bribery or other corrupt practices. In addition to the potential penalties imposed by regulatory bodies, in the event illicit conduct is conducted by, for or a firm, firms risk “reputational hits” and being viewed adversely in public’s eye. These issues can culminate in substantial losses for a firm and underscore the need to properly vet the organizations and people with which a firm does business. This is key to any firm that wants to thwart the risks associated with violations of ABC law.
What are the challenges in monitoring ongoing changes in vulnerability to anti bribery and corruption in reference to hiring practises and how can we combat this?
There are a myriad of challenges impacting firms with respect to its hiring practices. The biggest challenge may be the prevention and detection of bribery and corruption in an environment where the bribery and corruption that is taking place is becoming more complex, is often covert and difficult to detect.
There are strategies firms can employ to mitigate challenges like this. Firm-wide, there should be properly documented due-diligence with respect to a firm’s hiring practices, and any due diligence practices employed by a firm should be memorialized in procedures. To the extent practicable and based on the size, business model and complexity of the business activities of the firm, the procedures developed should be developed at an enterprise-wide level with input from all key stakeholders. This will encourage consistency across all business units and one set of standards to be applied globally. Periodic reviews by an independent third party (which may include internal audit) should be conducted to ensure that there is appropriate oversight, adherence to firm policy, and consistency in the application of the firm’s procedures.
This should be coupled with an environment which encourages a culture of compliance. The firm’s commitment to abiding by ABC law and its prohibitions against bribery and corruption should be known by all key stakeholders, through mechanisms like: representations in contracts seeking a reciprocal commitment from business partners; trainings administered to firm insiders; performance evaluations for personnel that center on the firm’s ethics and commitment to sound corporate practices, such as adherence to laws and regulations in the ABC space; the adoption and enforcement of a code of ethics; and periodic reports to the firm’s governing body on issues pertaining to ABC.