Economic crime (also known as financial crime) principal catalysts is monetary gain. However economic crime not only has a devasting effect on individuals and communities but when associated with organised crime and terrorist financing it threatens laws, democratic processes and fundamental human freedoms, impoverishing states and distorting free trade and competition.
Not a victimless crime
Because of the well-publicised financial scandals that marked the aftermath of the tech bubble in 2002 and the housing bubble in 2008, what once was considered to be a merely poor business practice (i.e. widespread reckless investment) is now considered to be criminal. We saw how the vast losses associated with these high-level financial fraud scandals undermined social-security systems and destabilised economic systems. Today there is a growing consensus of the need to improve the global framework for fighting financial crime and regain the public’s trust. And financial crime prevention policies and procedures are critical.
Walk the walk with a robust code of conduct
The failure of self-regulation by most companies involved in the scandals only highlighted how important is it that organisations have prevention policies and procedures in place. These policies fall under the “Ethical Code of Conduct” A code of conduct sets the standards for how an organisation ought to behave and guides its workforce in the decision-making. A robust Code of Conduct, together with other internal rules and guidelines, serve as the foundation for a successful free of fraud organisation.
Only by having a robust code of conduct can organisations demonstrate their commitment to complying with all applicable laws and regulations. With a well-established set of global policies, the organisation can achieve robust and consistent standards of compliance. Rather than assume that ethical rules “go without saying,” every organisation should spell out what they expect of their employees when it comes to ethical behaviour. At CRI Group, we counsel business leaders on the principal that every organisation should have a written, carefully considered ethical code of conduct as part of their fraud prevention strategy. CRI’s Certification program through the ABAC Center of Excellence includes developing an ethical code of conduct as part of the training and development phase for clients.
Successful organisations adopt a risk-based approach when doing business…
These policies should provide a uniform set of risk management principles and mandatory standards throughout. A company must have in place up-to-date policies and procedures appropriate to its business. These should be readily accessible, effective and understood by all relevant workforce.
- How often are your organisation’s policies and procedures reviewed, and at what level of seniority?
- How does it mitigate the financial crime risks it identifies?
- What steps does the organisation take to ensure that relevant policies and procedures reflect new risks or external events? How quickly are any necessary changes made?
- What steps does the organisation take to ensure that staff understand its policies and procedures?
- How do you ensure that policies and procedures are disseminated and applied throughout the business?
Examples of good practice
- There is clear documentation of the company’s approach to complying with its legal and regulatory requirements concerning financial crime;
- Policies and procedures are regularly reviewed and updated; and
- Internal audit or another independent party monitors the effectiveness of policies, procedures, systems and controls.
Examples of poor practice
- No written policies and procedures;
- Does not tailor externally produced policies and procedures to suit its business;
- Takes inadequate steps to communicate policies and procedures to relevant staff;
- Fails to review policies and procedures in light of events;
- Fails to check whether policies and practices are applied consistently and effectively; and
- Has not considered whether its policies and practices are consistent with its obligations under legislation that forbids discrimination.
An Investigative Study Into Causal Factors of the Perpetration of Transnational Financial Crimes
As the global impact of transnational financial crime increases to unprecedented levels, attentions have turned to the need to fully understand the motivations that lead to the perpetration of such crimes. CRI Group has recently published an ebook that provides insightful looks into issues at the forefront of fraud and corruption today. They range from deep dives into the U.S., U.K. and other anti-fraud and anti-corruption laws around the world, to close examinations of actual fraud cases that hold lessons for all of us. This ebook provides an in-depth study of transnational financial crimes and the national laws and regulations that govern them. Laws in the U.S. and the U.K., in particular, are compared and examined in terms of effectiveness in preventing financial crimes. The comparative study focuses on corporate fraud. “The Catalysts for Economic Crime” pursues the question as to how weaknesses in national laws can be considered “a core causal factor in the perpetration of transnational financial crimes.” We invite you to download this ebook and increase your knowledge of fraud, corruption, proper compliance, risk assessments, due diligence and more.