Financial crime incorporates many types of activity, including fraud, bribery and corruption, insider dealing, terrorist financing and money laundering. Tackling these illicit activities is a major concern for regulators, and is reflected in new legislation like the EU Fourth Anti-Money Laundering Directive. The focus on financial crime has also resulted in banks – and, increasingly, corporates – incurring large fines.
While stringent regulations are vital to building a financial system in which all participants can have confidence, the associated compliance requirements can bring a heavy administrative burden and additional costs, as well as delaying corporate banking activities such as opening bank accounts. As a result, there is a clear need for companies to work proactively with their banks and adopt best practices to overcome these challenges.
Need to know
Companies should be aware of a number of developments and initiatives relating to corporate compliance. In 2017 alone, the following guidelines and directives were released, among others:
- The US Department of Justice (DoJ) published a paper, “Evaluation of Corporate Compliance Programs” , which provides practical guidance on how organisations can evaluate their compliance programs.
- The Wolfsberg Group, International Chamber of Commerce and the BAFT published updated Trade Finance Principles . These highlight the importance of all stakeholders – not just financial institutions – in combating money laundering and financial crime.
- The EU Fourth Anti-Money Laundering Directive  included a due diligence obligation in case of suspected financial crime and bribery.
Compliance pain points
Today most corporates – at least those active in international trade – are expected to have an internal compliance programme in place. Driven by export controls, and particularly the need to monitor exports of arms, military equipment and dual-use goods, firms need compliance policies and procedures in place, including the screening of all aspects of an export. For example, the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies states that client and end-user verification against international sanctions lists is crucial.
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