In order to protect the integrity of the financial markets and to help prevent diversion of sensitive goods and technologies, financial institutions, trade companies and industry manufacturers are expected by law to contribute to the prevention of financial economic crime. To fulfil this important duty, robust compliance control frameworks must be in place to ensure that risks are well identified, assessed and properly mitigated.
We identify the scope of the integrity risk management to encompass the following financial economic crimes and other violations;
- Money laundering
- Terrorist financing
- Sanctions evasion
- Evasion of export controls
- Corruption and bribery
- External and internal fraud
- Tax evasion, tax fraud and aggressive tax planning
- Market manipulation / Insider trading
- Violation of antitrust legislation
- Violations of code of conduct / business principles / core values
- Breach of privacy / leakage of confidential data
- Socially unacceptable behaviour
- Conflicts of interest
- Abuse of position
International standards have embraced the requirement that all licensed financial institutions should, on an ongoing basis, identify, assess and control the integrity risks related to their business. This requirement was adopted in the EU 4th AML Directive and implemented in the legislation of the EU Member States.
Whereas this requirement is principles based, in The Netherlands the approach of the Systematic Integrity Risk Analysis (SIRA) became the prevailing standard as a best practice. An important element is the risk appetite statement (RAS), which serves as the reference for all risk acceptance.
We support financial institutions in designing a proper SIRA approach and advise on how to include this in their processes. Our support includes defining a clear integrity risk appetite.
Industry & trade companies
We recommend our industrial clients to adopt the universally applicable SIRA approach, because we see on ongoing trend of financial institutions requiring similar compliance risk management standards from their clients. Such an approach results in a solid internal compliance program (ICP) which not only helps prevent costly violations of export controls and international sanctions regulations, but is moreover often a prerequisite for obtaining export licenses.
Would you like to know how Governance, Risk & Compliance can help your business? Please contact our advisors: