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Insight

A case study on why ABC compliance is so important

Written by Martin Woods, Compliance Week on Wednesday May 13, 2020


If there is an A-Z compliance procedure to follow, don’t stop at X or miss out LMN. Adhere to the procedure and preserve the integrity of your firm and those honest people who work within the rules.

Anti-bribery and corruption (ABC) is a high priority for compliance professionals in all businesses, indeed all areas of life. We have witnessed the “Feds Indict Footballing Aristocracy” within the investigation of the institutional bribery and corruption practices routinely applied by FIFA.

In Latvia, the former Governor of the Central Bank is being prosecuted for taking bribes from banks engaged in laundering money. The fact is money talks, and a lot of money makes a lot of noise. In addition, it is undoubtedly powerful, persuasive, and to some people, attractive.

I do not accept every person has their price; after all, it depends what is being sold. Some of us place a higher value on a profile with integrity and good health as against a profile with dirty money and wealth. Be assured, most people who give and take bribes suffer from poor health, brought upon because of fear, stress, and anxiety. There is a lot to be said for the health benefits of an honest, albeit simple, life.

Earlier this month, the U.S. Securities and Exchange Commission (SEC) charged a former Goldman Sachs banker, Asante Berko, with facilitating and making bribes of several million dollars to government officials, in order to secure a lucrative contract for his client. There are a number of interesting components to this case, not least of which is the international dimensions. Berko is a U.S. citizen with Ghanaian heritage; he worked for Goldman Sachs in London, his client was located in Turkey, and he was engaged in bribing government officials in Ghana, where a power plant was to be built.

Given all of the above, why was Berko charged in the United States? Well, as Goldman Sachs is a company publicly traded on the New York Stock Exchange, the SEC has jurisdiction. Moreover, the bribes were paid in U.S. dollars, which would give jurisdiction to the FBI/DOJ (in particular, the Kleptocracy unit, the same unit prosecuting the FIFA executives) and the District Attorneys’ Office in New York, as all U.S. dollar transactions are cleared in the state of New York.

The case serves to remind everyone of the reach of the very long arm of U.S. law enforcement. The other lesson is the importance of a strong ABC compliance framework, which delivers training, implements controls, and demands information, as well as answers from relationship bankers and clients, and importantly, protects firms.

Significantly, Goldman Sachs was not the subject of any institutional charges, because it was able to evidence there were ABC controls and training in place. Furthermore, Berko lied to compliance in order to defeat the controls. It is the lies that will likely help to convict Berko and undoubtedly protected Goldman Sachs. Thus, never assume an answer: always pose the question and demand the answer. Had Goldman Sachs taken matters for granted and/or given Berko and his client the benefit of the doubt, it would have perhaps referenced a poor ABC culture in which controls can be turned off and on. Ultimately, it may have been charged with breaches by the SEC.

ABC is bad for a firm’s health, and if there is an A-Z compliance procedure to follow, don’t stop at X or miss out LMN. Adhere to the procedure and preserve the integrity of your firm and those honest people who work within the rules. Good compliance generates good outcomes.

 

Want to know more about the topic? Visit our Financial Crime Blog for more fresh insights.

 


This article has been republished with permission from Compliance Week, a US-based information service on corporate governance, risk, and compliance. Compliance Week is a sister company to the International Compliance Association. Both organisations are under the umbrella of Wilmington plc. To read more visit www.complianceweek.com


 

This article forms part of the #BigCompConvo - Join us as we explore and debate the latest challenges and issues facing you and regulatory and financial crime compliance professionals all over the world. If you’d like to contribute an article as part of the Big Compliance Conversation get in touch with us at contributions@int-comp.org

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