FSPs Face New Era of Transparency: Integrity Programs Must Adapt to Local Laws

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The landscape of compliance for financial services providers (FSPs) is shifting globally, requiring them to adapt their integrity programs to local laws. A recent report highlights the risks and challenges that FSPs face in implementing effective integrity programs.

Navigating a Maze of Regulations

From simple issues like exchange rates to complex matters like employee agreements, FSPs must navigate a maze of regulations and guidelines to ensure compliance. Failure to do so can result in reputational damage, financial penalties, and even criminal charges.

Interactions with the Public Sector

Public tenders, contracts, and debt issuance require special attention to prevent corruption. Banks, in particular, must be cautious when dealing with state-owned companies and agencies, as well as issuing public debt bonds.

“A wrong adaptation of a foreign law may not only make an integrity program ineffective but also expose the company to criminal liability,” warned Juan Carlos Pérez Morales, a compliance expert.

Third-Party Due Diligence

Third-party due diligence is another critical aspect of FSPs’ integrity programs. Companies must vet business associates and intermediaries thoroughly to ensure they are not complicit in illicit activities.

Risk Assessment and Management

A periodic risk assessment is essential to identify and mitigate risks as the company’s business evolves. FSPs must also prioritize tone from the top, with clear commitment from management to the program’s effectiveness.

Internal Investigations

Internal investigations require special care, particularly when accessing employees’ private records, such as bank accounts. Companies must have a protocol approved by their governing body to detect and mitigate risks and justify sanctions for violations.

Dedicated Integrity Programs

The report highlights the importance of having an internal officer or team dedicated to developing and monitoring integrity programs, especially for large companies.

“In today’s complex regulatory environment, FSPs can no longer afford to treat compliance as an afterthought,” said Pérez Morales. “They must prioritize transparency, accountability, and effective risk management to maintain trust with their customers, regulators, and the public.”

Conclusion

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As the financial services industry continues to evolve, FSPs must stay ahead of the curve by adapting their integrity programs to local laws and guidelines. The consequences of non-compliance can be severe, making proactive measures essential for survival in today’s market.

Sources:

• Corporate Criminal Liability Act
• Guidelines for Integrity Programs