Financial Crime World

Ecuador Takes a Step Towards Integrity: A New Dawn of Opportunities

In Ecuador, a shift towards integrity is underway. The country’s government has introduced new regulations aimed at promoting ethical behavior and preventing corruption.

New Regulations for Ethical Governmental Behavior

President Guillermo Lasso Mendoza’s administration has issued Presidential Decree No. 4, outlining the Rules of Ethical Governmental Behavior. This decree sets a new standard for public administration entities in Ecuador, requiring them to establish internal norms that align with the government’s expectations.

The Risks of Non-Compliance

Small and medium-sized enterprises (SMEs) are particularly vulnerable to non-compliance risks. These businesses account for a significant share of Ecuador’s companies and are exposed to the same corruption risks as larger multinationals.

  • SMEs may struggle to adapt to new regulations, increasing their risk exposure
  • Non-compliance can lead to reputational damage, legal issues, and financial losses
  • The absence of effective compliance systems makes it challenging for SMEs to detect and prevent corruption

Benefits of Implementing an Integrity Program

By implementing an integrity program, SMEs can:

  • Improve product and service quality through transparency and accountability
  • Reduce the likelihood of “cash vouchers” for bribes and embezzlement
  • Minimize legal and reputational risks associated with non-compliance
  • Foster employee commitment to a culture of integrity
  • Establish guidelines for senior management decision-making

International Best Practices

Ecuador’s regulations follow international best practices, as recommended by organizations such as the Organization for Economic Co-operation and Development (OECD) and the United Nations Office on Drugs and Crime (UNODC). These recommendations recognize the liability of companies in preventing corruption in both public and private sectors.

  • SMEs will soon learn that good compliance practices are not only applicable to large multinationals but also to smaller businesses
  • Implementing an integrity program is a strategic move for SMEs to stay ahead of regulatory changes and maintain a strong reputation

References

  • Decree No. 4 The Rules of Ethical Governmental Behavior of the President of the Republic of Ecuador, May 24, 2021
  • Organic Law for the Prevention, Detection, and Eradication of the Crime of Money Laundering and the Financing of Crimes
  • Comprehensive Criminal Organic Code

By Fátima Flores Vera, CEO Siace Consultores