Lawmakers and Attorneys Warn of Consequences in Integrity Program Design
In a rare move, lawmakers and attorneys are sounding the alarm about the potential consequences of neglecting foreign legislation when designing and implementing integrity programs for financial institutions.
The Risks of Neglecting Foreign Legislation
Financial services providers (FSPs) face increasing scrutiny over their interactions with public sector entities. Integrity in public tender processes and other dealings with government agencies is crucial to preventing corruption, yet many FSPs are overlooking critical rules and procedures. This phenomenon is particularly prevalent in Argentina, where state-owned companies and agencies are often treated as mere corporate clients rather than public entities.
The Consequences of a Lax Approach
A lax approach can lead to significant reputational risks, as seen in the country’s sovereign debt crisis in the late 1990s and early 2000s. To mitigate these risks, lawmakers and attorneys stress the importance of training FSP employees on local legislation and circumstances.
The Need for Local Training
While foreign law firms may provide valuable guidance on anti-bribery and corruption (ABC) measures, a one-size-fits-all approach is not sufficient. “The training should be adapted to the local reality,” said an attorney specializing in financial regulation. “A defense based solely on foreign legislation will not hold up in court or public opinion.”
Periodic Risk Assessments
The need for periodic risk assessments is also underscored by lawmakers and attorneys. As FSPs evolve and their internal organizations change, so too must their integrity programs.
Top Management Commitment
Top management commitment to the program is equally crucial, with visible and unequivocal support essential to demonstrating a culture of integrity.
Third-Party Due Diligence
Finally, the importance of third-party due diligence cannot be overstated. FSPs must prioritize evidence-based vetting of business associates and intermediaries to prevent reputational damage.
Conclusion
In conclusion, lawmakers and attorneys are warning financial institutions that neglecting foreign legislation in their integrity programs can have serious consequences. By prioritizing local training, risk assessments, top management commitment, and third-party due diligence, FSPs can ensure a culture of integrity that protects both themselves and the public sector entities they interact with.
Key Takeaways
- Neglecting foreign legislation in integrity program design can have serious consequences
- Local training is essential to understanding local legislation and circumstances
- Periodic risk assessments are necessary to adapt integrity programs to changing internal organizations
- Top management commitment is crucial for demonstrating a culture of integrity
- Third-party due diligence is critical for preventing reputational damage