Financial Crime World

Local FSPs: The Unseen Risks That Can Bring Down Your Business

As the financial sector continues to evolve, local Financial Service Providers (FSPs) are increasingly exposed to risks that can have far-reaching consequences for their businesses and reputations.

Unique Challenges of Local FSPs

While many FSPs may be aware of the importance of implementing integrity programs, they often neglect to consider the unique challenges posed by their interactions with the public sector. In Argentina, where corruption is a significant concern, FSPs must be particularly vigilant in ensuring that their operations are free from bribery and other forms of corruption.

Risks Facing Local FSPs

  • Termination of Employee Agreements due to ABC matters: Wrongful adaptations can lead to compliance failures and ultimately, financial losses.
  • Third-party Due Diligence: Failure to conduct thorough due diligence on business associates and intermediaries can result in reputational damage and legal liability.

Mitigating Risks

To mitigate these risks, FSPs must implement robust integrity programs that include:

  • Periodic risk assessments
  • Tone from the top
  • Internal investigations

These programs must be designed with the local reality in mind, taking into account the unique challenges posed by Argentina’s business environment.

Employee Training

In addition to these measures, FSPs must also ensure that their employees are properly trained on anti-corruption laws and regulations. This includes:

  • Providing training specifically adapted to the local reality
  • Ensuring that distant branches and offices are equipped with the necessary knowledge and resources to prevent corruption

Experts Weigh in

  • “Local FSPs often underestimate the risks posed by their interactions with the public sector,” said Maria Rodriguez, a leading expert on anti-corruption laws. “It’s essential for them to recognize these risks and implement robust integrity programs to mitigate them.”
  • “The Corporate Criminal Liability Act has introduced significant changes to Argentina’s regulatory landscape,” added Juan Sanchez, a financial lawyer. “FSPs must ensure that their operations are in compliance with this new legislation to avoid the risk of criminal sanctions.”

What You Can Do

To protect your business from these risks, consider the following steps:

  1. Implement a robust integrity program: Includes periodic risk assessments, tone from the top, and internal investigations.
  2. Ensure employee training: Provide training specifically adapted to the local reality and ensure distant branches and offices are equipped with necessary knowledge and resources.
  3. Conduct thorough due diligence: On all third-party business associates and intermediaries.
  4. Prioritize compliance: With Argentina’s regulatory landscape, including the Corporate Criminal Liability Act.

By taking these steps, you can ensure that your FSP remains compliant with local regulations and minimizes its risk exposure to corruption and other illicit activities.