Corruption Monitor: The Ultimate Risk Management Tool for Your Business

COVID19 where changed the intercourse of businesses, it escalated the globalization and cross border transactional activities, exposing the institutions to predicate crimes such as money laundering, proliferation financing and cyber enabled frauds. Witnessing an increasing trend in corruption and its enabling crimes, businesses seek to implement a functional corruption monitoring plan to maintain their sustainability goals and meet ever-escalating compliance requirements. A multidisciplinary subject, corruption stands at the top of organized crimes list while enabling associated fraudulent activities being executed all around the world. Embracing the inevitable changes in financial landscape and fraudulent activities, in April 2023, the Wolfsberg Group brought an addition to their anti-bribery and corruption (ABAC) guidelines addressing the intricate challenges of anti-corruption and risk management plan by broadly defining the corruption phenomena in terms of power abuse for personal gains.

This blog will help you in building a better understanding of how monitoring of corruption works and what possible challenges businesses face while analyzing the indicators for monitoring corruption and taking necessary measures to protect the integrity of their businesses.

Corruption: A Polysemous Phenomena

Open to  various interpretations and folding complexities in its nature, researchers have defined corruption as an abuse of power or authority by both public or private individuals in committing crimes in the form of shadowed activities such as financial crimes, frauds, bribery, manipulation, deception, and last but not least nepotism.

Rooting back to Egyptian history, corruption has remained a constant act and growing since then, throughout the world. Difficult to measure the magnitude, nations have paid heavy price to corruption in terms of shattered economy and failed governance. After Malaysia and Brazil, the corruption scandals of Indonesia cost one of its regions more than 90% of its councilors convicted in corrupt activities.

Let’s not stay on the nature of corruption and how history shows its inevitable occurrence and let me emphasize on how the evolving nature of financial ecosystem and business infrastructure is in dire need of implementing robust monitoring processes to stop this pandemic from rusting the global peace and institutional integrity.

Monitoring Corruption: Inevitable Measure for institutions

Originated from a Latin word, corruption literally means “mar, bribe, destroy”, defining its association with bribery and destruction of the financial system through facilitating illicit flow of money. Whether it’s a petty bribe act by a ground level individual or millions of laundered money by the public office holders, a resilient corruption monitoring process is the backbone of any stable economy while paving a smooth way to meet regulatory compliances.

Giving birth to a major concern, corruption causes the global GDP a total 5% of loss annually which exceeds the global aid funds by a factor of 10. Out of $2.6 trillion bleeding to corruption, researchers conclude that $1 trillion is annually lost to bribes only while corruption enabled money laundering costs the world $2.8 trillion per year.

Developing countries taking a toll on their economic and development structure are heavily impacted by corruption and its enabled criminal activities to embezzle billions of dollars veiled under posh properties and western luxuries. Organized crime actors connected globally facilitate the drainage of money which could have been utilized for strengthening the economy and giving a better way of living to their nationals.  On the other hand, the alarming state of affairs is not quite different for developed countries where corruption erodes the roots of good governance causing the institutions to lose public and global trust. Given below is a comprehensive visualization of how corruption and its facilitated crimes are eroding the businesses on domestic and global level.

Interlinked by the need of hour, corruption and risk management go hand in hand. Let’s take a look at the motivating factors for businesses to re-evaluate their existing measures to prevent corruption and being involved with corrupt entities.

Regulatory Compliance

In an effort to reinforce an anti-corruption plan for institutions and businesses advocating the implementation of ABAC measures, the U.S DOJ (Department of Justice) has updated its guidelines in 2023. Requiring the corporate sector to improve their compliance measures, the DOJ Criminal Division encourages the businesses to practice a resilient and functional risk management plan with ongoing evaluation to curb the growing corruption threats.

Emphasizing the financial security, the U.S in collaboration with other countries forfeited the businesses with a record penalties of total $7.76 billion against bribery. Therefore, the global business community is encouraged to employ a robust compliance program against corruption by utilizing the regulations, ethical values, and available resources.

Accelerated Business Opportunities

Allowing businesses to expand their operations globally with consumer trust intact, robust corruption monitoring facilitates the corporate sector to manage their risk effectively. Along with enhanced credibility and sense of ethical economics, businesses attract new investors and clients on a broad scale. The implementation of ABAC compliance plan enabled by monitoring of corruption empowers the business success in terms of aligned operations, competitive edge and reduced compliance cost. To help you take a better look at how your business can thrive instead of survive in the global marketplace, below is the detailed map of benefits businesses can have their hands on.

Socially responsible Infrastructure

Failure to an active response towards the indicators of corruption monitoring, as an unfortunate consequence, your customers act before the regulatory bodies do. Evaluating the trust level of consumers on businesses, PWC conducted a survey, concluding 44% of customers stopped their transactional activities because they do not trust the compliance measures of companies in curbing the corruption threats. With the immeasurable cost of losing client trust, businesses are under social and ethical pressure to broadcast their agenda on anti-corruption and risk management plans.

Having implemented a reliable online corruption monitoring system where allows financial institutions and businesses to build a resilient plan against flow of shadowed money in the form of bribery and money laundering, the incompetence of a monitoring tool can pose your business to unforgivable consequences.

Ineffective and Incompetent Corruption Monitoring: Challenges & Solutions

A decade long shadowed journey of corruption, one of the biggest companies in Germany, Siemens added new heights to the recorded corruption through bribing public office holders with an estimated amount of $1.4 billion. Resulting in overpriced living commodities for affected citizens, the corrupt coordinated group of individuals raised a question on the competence of monitoring measures being implemented by financial institutions.

Let’s take a deeper dive into the inherent complexities and challenges of the corruption evaluation process which enables these corrupt crime actors to execute predicated crimes.

Diversity of Data Ecosystem

Published by the Transparency International, the Corruption Perception Index (CPI) evaluated for 180 countries across the world shows that only six countries named Denmark, Finland, New Zealand, Norway, Singapore, and Sweden are ranked as clean while the countries names North Korea, Yemen, Somalia, Syria, and South Sudan have been ranked with lowest scores graded on 0 to 100.

The presence of massive corruption cases and diverse data on flagged corrupt entities across the world requires an effective analysis of huge datasets while not missing any potential corruption indicators. Alert generation for high-risk individuals such as politically exposed persons (PEPs), sanctioned entities, and individuals flagged in various other barred lists demands automated and robust algorithms to smoothly detect potential threats for your business.

Technology has not only facilitated the mitigation measures but it has equipped the corrupt decision makers to work in intricate and veiled ways to launder or bribe illicit money through complex transactional routes. Monitoring of corruption embedded with effective identification processes and real time alert generation while not missing a minor link of monitored entities with PEPs is needed more than ever.

Relevance & Secure Handling of Data

Segregation of dubious and relevant information is crucial for executing the anti-corruption compliance plan your business paid a price for. Before onboarding an influential client and executing a corruption monitoring process against the overloaded data issued by several jurisdictions can be overwhelming, leaving a spot for missing what should have never been overlooked. The effective online corruption monitoring services are not only required to separate milk from water but to handle the sensitive data in the most secure way possible.

Timeliness & Decision Making

Unlike the saying “Better late than never reaching”, a prompt response towards the indicators of corruption monitoring is imperative for businesses. If stopping corruption from happening is not in your hands then identifying the corrupt individuals and preventing them from getting in business is surely something a competent monitoring tool can help you with. The enhanced regulatory scrutiny against high-risk profiles and the need to report such risks in timely manners is critical to prevent compliance breach and reputational fall in the global marketplace.

Sensitive Analysis & Regulatory Compliance

The precise risk analysis of influential client bases to meet regulatory compliance and provision of transparent decision making are considered as the unavoidable features of a proactive corruption monitoring process. Failure to incorporate updated regulatory compliance and expert feedback into risk identification and reporting can leave your business vulnerable to legal and ethical apprehensions.

How AML Watcher is a Reliable Solution in Monitoring Corruption?

Unearthing the hidden and complex networks of corrupt organized individuals, AML Watcher empowers your compliance measures to stay vigilant from high-risk profiles before unknowingly allowing them to pollute your business ecosystem. Below are the reasons why AML Watcher is a prime solution provider for corruption monitoring.

Credible & Diverse Database

Leveraging your compliance with an extensive database of more than 180 countries covering a broad spectrum of regional, domestic, and international law enforcement guidelines. AML Watcher database includes all high-risk regions and entities including PEPs, sanctioned bodies, and individuals flagged by globally ruling jurisdictions.

Meet Compliance with Corruption Index

AML Watcher corruption monitoring tool empowered with corruption index enables your business to acquire better insight of potential threats through credible data sources handpicked from institutions including World Economic Forum, Word Bank, and Transparency International. Meeting the compliance requirements outlined by the FCPA (Foreign Corrupt Practices Act), CFPOA (Canadian Corruption of Foreign Public Officials Act, and UKBA (UK Bribery Act), AML Watcher monitoring tool equips the businesses with functional and resilient compliance measures against corruption.

Supplementary Ethical Measures: Conclusion

In a fast paced financial ecosystem where every individual is striving to achieve personal goals, a balanced blend of ethical sensitivity and responsibility, regulatory standards to maintain global peace, and proactive corruption monitoring to overcome inherent flaws in existing measures seem to offer a long-term solution to facilitate corruption and its enabled crimes. As old as the history of humankind, corruption might appear an inevitable act but its long lasting threats to the sustainability of nations are the reasons we must align our efforts for a uniform cause.

AML Watcher with its mission to empower institutions and businesses in curbing predicate crimes looks at a promising future where economical integrity is intact and regulatory compliance is being met. Reach us out to meet your compliance goals.