Following the release of the Dow Jones Risk and Compliance Anti-Corruption Survey results, our compliance expert dives deep into the murkier challenges to keep in mind when expanding to new countries.
It's a phenomenon - by now unavoidable - which has impacted the strategies of all players competing in the global economic arena. If you're expanding to new markets, you need to make sure your compliance and due diligence are absolutely water tight or risk fines, reputation risk and even jail time.
Together with the importance to steadily innovate and research new and alternative ways for financing expansion into new markets, money laundering and corruption should remain top of mind for companies large and small looking to grow. Whatever the business and the sector in which your company is operating, the importance of analysing and assessing your potential clients or providers remains essential.
Money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction are serious threats to security and the integrity of the financial system, and it can occur practically anywhere in the world and in any sector.
If you were to conduct a survey in the street asking people to define money laundering, the general response would be one of confusion - that it's a problem for governments or banks to combat. But this is not exactly the case. It can seem a victimless crime but it is a crime in which every person or company could be involved.
Money launderers tend to seek out countries or sectors in which there is low risk of detection due to weak or ineffective anti-money laundering programmes. It goes without saying these countries or sectors are often the more interesting and growing markets for companies looking to expand.
Big multinational companies quickly understood the need, and proved willing to prevent any potential risk which could have an impact on one of the most important intangible assets of any company: its reputation. However, the majority of the companies operating in new markets have not yet focused on this potential threat. The market impact will only grow as globalisation makes it important for companies of any size and sector to play in a cross-border global court where managing information needs fast and effective instruments to allow quick action.
Compliance - whether it be in terms of money laundering or bribery or corruption - must be at the forefront of every organisation's core business practises. The confidentiality and delicacy of the matter has to be properly treated by a partner used to and well equipped for supporting the players.
The recently-released Dow Jones Risk and Compliance annual Anti-Corruption Survey showed that many companies are aware of the importance of anti-money laundering and due diligence operations. The presence of such programs in the surveyed companies remained steady at 82%. Interestingly, 32% of companies operating such programmes outsource the monitoring, showing the importance placed on a third party operator to help assure shareholders and inspectors that operations are above board.
Find out more about the aspects of a Know Your Client programme here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
