Anti-Corruption Role Of Compliance Officers In Banking Practice

Role Of Compliance Officers In Banking Practice As Fighters Against Corruption

In the international and global economy, the procurement of capital investments, the appropriate use of funds, investment in large-scale projects, the issuance of government and corporate bonds and the financing of SME and national projects is unthinkable without credit institutions like banks or other financial institutions. The importance of banks and financial institutions in Germany and Europe also increased as a result of the introduction of the euro on 1 January 1999. The comparability of services across Europe leads to a marked increase in competition among banks and mergers in the banking sector.

Due to the competitive pressure, the employees in the individual international markets no longer act objectively, rationally, neutrally and legally, but also strive for short-term successes with high returns and growth. They are sometimes not cautious when it comes to balance sheet manipulations, tax evasion, foreign tax evasion, fraud, infidelity or corruption. The internationalization of the individual markets (industrial, commercial services, capital market, etc.) as well as the economic crisis in the banking sector in 2008 – require effective preventive measures to prevent financial crime and new financial market rules to prevent future economic crises.

The banking system is used by financial or economic criminals to transfer money or assets, to generate funds through unfair loans or to exclude customers by means of lucrative investment opportunities. According to a KPMG study in 2006, 71% of surveyed companies consider the phenomenon of finacial crime as a serious problem for economic life. In the last 3 years, the companies surveyed were mainly affected from:

  • Theft / embezzlement (82%),
  • infidelity (51%),
  • Fraud (40%), and
  • Corruption (17%)

Companies also estimate the darkness in the area of ​​economic crime to be around 83%. However, only a few companies combine this assessment with their own risk. Of course, employees in financial services companies as well as in other industries are an integral part of the fight against all forms of corruption and economic crime.

There have been numerous scandals in recent decades in the financial sector, such as the collapse of the Herstatt Bank, the Barings Bank, foreign exchange surveys of Volkswagen AG, Balsam AG and Procedo GmbH. From the strategic and criminal point of view, the lessons from the public as well as from numerous shocks of regional institutes, such as the merger of the HypoVereinsbank of Sparkasse Mannheim, the Berlin banking company, the insolvency of the Procedo, the Schmidt Bank and the Gontard Metallbank are not less bitter.

The numerous cases from the practice, such as Enron or MCI WorldCom, which caused two of the biggest economic scandals in the US economy due to account balancing and missed bookings. Corruption cases at VW, Bahn AG and Siemens in Germany make it clear that it is not a system-conditioned confidence and economic crisis with corresponding high material and non-material damage that requires a more stringent legal framework with new financial market rules and corresponding cost-intensive organizational requirements and additional audit scenarios for international companies around the world. In this article we consider the fight against corruption and other forms of economic crime predominantly from the point of view of criminology and business.

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