December 18, 2019

ABC (Anti-Bribery/Corruption) is a cause that the entire world is fighting for. All countries, even the developed ones, suffer from the consequences of bribery and corruption to varying degrees.  The World Economic Forum (WEF) estimates the global cost of corruption at USD 2.6 trillion which is 5% of the global GDP. Also, according to the World Bank, businesses and individuals pay more than USD 1 trillion in bribes annually.  It is through international collaboration that the scourge of corruption can be curbed. In this regard, there are several organizations and conventions (such as UNCAC-United Nations Convention Against Corruption, OECD’s Anti-Bribery Convention, ADB/OECD’s Anti-Corruption Initiative, FATF-Financial Action Task Force, The Wolfsberg Group, etc.) that provide global principles, standards, guidelines, and best practices for implementation by various countries who are their members or signatories.  Whether or not a country is a member/signatory of such organizations and conventions, the chances are that the international fraternity that does adopt the global standards, principles, etc., would either eventually stop doing business with a non-conforming country or would be reluctant to work with it.

One of these organizations, The Wolfsberg Group, is an association of thirteen global banks which aims to develop frameworks and guidance for the management of financial crime risks (include bribery & corruption) in the context of KYC-Know Your Customer, AML-Anti-Money Laundering and CFT-Countering the Financing of Terrorism. Banks which have cross-border correspondent banking relationships are familiar with the “AML Questionnaire” which had to be completed as part of the due diligence requirements for establishing or continuing such relationships.  This questionnaire was replaced with “CBDDQ-Correspondent Banking Due Diligence Questionnaire” in 2018 by The Wolfsberg Group with an implementation program phased till Dec 31, 2019 (just around the corner). CBDDQ is a substantially expanded version of the previous questionnaire (110 versus 28 questions) and, among other sections, now includes a section on ABC as well.  Its main purpose is to fulfill the due diligence requirements in line with FATF’s Recommendation # 13 which pertains to correspondent banking.  Even if a bank does not opt to use CBDDQ, a similar questionnaire or due diligence should still be expected to be completed.

Let’s take a look at some of the ABC-related questions that have been posed in CBDDQ. There is a total of 25 such questions and they relate to elements such as:

  • Policies & Procedures for detection, prevention, and reporting of bribery and corruption cases.
  • A specifically designated officer for the ABC Program
  • Staffing for the ABC Program – Adequacy & Appropriateness
  • Controls in place to monitor the effectiveness of ABC Program
  • ABC Risk Assessment
  • Independent Audit coverage
  • MIS for the Management and the Board
  • Mandatory ABC training coverage – Senior Management and the Board; First, Second, and Third Lines of Defense; Third Parties.
  • Targeted ABC training coverage – Specific roles, responsibilities, processes.

Some organizations may already have policies & procedures which relate to various elements of ABC but they are fragmented across various documents such as, Code of Conduct, Staff Service Rules, Whistle Blowing Policy, etc. However, it is generally expected to have one, consolidated ABC Policy.  When I was the Global Chief Compliance Officer for a bank in Pakistan, one of our foreign investors (with a significant shareholding) had insisted for a consolidated policy when they were shown the various policy documents like the ones mentioned above. Thus, we had to develop and implement an ABC Policy based on best practices and standards, in line with the regulations.

It is well known that bribery and corruption have a link with money-laundering, and they are listed as predicate offenses like some other financial crimes. Clearly, banks have to guard against the risk of being used as conduits for money-laundering and terrorist financing. Given the huge share of bribery & corruption in these illicit proceeds, it makes for a strong case to have a focused ABC compliance program.

It is a misconception in certain quarters that corruption occurs only in public sector organizations, whereas it is very much prevalent in the private sector companies too.  In fact, there could be a nexus between the private sector and public sector enterprises to facilitate corruption. That is why any effective ABC Compliance Program would also include the ascertaining and monitoring of transactions, products & services that involve state-owned or state-controlled enterprises and public officials, along with the identification of bank’s own officials who directly deal with these enterprises.

Apart from the AML/CFT risk, banks could be exposed to reputational risk if any of their functions is found involved in bribery or corruption scandals. So, it is protecting themselves from financial and reputational risks too, arising due to corruption in areas such as: Procurement, Third-Party Service Contracts, HR, Lending, etc.

At a minimum, a good ABC Program should encompass the following elements:

  • Policies & Procedures
  • On-boarding of not only customers but service providers, contractors, vendors.
  • Monitoring
  • Risk Assessments
  • Reporting
  • Investigations
  • Remedial Measures
  • Archiving
  • Training
  • Communication
  • Independent Audit

The world recently marked December 9, 2019 as the annual International Anti-Corruption Day, renewing the pledge to fight the menace of bribery & corruption.  Now is the time to transform this pledge to tangible actions. For the banks, it should translate to coming up with best-in-class ABC programs as advised by organizations like FATF and The Wolfsberg Group.


Faisal Anwar is an independent consultant with 30+ years of prior experience with banks such as RBS, ABN AMRO, Bank of America and HBL.  He is engaged in providing consultancy/advisory and training & development services to banks and other organizations in areas such as Compliance, Business Ethics, ORM, Fraud Risk & Prevention, and Governance. Faisal holds a B.Com (Gold Medalist) Degree from the University of the Punjab, Pakistan; a BBA (with distinction) from the University of Oklahoma, USA; and an MBA from the University of Texas, USA.  He also holds the CCEP-I (Certified Compliance & Ethics Professional – International) qualification from the Society of Corporate Compliance & Ethics, USA.