How Automation is Streamlining Anti-Bribery and Corruption Due Diligence
We are privileged to have Gavin Proudley, Global Director of Due Diligence at Dow Jones, guest post on how automation technology can improve the anti-bribery and corruption due diligence process during a critical time of regulatory change and enforcement.
Gavin has helped clients manage financial crime, corruption and reputational risk for more than 10 years, working with large financial institutions and businesses in onboarding high risk and high value clients. His insight for this post was originally shared in an Opus webinar, Anti-Bribery & Corruption Compliance – Is Automation the Answer?
Bribery and corruption continue to occur predominantly through third parties. It’s much more likely for a third party purportedly acting on your behalf to behave unethically than for an internal employee to do so.
This is why due diligence is at the heart of any effective anti-bribery and corruption compliance program. The basic premise is simple: if you know who your business partners are, you won’t be exposed to unknown risks that you can’t manage.
By monitoring third parties all along the value chain and asking them important questions about risk, you will be able to get ABAC due diligence right.
But this certainly doesn’t mean that researching, assessing and putting all that information to use is easy. Due diligence is still maturing as a process. Compliance professionals often have difficulty accessing and knowing where to find the right information, lack staffing and budget, and are even up against the elemental challenges of time and language.
In the complex world of ABAC compliance, automation technology is often the best way to improve effectiveness and streamline the due diligence process.
What’s Happening in the World of ABAC Compliance – 5 Key Challenges
Businesses today operate in a complex regulatory environment with increasing enforcement of anti-bribery and corruption laws. As a result, compliance professionals are bearing a heavier burden for meeting regulatory guidelines without inhibiting company growth – even when that growth involves expansion into high-risk regions.
Here are some of the challenges of working with third-parties while also staying compliant with anti-bribery and corruption regulations.
1. More regulations, more risk, more work. Over the past 10 years, organizations have put increasing importance on compliance. Compliance professionals are more integral and increasingly valued within their organizations. But at the same time, they are facing heavier workloads and increasing pressure to manage ABAC risk. ABAC due diligence is not getting any easier. If you feel the pressure, that’s a good sign you’re taking compliance seriously.
2. ABAC regulations are becoming more complex. Doesn’t it feel like a new ABAC regulation or piece of legislation comes out almost every month? From China’s Shenzhen Standard to the Bribery Act in Bermuda, companies are managing legislation from very different markets and cultures. And there will be many more regulations to come. Moving forward, there may be more convergence around a globally consistent standard for anti-bribery and anti-corruption requirements, but we’re not there yet.
3. Enforcement of ABAC regulations is growing. Regulation is increasing, but so too is enforcement. What we see from enforcement across the world is that, invariably, big investigations are trans-national. They involve multiple enforcement bodies, multiple countries, and touch multiple companies. Today’s companies are expected to put in the research to know whether or not their third-parties will expose them to ABAC risk.
4. Managing expansion into high-risk markets. Companies that are looking for growth tend to seek opportunities in high-risk markets. Take Iran, for example. Iran is a fantastic and well-developed market with a highly-educated workforce. But to do business in the country, companies have to navigate sanctions and the perception that Iran poses a high-level of corruption risk. Entering into high-risk markets can bring great businesses opportunities, but they require more stringent due diligence.
5. Addressing consumer demands for transparency. Lastly, one of the reasons life isn’t getting easier for compliance professionals is the long list of issues coming under their remit. These issues are, in some ways, reputational risks rather than regulatory risks, and include new legislation on modern slavery, conflict minerals and tax transparency. The power of the consumer to drive the debate means organizations need to have an eye on a whole range of reputational issues, that could have just as much negative impact as regulatory issues.
How Automation Technology Helps in the Due Diligence and Compliance Process
Clearly, businesses are up against a lot when it comes to meeting anti-bribery and corruption compliance requirements. This is where automation technology comes in to help organizations keep up with ABAC compliance, expand their business and maintain positive relationships with consumers. There are four essential ways automation improves the due diligence process.
1. Automation helps you conduct comprehensive due diligence. If your due diligence process is not comprehensive, your company will struggle to keep up with ensuring all your business partners are meeting ABAC compliance requirements, especially in front of a regulator. Automation takes pressure off compliance professionals by streamlining the due diligence process through preset workflows for risk screening and gathering data. With the number of regulations growing, it’s important to make sure third-parties are aligning with each unique requirement.
2. Automation makes due diligence consistent. Most organizations have multiple divisions, maybe across different jurisdictions, with different cultures and approaches to due diligence. However, your due diligence process needs to be consistent to avoid unnecessary risk. Automation technology drives the consistency you need to complete highly-effective risk scoring. The goal is to make sure that third-parties are all assessed for risk in the same way, using the same criteria. By being consistent across the organization, you’ll have a documented trail of your compliance process that stands up to regulatory scrutiny and catches changing risk levels.
3. Automation makes your company more efficient. It’s very common for compliance teams to feel that people across the business are cutting deals and establishing relationships that are not going through appropriate due diligence. If your due diligence process isn’t efficient, those in other departments looking to start new business relationships are going to get frustrated and find a way to bypass the process. Automation makes due diligence faster, allowing companies to screen data, like sanctions lists and outside compliance databases, to rapidly assess for risk.
4. Automation makes audits simpler. An automated process makes it easier to demonstrate to external and internal stakeholders, that your company has taken the right steps at the right time, in the right way, to conduct anti-bribery and corruption due diligence.
We know that businesses can’t operate without third parties. And we know that due diligence is essential for managing risk and compliance. But besides being a way to avoid regulatory fines, conducting due diligence is also a means to drive strategic growth.
Knowing who you do business with and how key partners are performing allows companies to pick the best relationships that will help them expand and provide better products and services. Using automation technology is one way to achieve this balance between managing risk and supporting company growth.
Hear more from Gavin in our webinar, Anti-Bribery & Corruption Compliance – Is Automation the Answer? Download the full recording.