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Essential guidelines in the fight against corporate corruption

The International Chamber of Commerce (ICC) has launched a comprehensive Business Integrity Compendium, the aim of which is to provide guidance for companies on corporate responsibility, due diligence and how to tackle corruption.

The compendium highlights the prevalence of some forms of corruption, particularly the use of facilitation payments as a means of bribery, as well as extortion and solicitation, trading in influence and conflicts of interest. The ICC stated: “Corruption continues to blight the global economy and is estimated to divert more than 5% of global GDP on an annual basis – yet it often goes unnoticed. Through integration of strategic compliance programmes that contribute to a culture of integrity across company departments, locations and sectors, business continues to play a vital role in tackling corruption in all forms.”

Some of the recommended corporate policies for supporting anti-corruption rules include:

  • entering into a written agreement with third-parties to inform them of and gain commitment to respecting anti-corruption rules;
  • requesting that a third-party supplier or partner undergo an audit by an independent auditor to verify compliance with rules;
  • state that the third-party shall not be paid in cash and must be paid in the country where its headquarters are located/country of residence/country where operations are executed;
  • keep a list of names, terms of engagement and payments to third-parties;
  • companies should take measures within their power to ensure that charitable contributions and sponsorships are not used as a subterfuge for corruption;
  • employees should be assured they can report violations of anti-corruption rules without fear of discrimination or disciplinary action;
  • key personnel in areas subject to high corruption risk should be trained and evaluated regularly and the rotation of such personnel should be considered;

Guidelines for financial reporting and accounting

With regards to financial reporting and accounting, the ICC compendium states that companies should ensure:

  1. all financial transactions are adequately identified and properly and fairly recorded in appropriate books and accounting records available for inspection by their Board of Directors, as well as by auditors;
  2. there are no “off the books” or secret accounts and no documents may be issued which do not fairly and accurately record the transactions to which they relate;
  3. there is no recording of non-existent expenditures or of liabilities with incorrect identification of their objects or of unusual transactions which do not have a genuine, legitimate purpose;
  4. cash payments or payments in kind are monitored in order to avoid that they are used as substitutes for bribes; only small cash payments made from petty cash or in countries or locations where there is no working banking system should be permitted;
  5. no bookkeeping or other relevant documents are intentionally destroyed earlier than required by law;
  6. independent systems of auditing are in place, whether through internal or external auditors, designed to bring to light any transactions which contravene these rules or applicable accounting rules and which provide for appropriate corrective action if the case arises; and
  7. all provisions of national tax laws and regulations are complied with, including those prohibiting the deduction of any form of bribe payment from taxable income.

The ICC also outlines the desired elements of a corporate compliance programme, ranging from a statement of strong support from the board of directors, to regular risk assessments and independent compliance reviews, and providing training to employees on identifying corruption risks.

CTMfile take: This compendium could be a useful resource for corporate treasurers and other financial professionals looking to set up a compliance programme or address corruption risk. It contains other useful guidance such as: 'Six steps to responsible sourcing'; 'How to respond to a bribery demand'; and 'Why SMEs should do due diligence on third parties'.

This item appears in the following sections:
Fraud Prevention
Anti-Money Laundering Fraud Prevention
Terrorist Financing
ID Systems & Services in Fraud Prevention
Minimizing Fraud Procedures
Minimizing Payment Fraud

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