The Latin American region and the infrastructure industry have been making the headlines after recent investigations and exemplary sanctions on corruption-related scandals that have even overthrown governments. Colombia has not been immune from this situation: this has encouraged regulators to acelerate efforts to criminalise behaviours related to compliance risks especially corruption, bribery, money laundering and financing of terrorism (AML/CFT), and antitrust.
The interaction between state-owned entities and private companies in a country like Colombia where great efforts are being made in infrastructure development means that, on both sides, there is a likelihood of bribery and other types of corruption occuring. This hypothesis is supported by International Transparency's perception of corruption index, in which Colombia was ranked 96 out of 180 countries in 2017, with a score of 37/100, showing a high perception of corruption. This is a challenge for all industries concerned, but especially for financial institutions evaluating whether to grant financing to a private party contracting with the government in the infrastructure sector.
This makes us wonder what to do with those who seek illegal benefits and advantages on this market. The answer falls in adequate compliance risk management, and a prevention and awareness culture. The Financial Superintendence of Colombia requires that the entities under surveillance implement an Asset Laundering and Financing of Terrorism Risk Management System.
Under a number of regulations applicable, Colombian companies are required to adopt compliance programmes to be able to carry out a tailored compliance risk analysis, establishing correct mitigation strategies. Financial institutions are not the only ones that need to do this: private companies asking for financing also need to have such programmes in place. Although compliance risk management can take the same approach as enterprise risk management, it has its own particularities. In general, companies that, as of December 31 of the immediately preceding year, had total revenues equal to or greater than approximately $43 million are required by law to implement an AML/CFT risk management system.
As in any system, the establishment of a compliance programme does not prevent risks from materialising, but it is an effective driver for a zero tolerance organisational culture. It can also prevent the institution from benefiting from assets originating from illegal activities (including corruption and bribery) or from channelling resources towards the development of terrorist activities.
|Carlos Fradique-Méndez||Sandra León|