Anti fraud regulations: Compliance should not slip through the cracks

During the lockdown, there were only a handful of vendors who could provide the goods and services that companies relied on. Whether for procuring equipment, financing, or ensuring the safety of their staff, organisations were forced to find quick workable solutions. These solutions may have led to situations that jeopardised years of efforts towards building an ethical enterprise.

India has witnessed similar allegations of corruption relating to the procurement of medical equipment, distribution of relief funds, etc. Keeping in mind these issues, organisations should consider relooking at their anti-bribery and corruption compliance programmes, particularly in light of the new operating models such as remote working and their operations during the lockdown. Below are some practical considerations:

1. Undertake detailed corruption risk assessment to check vulnerabilities in areas such as procurement, logistics, payroll, and charitable contributions. This may be done by testing select suspicious transactions to understand how policies were followed—whether there was any legal exposure, and if any remedial measures were necessary.
2. Review transparency of information: It is essential that companies review transparency and accountability of decision-making processes during such crises and embed mechanisms to provide transparency to relevant stakeholders. For example, if the approving authority is unable to provide the necessary approvals using the company’s online tools, an email approval could be maintained by the relevant department. Where approvals rely on physical documentation, organisations could consider online tools as alternatives.
3. Historic and real-time monitoring of business transactions can be undertaken using data analytics to identify anomalies such as high-value/round-value transactions, first-time vendors, and charitable contributions to unknown institutions. In case of any deviations, corrective and preventive actions could be implemented.
4. Escalation mechanisms such as a whistle-blower hotline could be put in place and made functional. Additionally, compliance officers could be trained to be technically enabled to respond appropriately to suspicions or allegations of any unethical activity reported via these mechanisms, to avoid delays in addressing such concerns.
5. Key policies such as anti-corruption policy, third-party due-diligence policy, corporate social responsibility policy, and relevant procedures should be reviewed so that appropriate guidance is provided for compliance during the crisis. As a safeguard, exceptional approvals, such as the postponement of the third-party due-diligence, or donations being made without requisite vetting, should be analysed to identify malpractices.
6. The organisation’s commitment to anti-corruption compliance should be reiterated and reinforced by communicating the importance of good governance to employees and stakeholders. Refresher trainings on anti-corruption and anti-fraud topics can also be undertaken.