EBI Publications

Integrity Risks for Financial Institutions; Financial institutions are exposed to many forms of integrity risks, which range according to both the services/ products that they offer and their risk appetite. These forms varies to include:  Money laundering; defined as the action of transferring illegally obtained money or investments through an outside party to conceal the true source. Unfortunately, such transactions had been evolving to become more varied and complex and are even extended to include nonfinancial institutions (e.g., wire remittance services, cash couriers, insurers, brokers, traders), as well as nonfinancial businesses and professions (e.g., lawyers, accountants).  Terrorist financing  Circumvention of sanctions legislation  Corruption (bribery)  Conflicts of interest  Fraud within or outside the organization  Evasion or avoidance of tax regulation  Market manipulation  Cybercrime  Socially unacceptable behavior. of these tasks cannot be specified in contracts rather depend on trust. The reason behind this is that banking activities are based on relations with multiple parties. In details, banking integrity and trust is critical primary in the relationship of savers or depositors and the bank. The saved money must be kept in secure and made readily available to be returned on demand. This intermediary function of the bank requires assuming trust and integrity, besides controlling the different other types of risks involved in the banking transactions. Furthermore, banks are privy to a massive amounts of sensitive information that raises the concerns of confidentiality, privacy and trust in the banking system. Therefore, the bank’s main business is based on its practice of holding itself to the highest standards of integrity. Towards this end, banks seek to promote high ethical standards, integrity, and good business practices within its continuous and long run business operations. Moreover, banks work on ensuring that their behavior and the manner in which they choose their project sponsors, clients, co-financiers and counterparties meet these standards.