During the COVID-19 global pandemic, FMO has demonstrated it is resilient and can continue to carry out its mission while operating in a robust, effective and efficient way. The first half of the year has been focused on business continuity and further embedding KYC processes and governance in our organization.
Following the outbreak of the COVID-19 pandemic, FMO quickly adapted to a new situation. Employees have been working from home and business continuity plans have been implemented and are working effectively. We adapted our governance structure to ensure quality, agility and multiple perspectives in decision-making. This entailed combining existing decision-making bodies and establishing new taskforces to monitor the impact of the coronavirus on 1) our markets and customers, so as to provide support where needed, and 2) on the liquidity and financial situation of FMO. In addition, we streamlined our processes by delegating approval authority to investment teams on providing moratoriums on principal and interest payments, by providing pricing guidance for new transactions that reflect new market realities and by providing guidance on which type of investments are eligible for digital ESG due diligence.
Know Your Customer
It is FMO’s mission to empower entrepreneurs in developing and emerging countries. FMO also plays a role as gatekeeper to help prevent Financial Economic Crime and preserve the integrity and reputation of the financial system. It is therefore key that FMO knows with whom it is establishing a business relationship. FMO only wants to deal with customers of good standing and reputation. 'Knowing' a customer means acquiring and monitoring all relevant information and documents concerning the identity of the customer, gaining insight into the business and its structure, and assessing the customer risk holistically.
In the first half of 2020, 30 training sessions on FEC and Know Your Customer were attended by an average of 30 participants per session. We have further improved the FEC / KYC policy and guidance notes. In addition, a Systemic Integrity Risk Assessment (SIRA) was conducted using an updated approach that included workshops to assess relevant risk scenarios. Stronger emphasis was made in the SIRA 2020 on risks related to financial economic crime.
As part of the preparations to re-start work on file remediation, an assessment of high-risk triggers was performed by the investment teams in cooperation with the KYC team. This was done to ensure that the “risk buckets” we will use during file remediation fully reflect our updated FEC policies and guidance notes.
To strengthen FMO’s KYC capabilities and ensure a thorough governance of related processes, a new KYC department was formed per 1 July. The KYC department works closely with the investment teams to prepare in-depth Customer Due Diligence. The Compliance department maintains the second line of defense. We have significantly increased the number of FTEs in both the first and second lines of defense.