During the COVID-19 pandemic, FMO has demonstrated it is resilient and can carry out its mission in a robust, effective and efficient way. In 2021, we focused on carrying out our project portfolio and further embedding KYC processes and governance in our organization.
FMO continues to invest in an effective and efficient organization through its project portfolio. In 2021, we realized 92% of our project deliverables (2020: 92%), above our target of 85%.
In 2021, we strengthened our project portfolio monitoring and control processes, focusing in particular on resource management. We frequently reported to and aligned with areas of the business demonstrating the greatest resource constraints in order to prevent issues in project execution and/or to prioritize. Furthermore, we extended our monitoring and processes beyond projects to initiatives (smaller more informal cross departmental change activities) to improve steering, accountability, resource allocation, pro-active stakeholder management and timely execution. To support this, we set up a separate governance with more delegated decision-making power at Director level and a lighter monitoring process.
The project with the highest priority was the FEC enhancement program. Furthermore, significant improvements were implemented on managing of and reporting on climate risk, impact and ESG, as well as improvements on data quality for customer/party data. The NL Business portfolio and the related activities were transferred to Invest International; FMO will temporarily provide service support to Invest International. Also, we enabled SOFR based transactions to comply with the revised EU Benchmark Regulation after discontinuation of LIBOR and EONIA as benchmark rates.
Furthermore, we added an impact module to our Sustainability Information System (SIS) that was launched in 2020. SIS allows us to connect impact and ESG domains, consolidate underlying processes and provide clarity on tasks and responsibilities via workflows that are linked to each transaction and customer. The impact module replaces the old system to process and approve label requests and impact data registration. The main advantage of this system is the use and availability of robust information.
One of FMO’s core values is integrity. FMO believes it is important that this value is lived by its employees as well as its customers and suppliers. FMO has embedded integrity into its policies, products and procedures. The KYC Framework, the Anti Bribery & Corruption Policy as well as Gifts, Entertainment & Hospitality Policy address the minimum standards our stakeholders, including our employees, should adhere to.
In 2021, all new FMO employees were required to complete the Compliance e-learning that addresses personal integrity topics such as bribery and corruption. In addition, new investment staff were also required to complete the KYC e-learning as part of their onboarding. All new investment staff were also required to undertake additional training related to the FEC program and remediation project.
KYC remediation and incidents
In 2021, FMO continued the KYC remediation effort to align with the latest KYC and FEC requirements. This was finished before the end of the year and forms part of meeting DNB’s expectations. In total 951 active customer KYC files were remediated. Independent external validation confirmed that the remediated efforts and KYC files are demonstrably compliant with the relevant requirements, after which the Management Board provided a compliance statement to DNB. The validation identified several recommendations that FMO will follow up on in 2022.
In 2021, we registered one KYC incident at existing customers (2020: two incidents). In this specific case the KYC procedure was not fully followed. Remedial actions were taken and the risk mitigated.
Alleged customer-related integrity issues
This refers to any unusual transactions that could indicate money laundering, corruption, fraud, terrorist financing, or non-compliance with sanctions programs (OFAC/EU/ NL/UN/UK) by customers or other counter parties (such as guarantors, custodians, UBOs). In 2021, a total of 12 new alleged customer-related integrity cases were reported to the Compliance Committee (2020: 20 cases). Issues were triggered by investment staff, other DFIs and partner (International) Finance Institutions (IFIs) or whistle blowers. FMO investigates each case together with partner DFIs/IFIs where needed, to verify its legitimacy and to determine solutions. During 2021, we closed 11 alleged customer-related integrity cases (2020: 24 cases), where either the issues were resolved or FMO decided to end the relationship.
Alleged employee-related integrity issues
Alleged employee-related integrity issues refer to any indication of suspected involvement with bribery, corruption, fraud, privacy violation, conflict of interest due to outside positions, gifts/entertainment/hospitality, or use of price-sensitive information. In 2021, one case was reported to the Compliance Committee (2020: one case), which has been closed.
Reported data leaks
Over the course of the year, one data leak was reported to the Data Protection Authority (2020: 0 data leaks reported).