Business integrity
Integrity is one of FMO’s core values. We believe it is important that this value is lived by our employees, our customers and our suppliers. FMO has embedded integrity into its policies, products and procedures.
Developments
In 2023, we set up a Market Abuse Disclosure Committee to ensure compliance with the EU Market Abuse Regulation. In addition, we completed the Data Protection Project to ensure that we comply with the European General Data Protection Regulation (GDPR). Furthermore, we enhanced our FEC framework by strengthening our team, revising part of our KYC process to improve efficiency, continuous compliance monitoring, which includes monitoring of KYC files, and transaction filtering.
Further information on developments in this area is provided in the ‘Risk management' chapter. In the following sections, we report the 2023 results on several relevant indicators.
KYC and KYS incidents
In 2023, we registered four operational risk events related to KYC (2022: five operational risk events) and one (low-risk) operational risk event related to Know Your Supplier (KYS) (2022: one operational risk event relating to KYS). All cases resulted from relevant KYC and KYS procedures not being fully followed. Remedial actions have been completed or are in progress.
Alleged customer-related integrity issues
This refers to transactions that present a higher risk to the organization. This may be due to possible involvement of 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 or ultimate beneficial owners. Such transactions are escalated to the Compliance Committee, which in December 2023, was renamed the Integrity and Issue Management Committee.
In 2023, five new alleged customer-related integrity cases were reported to this committee (2022: four cases). Four of these were included on the monitoring list. In addition, on one reported case, the committee decided that further monitoring was not deemed necessary.
Issues were raised – among others – by Investment, Compliance or KYC staff, other DFIs, and partner (international) finance institutions. FMO investigates each case, with partner DFIs/IFIs where needed, to verify its legitimacy and to determine solutions. During 2023, we closed one alleged customer-related integrity case (2022: eight cases). Issues and investigations are monitored via the Compliance Committee or after December, the Integrity and Issue Management Committee.
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 market abuse. In 2023, one case (2022: two cases) of alleged integrity cases was brought to the attention of Compliance (either directly or via the Speak Up line). The case has been closed.
Reported data breaches
Similar to 2022, no data breaches were reported to the Data Protection Authority in 2023.
Significant instances of non-compliance with laws and regulations
Significant instances of non-compliance constitute breaches of laws and regulations that have led to enforcement measures taken towards FMO by the relevant supervisory bodies or other competent authorities.
In August of 2023 we reported that, as a result of late notifications of unusual transactions to the Financial Intelligence Unit (FIU) in 2021 and 2022, DNB decided on enforcement measures. DNB is currently re-assessing these measures upon request of FMO (by means of objection). FMO’s related Financial Economic Crime (FEC) framework enhancement program – which involved a full KYC file remediation – was finalized at the end of 2021. During 2023, FMO focused on continuous improvement of its FEC framework, through (amongst others) periodic review of policies and procedures, training, and monitoring of performance.