The Tribune

The global issues we face today are multi-faceted and interconnected, and they are becoming increasingly complex with each passing day. Increasing economic inequality, racial discrimination and geopolitical strains are all posing significant challenges to society. Simultaneously, the digital revolution is transforming the global economy, and these changes have profound effects on the way you live and work. Moreover, with an increase in fraud, the emergence of financial technology (Fintech) and cybersecurity threats, the words “compliance” and “ethics” are often used interchangeably in regard to companies doing what is best for their stakeholders.

For the avoidance of doubt, the term “compliance” is used in the context of corporate governance to describe obeying the law. Conversely, whether the law permits it or not, ethics is about doing the right thing. In this article, I will discuss in brief two points: leading through an ethical lens, and the ethical handling of personal identifiable information (PII) as a strategy to reduce fraud.

Leading through an ethical lens

It is a given that leaders make decisions daily. Regardless of the size or significance of the decision, these choices often reveal a snapshot into the deeply ingrained values a leader holds. Leadership in an increasingly complex and ambiguous world puts Boards of Directors, senior executives and managers in situations where we must make choices when faced with risks and opportunities on both sides of the fence; differing opinions about what is an appropriate choice; and the lack of adequate information to guide our decisions.

In these circumstances, formulating a systematic approach or framework will help ensure that companies are making consistent decisions aligned with their core values. Before every decision is made, leaders must consider the core values of their company. Also, gather timely and relevant information to help with research on the topic. Then consider the risks and rewards of the pending decision. Finally, communicate the decision with clarity and monitor its impact.

The ethical handling of Personal Identifiable Information (PII)

The PricewaterhouseCoopers (PwC) Global Economic Crime and Fraud Survey 2020 revealed, based on feedback from 5,000 respondents representing 99 territories, that these companies experienced tangible losses of more than $42bn due to fraud. Customer fraud and cybercrime were the two top crimes frequently experienced. Facts like these have pushed companies to consider artificial intelligence and automation to reduce the impact of fraud.

Historically, fraud is detected after it has occurred. However, by leveraging automated processes to detect fraud in almost real-time, corporate leaders can mitigate these risks. This is accomplished by PII assisting companies to establish benchmarks that are used as triggers in fraud prevention. An additional aspect to consider is the enhancement of regulatory regimes surrounding PII, such as the European Union’s (EU) General Data Protection Regulation (GDPR) that includes guidance on how companies must manage PII. Therefore, companies must be careful when collecting and using personal information, and take steps to safeguard against data breaches, including adopting policies that establish limits on the collection and use of personal information.

Thus it is imperative that businesses carefully consider how they will handle fraud, including what technologies and procedures they will use to remain compliant with applicable laws and - where there are no laws - doing what is right. Enterprises should adopt ethically clear and transparent policies that govern how PII is used.

Conclusion

In short, in an effort to be ethical and compliant, a balance in the ethical framework, its deployment and management of PII must be met.

• NB: About Derek Smith Jr

Derek Smith Jr. has been a governance, risk and compliance professional for more than 20 years. He has held positions at a TerraLex member law firm, a Wolfsburg Group member bank and a ‘big four’ accounting firm. Mr Smith is a certified anti-money laundering specialist (CAMS), and the compliance officer and money laundering reporting officer (MLRO) for CG Atlantic’s family of companies (member of Coralisle Group) for The Bahamas and Turks & Caicos.