International Anti-Corruption Day 2024 | ETC's Commitment

Corruption, at all levels, slows down economic growth, exacerbates inequalities, and weakens public and private institutions. According to a 2021 World Bank study, corruption costs developing countries approximately $1 trillion annually, representing about 2% of global GDP.

In this context, financial institutions play a pivotal role as key actors in ensuring transparency and integrity in economic transactions. They are not only responsible for managing capital but also for implementing systems to prevent corruption while supporting initiatives to promote more ethical governance.

Corruption in the financial sector: what are its impacts?

When corruption infiltrates the financial sector, it has particularly severe repercussions on the entire economy. The 1Malaysia Development Berhad (1MDB) sovereign wealth fund scandal in Malaysia is a prime example of the devastating consequences of corruption.

Created to stimulate Malaysia’s economic development through strategic investments, the 1MDB fund was embezzled to enrich a network of political and economic actors. Billions of dollars were siphoned through complex mechanisms involving international banks, shell companies, and opaque transactions. This scandal highlights the dangers of corruption in a sector as central as finance.

The most notable impacts observed nationally and internationally include:

Loss of Investor Confidence:
Investors hesitate to commit their capital to environments perceived as unstable or corrupt. In Malaysia’s case, the country’s credibility was severely damaged, reducing its attractiveness in global financial markets.

Reduction of Foreign Investment Flows:
The scandal slowed the inflow of foreign capital, essential for economic growth. Investors chose to divert resources to markets offering governance and transparency guarantees. According to DWF Group, in 2015, foreign investors represented less than 20% of investments in the country’s bond market, compared to over 30% before the scandal.

Destabilization of Local Economies:
The debt, amounting to approximately $7.8 billion, including long-term bonds through 2039, heavily burdened Malaysia’s national budget, limiting public investments in critical sectors like infrastructure and education. This situation exacerbated inequalities and hindered economic and social progress.

This type of scandal demonstrates how crucial the fight against corruption in the financial sector is to preserve economic stability and restore trust—not only among investors but also among citizens. Governance reforms, transparency, and accountability are indispensable to addressing this challenge.

What is Ethical Governance?

According to the OECD and Transparency International, ethical governance involves “the application of principles of integrity, transparency, and accountability in managing public and private resources to ensure stakeholder trust and institutional sustainability” (OECD Principles of Corporate Governance, 2015).

Ethical governance is based on three fundamental principles: transparency, accountability, and integrity. These values lie at the heart of sound management practices in both the public and private sectors.

For financial institutions, this involves:

Adhering to strict international standards, such as the Financial Action Task Force (FATF) standards, which provide recommendations for combating money laundering and terrorist financing. According to the FATF, economies adopting these standards experience a 25% reduction in illicit financial flows.
Implementing rigorous internal controls to ensure the traceability of funds and operations. A 2022 Deloitte study reveals that 63% of fraud detected in financial institutions originates from effective internal monitoring systems.
Training employees, which is essential for raising awareness of ethical issues and identifying risks. A 2023 ACFE (Association of Certified Fraud Examiners) report indicates that companies investing in training see a 50% reduction in fraud-related incidents.

By adopting ethical governance, financial institutions promote transparency in transactions, improve resource allocation, and strengthen stakeholder trust. This model is a critical pillar for sustainable development, especially in emerging economies like those in Africa.

Compliance and Transparency: Essential Pillars for Financial Sector Stability

To mitigate these risks and maintain the integrity of the financial sector, institutions adopt rigorous compliance policies. These measures include implementing specialized training programs on ethics and compliance to raise employee awareness of corruption issues and equip them with the tools necessary to identify and report any suspicious behavior.

Additionally, these institutions align with internationally recognized standards, such as those issued by the Financial Action Task Force (FATF), which establish high standards for promoting transparency and integrity.

Another essential lever is the regular publication of external audit reports, which help strengthen investor and partner confidence by ensuring transparent financial management. These initiatives, while complex to implement, aim not only to protect the sustainability of financial institutions themselves but also to play a crucial role in maintaining a stable and equitable economic environment by laying a solid foundation for sustainable and responsible growth.

ETC: A committed institution in the fight against corruption

As a guarantee institution, ETC ensures transparent practices in its partnerships and operations, thereby fostering investor trust and promoting sustainable economic development in Africa. Its approach is based on:

Adherence to international regulatory frameworks: ETC complies with international governance and compliance standards. Its commitment to promoting ethical business practices is exemplified by its membership in the United Nations Global Compact. Furthermore, the application of Italian Legislative Decree No. 231, which establishes rigorous systems to prevent fraud and corruption, ensures that ETC operates with the highest level of transparency and accountability according to ISO 37001 standards.

Know Your Customer (KYC): To minimize fraud and corruption risks, ETC implements KYC processes. This allows the institution to verify the identity of partners and clients before engaging in any collaboration, ensuring that ETC supports funds and projects that are transparent and comply with international ethical standards. The KYC process also helps detect and avoid interactions with entities or individuals with a history of corruption or questionable financial practices.

These initiatives enable ETC to guarantee partnerships based on trust and actively contribute to sustainable economic development in Africa. In doing so, it attracts investors seeking reliable and ethical partners.

Supporting Africa’s Sustainable Development

Beyond fighting corruption, ETC works toward inclusive economic development in Africa. By fostering a culture of ethics and responsibility, it helps create a business environment conducive to sustainable investments.This commitment strengthens investor confidence, encouraging involvement in projects that generate economic growth and well-being for local communities. Through its ethical vision, ETC positions itself as a trusted partner, playing a strategic role in the continent’s economic rise.

The fight against corruption is imperative to building a prosperous and sustainable economic future. As a committed guarantee institution, ETC demonstrates that transparency and ethical governance are essential levers for sustainable development.