Course to help companies under pressure from financial crime

Crime Inc is flourishing despite the global financial crisis, creating additional pressures for company executives investigating criminal activity internally and trying to comply with a large and complex body of laws, Deakin's new chair of Law and expert in financial crime Professor Louis de Koker warned.

Crime syndicates have substantial funds at their disposal and, unlike corporate holdings, much of this is liquid," he explained.

"According to United Nations estimates the global market for illegal drugs appears to have stabilised at a staggering US$ 320 billion per year. Earlier this year, the UN's Drugs Czar, Antonio Maria Costa, indicated that some of the liquid drug money may actually have helped to keep the international banking system afloat at the end of 2008.

"The global financial crisis also provides these syndicates with new opportunities. Losses suffered in the financial markets have left key individuals more vulnerable to corruption and increased the vulnerability of companies to internal fraud, theft and collusion."

Professor de Koker, whose interests include money laundering and financial crime regulation, said the key to managing exposure to these crimes lay in a thorough appreciation of financial crime and compliance risks and the optimal alignment of the company's corporate governance, anti-fraud and compliance management policies, procedures and resources.

"Financial crime is constantly evolving," he said. "A company must continuously assess its changing risk profile and determine the optimal corporate response to the relevant risks.

"This requires a thorough knowledge of the financial crime environment. In addition, the company must understand and monitor its changing legal environment. New laws are adopted and interpretation of existing laws may alter their impact on a company. The company's compliance and financial crime responses must be framed within its corporate governance policy. Good corporate citizens comply with the law and steer clear of dirty money and shady clients."

Professor De Koker said a company's anti-money laundering and terror financing policy should therefore be driven by its ethical and governance framework and guided by the law.

"Unfortunately in many companies it is viewed as a matter driven by, rather than guided by, the law," he said.

"In these companies the compliance function tends to be isolated and at constant loggerheads with business divisions.

"Management's commitment to good corporate governance is experienced as a paper statement that has little bearing on the corporate culture or direction. It undermines the effectiveness of the company's compliance and anti-fraud procedures, leaving the company vulnerable to abuse.

"Ultimately management of the risk requires an in depth understanding of financial crime, the forces behind it and the limits within your business to challenge it."

A new course, The Graduate Certificate of Commercial Law (Financial Crime Control), will start in Semester 2 (Monday, 20 July).