Half of Banks Have Punished Employees for Corruption, E&Y SaysNicole Mortimer and Ben Moshinsky
Half of financial firms with an anti-corruption policy have punished employees who have breached regulations, according to a report published today by Ernst & Young LLP.
Financial services firms are more likely to act if they suspect corruption than other companies, the accounting firm said in the survey. Nearly 70 percent of individuals in finance said their employer had clear penalties for breaking money laundering rules, compared with 49 percent across all industries.
Regulators around the world have cracked down on fraud and corruption after the 2008 financial crisis. The U.S. fined HSBC Holdings Plc $1.9 billion last year over claims the lender gave terrorists and drug cartels access to the U.S. financial system. Standard Chartered Plc also agreed to pay $667 million to U.S. regulators after they alleged the bank helped Iran launder $250 billion.
“The damage to shareholder value that can arise as a result of misreporting or corruption can be far greater than regulatory sanctions,” Sanjay Bhandari, a fraud investigator at Ernst & Young, said in an e-mailed statement. “The reputational damage” can last for years, he said.
Nearly one in 10 executives who work in the financial services industry said they were aware of salespeople reporting revenue early to make their current quarter look better, according to the survey.
The survey questioned nearly 3,500 employees of large companies, including 458 individuals in the financial industry, in 36 countries across Europe, the Middle East, India and Africa.