Corporate Governance Best Practices in Financial Crime Management for Community Banks

AAccording to the United Nations Office on Drugs and Crime, an estimated $800-2 trillion is laundered globally each year. As financial crime becomes increasingly sophisticated, it is essential for banks of all sizes to have strong practices from top to bottom. Risk and governance leaders, including Byron Loflin, Global Head of the Nasdaq Advisory Board, recently discussed financial crime management for community banks.

When it comes to effective corporate governance, Loflin explained how boards need to be engaged and active in dealing with financial crime. Key tools such as board portal software, board assessments, and director and officer compliance questionnaires help ensure a financial institution maximizes board risk mitigation administration throughout the organization.

The following is a summary of best practices for governance leaders that can help reduce the risk of financial crime.

Long term strategy

Effective boards understand that a long-term strategy includes a proactive view of competition and industry disruption. Commitment to a long-term strategy is typically characterized by a board’s ability to spend less time on required compliance and more time addressing key areas of corporate governance that reduce risk while increasing collaboration. Board portal software, like Nasdaq Boardvantage®, facilitates efficiency through digitized collaboration and improved decision-making workflows for boards, while freeing them up to focus on other board responsibilities. corporate governance.

Succession planning

Human development and talent management are at the heart of good corporate governance today, according to Loflin. This includes hiring a CEO who is dedicated to making their company a great place to work. In terms of financial crime management, this also involves the integration of Enterprise Risk Management (ERM) in all areas of the strategy. The succession approach to ERM incorporates a framework for mitigating risks and identifying opportunities in operations, finances and business objectives.

Environmental, social and governance (ESG) practices

With the growing demand for effective ESG initiatives from investors, it is important for companies to adopt a practical approach that meets the needs of different stakeholders. One way boards can effectively analyze and report on ESG issues is through all-in-one reporting software like Nasdaq OneReport.

Disclosure and Transparency

Now more than ever, boards need to be more transparent to all stakeholders about reducing financial crime, according to Loflin. Therefore, boards should adopt the necessary disclosure and transparency guidelines for both directors and employees. Additionally, it is important that boards emphasize a sense of openness and commitment to excellence when dealing with financial crime risk management.

Board agility

Peter Drucker, an educator, consultant, and author who has influenced the practical underpinnings of modern business, emphasized that what gets measured gets better. Therefore, board members and boards can maintain and strengthen their financial crime risk management through regular training and assessment. According to Loflin, tabletop exercises that engage board agility are great ways for companies to see where they’re succeeding and where they need to improve. Additionally, a board assessment is an excellent tool for measuring board effectiveness, while identifying skills gaps and corporate governance opportunities. Nasdaq’s Board Advisory Team partners with boards on their journey to excellence, using ratings as a strategic enabler that helps a board confidently steer its business forward. coming.

For companies and boards looking to improve their corporate governance practices and reduce the risk of financial crime, Nasdaq offers a suite of corporate governance solutions and other anti-corruption services. financial crime that community banks can use and explore in their efforts to keep their customers and infrastructure safe and ethical.