Case study: How FAB combats financial crime
With a presence across five continents in addition to the UAE, FAB is UAE’s largest bank, offering a wide range of tailor-made solutions, products and services, to provide a customised experience. FAB invests heavily in crime prevention strategies and maintains robust controls to combat various types of criminal activities Tweet This!, including fraud, corruption, bribery, money laundering, terrorist financing, and breaching of international sanctions.
This case study is based on the 2019 ESG Report by FAB published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
FAB aspires to run its business in an open and transparent manner, firmly committed to conducting its global activities with integrity. In order to combat financial crime FAB took action to:
- combat fraud
- fight bribery and corruption
- raise employee awareness
- screen customers and transactions
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With this case study you will see:
- Which are the most important impacts (material issues) FAB has identified;
- How FAB proceeded with stakeholder engagement, and
- What actions were taken by FAB to combat financial crime
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What are the material issues the company has identified?
In its 2019 ESG Report FAB identified a range of material issues, such as financial and economic performance, systemic risk management, responsible customer relations, financial inclusion and accessibility, responsible lending and investing. Among these, combatting financial crime stands out as a key material issue for FAB.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups FAB engages with:
| Stakeholder Group | Method of engagement |
| Customers
| · Branches · Digital channels and social media · Relationship managers · Customer Experience Department · Customer surveys |
| Employees
| · Training and development programmes · Employee engagement · Recognition programmes · Transparent, accountable management · Whistleblower hotline |
| Shareholders and Investors
| · Board of Directors meetings · Public reports · Road shows |
| Government and Regulators
| · Group Internal Audit, Group Compliance and External Audit · Code of Ethics Policy · Public reporting |
| Environment
| · Sustainability report · Green bond report · Engagements with NGOs · External memberships |
| Local Community
| · CSR activities · Local procurement · Social media and website · Partnerships |
| Suppliers
| · Bidding and tendering · Supplier portal · Supplier Environmental & Social Code of Conduct |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics FAB conducted interviews and workshops with stakeholder groups, to identify what is important to them.
What actions were taken by FAB to combat financial crime?
In its 2019 ESG Report FAB reports that it took the following actions for combatting financial crime:
- Combatting fraud
- FAB’s global financial crime unit includes dedicated experts who specialise in crime prevention and managing threats posed to FAB. They undertake activities including fraud risk assessments, review new products before roll-out from a fraud risk perspective, conduct mystery shopping and spot checks to proactively test fraud controls, and update staff and customers about the latest trends in financial crime. The financial crime unit also works together with law enforcement agencies and industry peers to share intelligence, coordinate efforts and help fight financial crime in the wider community. FAB has a Group Vulnerability Assessment and Penetration Testing Policy and procedures to identify possible vulnerabilities on all bank assets and infrastructure, including payment card systems. FAB also uses advanced analytics that provide better insights and real-time data to uncover and act on potential threats.
- Fighting bribery and corruption
- FAB does not tolerate any deliberate breach of anti-bribery and corruption (AB&C) laws and regulations. The group AB&C policy was revised in December 2019, incorporating UK Bribery Act and Foreign Corrupt Practices Act (FCPA) requirements. Also, proper AB&C related controls have been embedded into the relevant business and support functions, to mitigate any bribery and corruption risks. The AB&C function provided a tailored training programme to certain functions with heightened bribery & corruption risks, along with the mandatory AB&C e-learning programme. The training programmes were provided to the Board, Senior Management and the wider bank personnel.
- Raising employee awareness
- FAB’s approach to fraud prevention includes an employee background check process, mandatory fraud awareness training as part of staff induction and an annual mandatory Anti-Money Laundering (AML), AB&C and Sanctions e-learning programme, which requires a minimum pass rate of 80%. FAB trains its people on how to identify, prevent and deal with financial crime and provides risk-assessment tools and models. Various polices are in place to guide employees and articulate FAB’s commitments, including AB&C Policy and the Prevention of Money Laundering and Counter Financing of Terrorism and Sanction Compliance Policy.
- Screening customers and transactions
- To verify and onboard legitimate customers, FAB’s due diligence process reflects international best practices and complies with relevant laws and regulations with respect to Know Your Customer (KYC) and other client identification requirements. FAB continuously updates its deterrence and detection infrastructure, which includes sophisticated tools to monitor, track and report criminals and any suspicious transaction activity across channels. Customers and counterparties are regularly screened against listed terrorist organisations and sanctioned names issued by the UN, US, EU, UK and UAE.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 205-1 Operations assessed for risks related to corruption
2) Disclosure 205-2 Communication and training about anti-corruption policies and procedures
Disclosure 205-1 Operations assessed for risks related to corruption corresponds to:
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.5
Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to:
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.5
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References:
1) This case study is based on published information by FAB, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) https://www.globalreporting.org/standards/gri-standards-download-center/
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