Case study: How Fransabank promotes ethical business behaviour
Fransabank is one of the oldest banks in Lebanon, serving more than 422,588 customers with 126 branches spread across the country, in addition to a total of 17 banking and non-banking subsidiaries and associates in the same market. Gaining the trust of customers, employees and other stakeholders by embracing moral and ethical principles, is a key priority for Fransabank.
This case study is based on the 2018 Corporate Social Responsibility Report by Fransabank 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
Fransabank seeks to play a substantial role in combating financial crime Tweet This!, operating in accordance with the highest ethical standards and in full compliance with all applicable anti-money laundering, financing of terrorism and corruption laws and regulations. In order to promote ethical business behaviour Fransabank took action to:
- prevent money laundering, financing of terrorism and corruption
- provide compliance training
- implement a Code of Conduct and Professional Ethics
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With this case study you will see:
- Which are the most important impacts (material issues) Fransabank has identified;
- How Fransabank proceeded with stakeholder engagement, and
- What actions were taken by Fransabank to promote ethical business behaviour
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What are the material issues the company has identified?
In its 2018 Corporate Social Responsibility Report Fransabank identified a range of material issues, such as customer satisfaction, climate change financing, data security and privacy, financial inclusion, responsible lending. Among these, promoting ethical business behaviour stands out as a key material issue for Fransabank.
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 Fransabank engages with:
| Stakeholder Group | Method of engagement |
| Customers
| · Satisfaction surveys · One-to-one meetings · Workshops and conferences · Financial consumer protection · Delivery channels (branches, call centre, e-banking, mobile banking, social media, email) |
| Employees
| · One-to-one meeting · Focus groups · Regular communication campaigns via intranet, e-mails, e-newsletters · Surveys · Publications · Trainings & workshops · Performance reviews |
| Shareholders
| · General meetings · Regulatory announcements · Financial disclosures · Presentation of the CSR achievements to the Board of Directors · Annual & CSR Reports |
| Regulatory authorities
| · Systematic reporting · Meetings and conferences · Lobbying activities · Industry associations · Periodic audits · Economic bulletin & market index · Annual & CSR Reports |
| Sustainability initiatives
| · Meetings · Annual conferences · Events · Social media · CSR reports |
| The media, interest groups and local communities | · Strategic collaborations · In-person meetings · Financial support & collaboration · Employee volunteering · Social events & conferences · Social media · Publications, press releases, media monitoring |
| Business partners and suppliers | · Meetings · Business feedback · Project meetings · Quality controls of products and services · E-mail communication |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics Fransabank carried out anonymous interviews with 161 corporate clients, a CSR survey engaging 133 Lebanese students and a Strengths, Weaknesses, Opportunities, and Threats (SWOT) study, with 162 staff feedback.
What actions were taken by Fransabank to promote ethical business behaviour?
In its 2018 Corporate Social Responsibility Report Fransabank reports that it took the following actions for promoting ethical business behaviour:
- Preventing money laundering, financing of terrorism and corruption
- Fransabank’s Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) Policy includes procedures for customer due diligence, reporting, record keeping, internal controls, risk management and communications that are intended to prevent illegal activities and crimes. Adequate training and coaching is also provided to enhance the compliance culture across Fransabank and specific policies on dealing with corruption and bribery are applied, as well as a complete sanctions programme aiming at being in full compliance with international standards and requirements. As such, all Fransabank employees:
- Conduct a periodic review of the AML/CFT, sanctions, anti-bribery and corruption, FATCA (Foreign Account Tax Compliance Act), Common Reporting Standard, and the EU’s GDPR policies and procedures to ensure compliance with the updated related requirements.
- Make sure that appropriate Know Your Customer (KYC) due diligence procedures are applied at the onset of the relationship with the customer and renewed at every material change in related data.
- Undertake a close monitoring on accounts’ movements and daily executed transactions to ensure their consistency with the customers’ net-worth status and their economic activity reflected in the KYC form; and accordingly handle system-generated alerts showing any deviation between mentioned and actual account activity. In this context, Fransabank has acquired ORACLE’s state-of-the-art software for Financial Crime Compliance Management, to be at the forefront of compliance with local and International standards, rules and regulations, and be a market leader in managing and eradicating the risks of money laundering, financing of terrorism, fraud and corruption.
- Perform a daily screening of the customers’ names against local watch and sanctions lists published by the Special Investigation Commission as well as those published by international bodies including UN, OFAC (Office of Foreign Assets Control), EU, HM Treasury, and Interpol.
- Apply strict control measures on wire transfers prior to processing them to make sure that the payment is not directly or indirectly in relation with sanctioned countries, individuals, entities, goods, vessels and ports.
- Conduct an Enhanced Due Diligence (EDD) on high risk customers, such as:
- Politically Exposed Persons (PEP)
- Off-shore companies
- Non-profits organisations
- Precious stone dealers
- Embassies
- Casinos
- High cash income professions
- Providing compliance training
- Fransabank’s compliance training sessions tackle topics such as Common Reporting Standards (CRS), fraud prevention, anti-money laundering and terrorist financing, professional secrecy, conflicts of interest and ethics, anti-bribery and corruption, sanctions requirements, and customer protection and satisfaction. To keep up with regular changes, and help employees stay informed about the latest regulations and international requirements, frequent trainings are carried out. Compliance training sessions are mandatory to Fransabank branches’ employees (customer service representatives, tellers, deputy branch managers and branch managers), as well as employees from selected departments/ divisions. In 2018, 1,006 employees completed 3,289 compliance training hours.
- Implementing a Code of Conduct and Professional Ethics
- The main objectives of Fransabank’s Corporate Code of Conduct and Professional Ethics are:
- To establish a common understanding of the standards of behaviour expected of all employees
- To provide a clear framework within which employees are expected to conduct themselves
- To maintain a work environment in which honesty, integrity and respect for fellow employees, and customers/clients constantly reflect in personal behaviour and standards of conduct
- To remind employees of what is expected from them as for their appearance and work ethics.
- Fransabank’s Corporate Code of Conduct and Professional Ethics reinforces the message that adherence to Fransabank’s core values and principles is every employee’s responsibility and that each has an obligation to apply the Code’s values and principles in everything he/she does, conduct business in a transparent, prudent and dependable manner, take responsibility, raise concerns and ask questions.
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: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Anti-corruption
Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to:
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Anti-corruption
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References:
1) This case study is based on published information by Fransabank, 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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