Integrity and compliance as one of B20 Indonesia priorities

The integrity and compliance role has been expanded and challenged more than ever due to escalated integrity issues. Association of Certified Fraud Examiners estimates that organizations lose 5% of revenue–or equals to more than $4.7 trillion – to fraud each year. Financial Action Task Force predicts the cost of money laundering per year reaches 2-5% of the world’s gross domestic product–or equals to $800 billion to $2 trillion. Meanwhile, The World Economic Forum counts $2.2 trillion–nearly 3% of the world’s economy are leaked to illicit trade.  

Other contributing factors are the prolonged COVID-19 pandemic that pushed businesses to adopt hybrid working lifestyle and new digital business model, geo-political tension that caused supply chain disruptions leading to global food and energy crisis, and higher demand on sustainability practices in business especially related to environmental, social, and governance conducts.  

However, the EY Global Integrity Report 2022 shows that over half (55%) of respondents agree that integrity standards have remained the same or worsened over the last 18 months. Looking at the importance of integrity and compliance as fundamental aspects in doing business, the Business 20 (B20) – the official Group of Twenty (G20) dialogue forum with the global business community – consistently established integrity and compliance as one of its task forces for the last couple of years.  

EY Indonesia as Knowledge Partner in B20 Indonesia Integrity and Compliance Task Force

Integrity & Compliance Task Force (I&C TF) has been part of B20 priorities since B20 Mexico 2012. EY Indonesia along with B20 I&C TF Coordination Group have the main task to prepare policy paper that incorporates the prioritized issues, recommendations, and required actions proposed by the Task Force to the G20.  

As Knowledge Partner, EY Indonesia assisted the Task Force in formulating this year’s I&C TF focus, which comprises high-level issues with topics and recommendations that are business-focused and action-oriented. Recurring themes in I&C TF include how governments can incentivize compliance, establishing public-private partnerships, Collective Action as tools to address corruption challenges, open data standards on beneficial ownership, and corruption in public procurement.  

This year’s B20 I&C TF also introduces several new topics about sustainable governance disclosure, money laundering/terrorist financing and response mechanism toward cybercrime risks. In summary, B20 Indonesia I&C TF proposes four recommendations, 9 policy actions and 40 policy sub-actions to be prioritized by the G20 countries.  

Understanding the Four Recommendations for Business

On the verge of challenge for business to operate with compliance and integrity-based activities that also aligned by B20 I&C TF’s recommendations, business is encouraged to promote sustainable governance to support environmental, social, and governance initiatives (B20’s first recommendation). The B20 emphasizes the importance for businesses in promoting standardized governance approaches and measures, compliance efforts, effective monitoring, and independent assurance towards implementation of sustainable governance, of which the aspects constitute the need to improve sustainable governance measures and optimize sustainable governance compliance disclosures and monitoring. 

Apart from just operating with sustainability, business should foster Collective Action to alleviate integrity risks (B20’s second recommendation). This can be done by optimizing fundamental safeguards of integrity and transparency when interacting with business networks and government parties. Business is encouraged to cultivate and strengthen integrity when engaging in business-to-business collaboration, to maintain integrity in business-to-government interactions, and to promote inclusiveness between public-private sector entities to ensure trust, transparency, and high standards of integrity. 

Despite the changing economic landscape, issues on money laundering/terrorist financing are the pertinent aspect to consider as it evolves in line with such changing landscape. Business, therefore, should foster agility in counteract measures to combat money laundering/terrorist financing risks (B20’s third recommendation). Business is required to adapt and enhance integrity framework based on changing landscape of money laundering/terrorist financing risks alongside enhancement of governance and collaborative works to promote effectiveness of the counteraction measures that can be achieved by refocusing on money laundering/terrorist financing risk factors identification and improving beneficial ownership transparency. 

As technology usage is also a pivotal aspect at the core of business operations, business should consider strengthening its governance to mitigate exacerbated cybercrime risks (B20’s fourth recommendation) which involves optimizing existing organizational resources to minimize exacerbated cybercrime risk and encouraging systemic cybercrime resilience and collaboration. Rectifying organizational governance structure and extending multi-stakeholder cooperation for better cybercrime responses are the two concrete actions suggested under this recommendation.