1. travel
2. tourist destinations
3. mexico and central america

A COMPLIANCE CASE STUDY
IN THE GLOBAL BANKNOTE
INDUSTRY
GEOFF BELL
CHIEF RISK & COMPLIANCE OFFICER
SUPPLY CHAIN
Film
Production
Opacification
Banknote
Printing
The Breakthrough
The First Guardian Banknote - 1988
SHADOW
IMAGE
TRANSPARENT
WINDOW
INTAGLIO
HOLOGRAM
3
OWNERSHIP STRUCTURE
50%
50%
80%
20%
CORPORATE PROFILE
Market Statistics
Number of Denominations Issued on Guardian®
31 countries have
issued banknotes on
Guardian® substrate
120
112
7 countries have
announced full
Guardian® banknote
series
5 denominations are
converting to
Guardian® each year
Number of Denominations
100
80
60
40
20
Current market share
at 5-7% and growing
0
1988
1990
1992
1994
1996
1998
2000
Source: Securency analysis
2002
2004
2006
2008
2010
MULTI NATIONAL RISKS
Agent sales and marketing arrangements
Senior government officials
Intense competition and barriers to entry
Long term high value contracts
CANADA
NORTHERN
IRELAND
ROMANIA
CHINA
MEXICO
HONDURAS
GUATEMALA
DOMINICAN
REPUBLIC
KUWAIT
HONG KONG
TAIWAN
THAILAND
NICARAGUA
VIETNAM
SRI LANKA
COSTA RICA
BRUNEI
MALAYSIA
SINGAPORE
BRAZIL
MOZAMBIQUE
PARAGUAY
INDONESIA
PAPUA NEW
GUINEA
VANUATU
AUSTRALIA
CHILE
NEW
ZEALAND
THE OFFENCE – CRIMINAL CODE
A person is guilty of an offence if the person provides, or offers,
or promises to provide, a benefit to another person where:
 The benefit is not legitimately due to the other person; and
 The person does so with the intention of influencing a foreign
public official in the exercise of the official’s duties as a foreign
public official in order to:
 Obtain or retain business; or
 Obtain or retain a business advantage that is not legitimately due
to the recipient, or intended recipient, of the business advantage
WHY COMPANIES NEED TO CARE…
 39 countries have enacted bribery and corruption laws under the
1997 OECD Anti-Bribery Convention
 There is an increased focus by law enforcement and regulators
here and abroad on Bribery and Corruption and related offences
 The reach of foreign law is expansive and there is unprecedented
cooperation between authorities
 The laws overlap and conduct may be caught by the laws of
multiple jurisdictions
And then, of course, the cost of the investigation and the
remediation…
THE INVESTIGATION
 Whistleblower alleges corrupt activity at Securency
 Board informs Australian Federal Police – full cooperation
 Forensic Review
 Change over in executive team – investigation continues
 Charged for conspiring to bribe, first under criminal provisions
 Nine executives charged
 Company matters resolved, committal hearings and mounting media
focus
The cost to the business?......to be continued.
THE COMPLIANCE CHALLENGE
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Forensic and internal audit
Termination of all agents and executive team
Flat sales and marketing structure
Appointment of Chief Risk & Compliance Officer
“No go” zones and local legal support
Culture, communication, transparency – industry role model
Governance, reporting and KPIs
Third party due diligence
UK bribery act – TI adequate procedures
LESSONS TO DATE
Must Do’s for International Companies
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Understand legislation and risks in your business
Top level commitment
Policies – strong and well communicated
Due diligence
Books and records – strong financial processes
Contracts need to involve more than Sales personnel
Conduct quality audits of key third parties
Reinforce messages – training
Whistleblower reporting
A sound culture is your best defense
RED FLAGS
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Invoices from non-approval service providers/unnecessary third parties performing
services
Cash payments, travel expenses, per diems
Payments to intermediate and ‘agents’, especially where appear inflated or lack of
documentation
Contracts with vague deliverables
Government customer that recommends or requires the company to use a particular
representative or distributor
Sales to governmental agencies with high unit price and low frequency
Requests for commission payments to be made to accounts in other countries or to
people/companies who did not perform the services
Excessive payments or commissions for services rendered or insufficient staff to
perform the services to be rendered
Loosing bidders hired as subcontractors
Favourable treatment of one supplier over another
Suspect qualifications of a successful bidder