What is anti-corruption compliance validation?
Validation is a label applied to small and medium-sized companies (SMEs) having successfully passed a certain number of anti-corruption due diligence checks.
Large multinationals are faced with the enormous task of conducting due diligence on all their business partners, regardless of these partners’ size and countries of operation. This is particularly true of companies responding to FCPA requirements. These large companies invest a significant amount of resources to provide proof that due diligence has been adequately performed on even the smallest and least at-risk partners.
Business partners, on the other hand, must frequently answer multiple questionnaires and other due diligence requests made by clients, sign anti-corruption statements, and accept anti-corruption clauses specific to each of their clients’ due diligence procedures.
Business partners, particularly those with long-standing relationships with their clients, are sometimes reticent to undergo renewed due diligence checks; however, more often than not, business partners sign anti-corruption statements and accept anti-corruption clauses without so much as glancing at them. This is cause for much concern among large companies that can be held liable in the event the business partner engages in corruption. Companies must obtain assurance that their business partners recognize their client’s zero-tolerance position on corruption, understand the reasons for this position, and openly commit to respecting it.
Validation was developed by ETHIC Intelligence in 2011 as a way of facilitating due diligence checks on small and medium-sized business partners (such as sales agents or consultants) while at the same time providing business partners an advantage over their competitors in selection by potential clients.
In association with World Check, SGS and DNV, ETHIC Intelligence conducts a certain level of due diligence on business partners and attributes a validation “label” that lessens the amount of due diligence large companies must perform on them. Partners voluntarily undergo validation processes in order to obtain the validation label that can improve their chances of being selected to do business by large clients; clients, on the other hand, can request that their business partners obtain validation as assurance that a certain level of due diligence has already been performed, thus lessening their due diligence burden.
Validation is proof that a small and/or medium-sized business partner:
Sample Anti-Corruption Code of Ethics SMEs applying for validation yet lacking sufficient anti-corruption tools - such as a code of ethics - may use resources provided by the auditor or ETHIC Intelligence. ETHIC Intelligence has drafted a free model anti-corruption code of ethics that SMEs can use. Click here to request the sample anti-corruption code of ethics.
Q&A on Validation
How much due diligence does Validation cover?
Validation offers assurance that the following measures have been taken:
Can large companies use Validation to avoid conducting due diligence on a business partner? Companies must adapt their level of due diligence to the degree of corruption risk carried by a business partner and the partner’s intended mission. Validation may suffice if the business partner and the mission the partner carries out are deemed to be low-risk by the company, particularly after having taken into account the compliance risk rating attached to Validation.
The compliance risk rating aims at providing general compliance information to potential clients of the business partner; however, it does not preclude such potential clients from performing additional due diligence specific to the mission envisaged for the business partner. Depending on the level of risk a business partner or the intended project are considered to be carrying, companies may wish to either conduct further due diligence or use only Validation results.
Does Validation certify that an act of corruption has not been committed by the business partner?
ETHIC Intelligence Business Partner AC Validation in no way certifies that an act of corruption has not, is not being or will not be committed by the business partner. It does not endorse the business partner’s professional capacity, experience or state of affairs; rather, it attests to the business partner’s awareness of corruption-related risks, regulations and best practices as well as its commitment to conducting business with integrity.
Can my SME apply for Validation?
To ask us a question or obtain more information on validation, please contact us. |
