Financial crime is one of the most common risks for many companies. Even though the causes of corruption can be diverse, one of the tools used to combat crime is through “whistleblowers”. A whistleblower is an individual who reports violations and exposes information or activities deemed illegal or unethical including illegal or unethical activities regarded as part of the job.
Whistleblowers who report financial crimes, like money laundering, are vital for fighting these crimes, but they are also in a vulnerable position. Consequently, it is important to provide them with several basic protections. If someone takes the risk of speaking out for the benefit of a cleaner financial services sector, the system must protect them. Reporting can come at a high price because whistleblowers often expose themselves to great personal risks to protect the public interest. As a result, they may lose their jobs, dampen their career prospects, and even put their own lives at risk. This is why anonymity is one of the key elements to ensuring the continuation of whistleblowing.
Whistleblowing has the potential to contribute to the reduction of illicit flows, but an effective legal protection of whistleblowers against retaliation with full compensation in case of reprisals is necessary. An adequate mechanism to ensure that disclosures are properly handled and thoroughly investigated is required. Additionally, public research, data collection, information, and training to increase knowledge about the public benefit of whistleblowing is also needed.
Whistleblowing will continue to be a vital component of good corporate governance but will only exist if such individuals have reason to believe they will be protected should they speak out. For that, banks and other financial institutions, in particular, must be willing to take more innovative approaches to encourage whistleblowing due to their important role in combatting financial crime.