Past events in history have shown that another pandemic may come about some time in the near future. However, there are measures that can be taken to reduce the risks as stated by a newspaper by the Institute of Economic Affairs. As the human population continues to increase, so too will viruses and diseases. Today, there are quite a few outbreaks that have remained and settled permanently among humans, though they have not quite reached the extent of the Covid-19 pandemic. However, when comparing Covid-19 to other major viruses and diseases that have spread, it is relatively moderate. Adding on to a growing population, economic integration, long supply chains, traveling and a change in how health care systems are operated and structured have all made the impact of an infectious disease significantly greater compared to 50-60 years ago. Continue reading…

by Alex Movchan & Magdalena Wolska

“People show you who they are,
not by what they say, but by what they do.”
Jane Green, British journalist and writer

Probably, every internal auditor, at least once, had a feeling after the end of the audit engagement, that maybe there was something unnoticed, undiscovered, left “behind the curtains”. You start thinking about it, but nothing concrete really comes up on your mind – the interviews were held, reviews performed, testing completed. It looks like everything was examined properly, but the fear of missing something important just does not come out of the mind. Suddenly a thought comes up out of the blue: “And what, if there was a fraud out there?” Right, missing a fraud is the worst nightmare for an internal auditor. Although the Standards don’t put full responsibility of fraud detection on the internal auditors, but as is written in the Standard 1210.A2: “Internal auditors must have sufficient knowledge to evaluate the risk of fraud and the manner in which it is managed by the organization”. What is the trickiest about fraud is that it is like an iceberg – seems to be just a small detail from the first sight, but 95% of an iceberg is hidden beneath the water. And the damage it can cause might be truly unpredictable. If you have any doubts about that, just think about Titanic – the largest ship afloat with 2500 passengers on board, 1 500 of them died, making it one of the deadliest commercial peacetime maritime disasters in modern history. And this tragedy happened because the crew did not manage to identify the iceberg in time. 
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by Alex Movchan

We recently spoke to a special woman, Alkistis Gkiosi, BAcc, ACCA, CIA, CFE, who is known as a Compliance Expert and Internal Controls and Regulatory Affairs Professional. She has gained a lot of international experience, thanks to the various positions she fulfilled initially in the field of external audit and later in internal audit. From internal audit, Alkistis ended up in Cyprus where she is in charge of the compliance department of an international financial services company. Continue reading…

In its judgment pronounced today, the Second Senate of the Federal Constitutional Court granted several constitutional complaints directed against the Public Sector Purchase Programme (PSPP) of the European Central Bank (ECB). The Court found that the Federal Government and the German Bundestag violated the complainants’ rights under Art. 38(1) first sentence in conjunction with Art. 20(1) and (2), and Art. 79(3) of the Basic Law (Grundgesetz – GG) by failing to take steps challenging that the ECB, in its decisions on the adoption and implementation of the PSPP, neither assessed nor substantiated that the measures provided for in these decisions satisfy the principle of proportionality. In its Judgment of 11 December 2018, the Court of Justice of the European Union (CJEU) has taken a different stance in response to the request for a preliminary ruling from the Federal Constitutional Court; however, this does not merit a different conclusion in the present proceedings. The review undertaken by the CJEU with regard to whether the ECB’s decisions on the PSPP satisfy the principle of proportionality is not comprehensible; to this extent, the judgment was thus rendered ultra vires. As regards the complainants’ challenge that the PSPP effectively circumvents Art. 123 TFEU, the Federal Constitutional Court did not find a violation of the prohibition of monetary financing of Member State budgets. The decision published today does not concern any financial assistance measures taken by the European Union or the ECB in the context of the current coronavirus crisis.  Continue reading…

The Dutch Compliance Officers Association, abbreviated VCO, asked Geert Vermeulen to answer a number of questions about the COVID-19 crisis. Geert Vermeulen is a well-known Compliance Officer in the Netherlands, he also gives lectures and he teaches. Last year, he was the winner of the National Compliance Award 2019 (see photo). This prize is awarded annually with the aim of stimulating developments in the field of compliance, professionalising the compliance function and improving integrity within organisations. Geert was asked only three questions, but he answered them very thoroughly and extensively.  Continue reading…

by Muel Kaptein

Since the corona crisis, the agenda of compliance officers has changed considerably. But what will the agenda of compliance officers look like when the (semi) lockdown is phased out and organizations start working on their recovery? The recovery phase brings all kinds of new issues and work with it for the compliance function. Below I briefly describe eleven new items for the compliance agenda after the lockdown. Are there items that you think are not addressed in this list or ones that you see differently? In random order, I see the following eleven new items for the compliance agenda.
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by Lieve Lowet

This is the last part of the series of three articles about my in-depth investigation of the aforementioned measures as a result of the corona crisis. All the above actions, mentioned in the two previous articles, we although, prima facie and probably well intended, carry nevertheless a very heavy price. I will focus on the insurance sector by naming five topics.
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by Lieve Lowet

This is part two of the series of three articles about my investigation into the recent measures taken by European authorities as a result of the situation that has arisen. This article is more specifically about Solvency II. For insurers, there is no equivalent measure to Article 141 CRD. There is no such legal base in the Solvency II framework directive to ‘urge’ not to distribute. Article 71(1)(l)(i) of the Solvency II Delegated Regulation refers indirectly to the cancellation of distribution (dividends) in case of non-compliance with the SCR or where the distribution would lead to such non-compliance when legal or contractual arrangements allow for such cancellation. But it does so in the context of the classification of tier 1 basic own funds. In the past, EIOPA has referred to the cancellation or referral of dividend distribution when the validity of the business model is at risk: this was a recommendation to national supervisors e.g. after the 2016 stress test to address the vulnerability identified in the exercise. And in its recent consultation paper on the Solvency II review (EIOPA-BOS_19-465-CP-0pinion 2020), EIOPA’s draft advice links the potential by supervisors to limit or withhold dividend payments and other voluntary capital distribution to a sustainable solvency position when insurers use e.g. long-term guarantee measures. It also touches upon the prohibition of payments of dividends outside the EEA as another method of group supervision or as an alternative for the capital surcharge in case of systemic risk. Pious wishes?
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by Lieve Lowet

We live in exceptional times. Right now it is good to check whether the measures announced at high speed comply with the basic principles of correct decision-making and that they are in accordance with the applicable laws and regulations. I have made an in-depth analysis and would like to share my findings in a series of three articles. The articles will be published on three consecutive days. On 17 January 2020, in tempore non suspectu, the ECB issued a recommendation on dividend distribution policies to prepare banks for the introduction of IFRS9 and the new CRD / CRR requirements (ECB / 2020/1, OJ C30 29 January 2020). Banks, even those with “fully loaded” ratios, were recommended to distribute their net profits in dividends in a conservative manner. And then the corona crisis started to hit….
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by Sandra Galletti & Dr. Steven Goldman

This article identifies some strategies and recommendations that banks can utilize to minimize the impact on bank operations of the Covid-19 pandemic. A pandemic* (1) is a very particular and very terrible type of crisis. Unlike other crises such as earthquakes or cyberattacks which impact the bank’s infrastructure, pandemics directly impact its people – employees, vendors, suppliers – who might be unable to perform their jobs. Furthermore, customers cannot do business in usual ways. Unlike other crises such as technological breakdowns or security threats to which there is a reasonable expectation of resolution within a certain time frame, a pandemic’s duration can be prolonged; its severity brutal. Continue reading…