97% of middle market construction firms consider themselves at risk of falling foul of anti-money laundering and anti-bribery legislation according to the latest YouGov survey, commissioned by leading audit, tax and consulting firm RSM
The survey of more than 300 UK middle market business leaders also revealed that 47% of firms have suffered, unwittingly or otherwise, in incidents that are outside of the law.
Yet despite this, nearly 62% of those questioned, which is the highest percentage of all sectors, felt that non-financial reporting – the mechanism through which risk is minimised – is excessive or demanding, diverting major resources and hindering company operations.
Kelly Boorman, head of construction at RSM, said: “Our research highlights that anti-money laundering and anti-bribery legislation presents a real risk to the construction sector. Not only the reputational and operational disruption if there is a breach; but also implementing sufficient internal procedures to mitigate risk.
“It also suggests a worrying ‘cake and eat it’ mind-set within middle market business. On the one hand businesses recognise the major risks they face, yet on the other hand remain reluctant to fully engage in a process that minimises the risk and associated liabilities.
“If done well, non-financial reporting can not only protect a business, but engender stakeholder confidence; increase business value; and of course, gain a much broader competitive advantage. However, if it’s overlooked it could leave an organisation exposed.”
RSM’s research, entitled ‘Beyond the balance sheet – helping you bring governance into focus’ demonstrates how financial metrics no longer form the only yardstick of success and covers a range of areas including anti-money laundering and bribery act compliance.
Boorman added: “There has been a shift in what constitutes a well-run business and it goes beyond the balance sheet. Integrity, and proof of it, is more important than ever before. However, navigating a tightening regulatory environment is complex and diverts resources which applies further pressure on operations.”
The report sets out how, through highlighting the key areas of non-financial reporting (NFE), organisations can set about addressing the governance.
Businesses are required to comply with a plethora of regulations and legislation (GDPR) designed to eradicate fraudulent practices and improve integrity. For the first time, the public, the media and employees have an open window into the inner workings of organisations via NFR data covering areas such as the General Data Protection Regulation (GDPR), the gender pay gap, equality and diversity, whistleblowing, payment practices (such as money laundering, bribery and tax evasion), and measures to tackle modern slavery.