It is that time of the year when Transparency International puts out its latest country ratings around the perception of corruption. Perhaps unsurprisingly, the outlook globally is grim. More than two-thirds of the countries score below 50, the half-way mark for the annual measurement.
Looking at the map below, the appearance is that the world is quite literally “on fire” with corruption - and the data, unfortunately, backs that up. Given the impact that corruption has on a nation’s citizens, as well as its development and connectivity to the global economy, more certainly must be done to neutralize it. I saw first hand the impact corruption had on Afghanistan during my time there with the U.S. Treasury and can tell you that nothing breaks the spirit more. Ultimately, if you can’t trust your government, who can you trust?
At Sigma Ratings, we take this annual data seriously for a number of reasons.
First, we incorporate Transparency International’s data into our dynamic country risk score, which monitors corruption, as well as other financial crime-related risks like regulation and geopolitical risk exposure. Second, we believe it is critical because it is one of the more consistent indicators that the world gets annually - a report card of sorts on how we are doing against corruption. While imperfect, there is something tangible about the Corruption Index that just doesn’t exist for money laundering for example.
Equally interesting - and perhaps insightful - is the use of Google Trends to review who is searching for “corruption” related topics. While anecdotal, the interesting truth is that the overlay between this and Transparency International is notable.
However, risk is more complicated than this. And as Transparency International points out, there is also trouble at the top of the league table. Corruption, ultimately, can be exported and imported knowingly and unknowingly between countries that are higher ranked and those that underperform. Complex legal vehicles, anonymous companies, miscellaneous payments and clever invoicing are just a few of the ways global corporates find themselves embroiled in what is a growing number of now public corruption scandals.
At Sigma, we are working with a growing number of financial and non-financial clients who take these risks seriously and are eager to join us in fighting financial crime with tech and data. These companies recognize that list-based screening is not enough and are keen to ensure they are not missing the other risk that might be hiding in plain sight. Join us!