Compliance and regulatory risks

Partly stemming from the financial crisis, regulatory requirements and supervision are significantly increasing. Examples are laws and regulations like Wft, Basel III, IFRS and Banking Codes. Developments (e.g. reporting standards, liquidity requirements, guidelines on remuneration, corporate governance, anti-corruption) are monitored and translated into policies by specialists and a dedicated regulatory working group. In 2011 we have also seen increasing supervision by the Dutch Central Bank: the results of these reviews have strengthened our comfort in FMO's Control Framework.

Simultaneously we have also noticed growing interest and need for transparency towards non-governmental organizations. This shift requires more measurement and reporting, a development that will without doubt further increase in the near future.

FMO's reputation is an indispensable asset that needs to be protected against damage. We have implemented a Code of Conduct prescribing the behavior of FMO's staff, which all employees must receive and sign before starting their career with us. FMO's values and culture is further discussed during a training for new employees. Besides hard controls such as rules and procedures, FMO's management believes that soft controls, focused on people's behavior, are of vital importance.

Reputational and compliance risk are also created by FMO's clients. To mitigate these risks, FMO has a strict Know-Your-Customer and Anti-Money Laundering policy to guide our investment officers. This policy is reviewed on a yearly basis according to new laws and regulations. Furthermore, FMO's compliance officers advise on and ultimately approve or reject all FMO's clients before a business relationship is established. In the case of compliance risk, continuous awareness and management monitoring are key controls. To continuously improve awareness, all departments annually receive specific training and are tested on compliance through an e-learning module. Additionally, following regulatory requirements, in 2011 we implemented an Anti-Bribery & Corruption policy.