1、OFFICE OF INSTITUTIONAL INTEGRITY AND SANCTIONS SYSTEM2O21 Annual Report1.4 The most recent developments under the Systemic Framework include those summarized below.1.5 A 360-Degree Integrity Approach.The Office of Institutional Integrity(OII)and the Sanctions System have adopted a coordinated 360-d

2、egree approach to protect and add value to IDB Group-financed activities.This approach safeguards Sovereign Guaranteed(SG)and Non-Sovereign Guaranteed(NSG)operations,as well as corporate projects and services,throughout the complete transaction cycle by(i)developing and strengthening actions that pr

3、event and mitigate integrity risks and(ii)taking appropriate enforcement actions when prohibited practices occur.1.6 A Proactive Approach to Address Integrity Risks in IDB Group-Financed Operations.The Systemic Framework emphasizes the importance of prevention in the fight against corruption.“ALLEGA

4、TIONS OF CORRUPTION SHOULD NOT PARALYZE THE BANKS ASSISTANCE,FOR THEN THE BANK WOULD BE CONTRIBUTING TO WORSENING THE CONDITIONS FOR ECONOMIC AND SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS WILL RESULT IN A RIGOROUS RISK ANALYSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED PR

5、OJECTS.”-SYSTEMIC FRAMEWORK.1.1 In 2021,OII and the Sanctions System commemorated 20 years since the approval by the Board of Directors of the IDBs anti-corruption framework:“Strengthening a Systemic Framework Against Corruption for the Inter-American Development Bank”(the“Systemic Framework”).The S

6、ystemic Framework emphasizes the need to consider integrity in the design and execution of operations and recognizes the importance of having a mechanism to address allegations of fraud and corruption in IDB-financed activities.1.2 Since the adoption of the Systemic Framework,the IDB Group has devel

7、oped an extensive set of policies,best practices,and specialized mechanisms to address potential weaknesses and strive for IDB Group-financed programs that are free from prohibited practices.These best practices have positioned the IDB Group as one of the leaders,along with other Multilateral Develo

8、pment Banks(MDBs),in transparency and integrity standards.1.3 An independent system to address allegations of fraud and corruption.The Systemic Framework also recognized the need for a mechanism to address allegations of fraud and corruption in IDB Group-financed activities.In 2003,OII was created t

9、o receive and investigate such allegations.1 Subsequently,in 2011,the IDB Group created the current Sanctions System,comprised of the Sanctions Officer2 and the Sanctions Committee,to adjudicate cases resulting from OIIs investigations.1.7 The importance of prevention has been reinforced by member c

10、ountries;for example,in the recent G7 Ministers Statement on the UN General Assembly Special Session Against Corruption issued on June 2,2021,the G7 commits to“work to ensure there are strong measures in place to prevent corruption and other forms of illicit finance to protect our financial centers

11、and deny safe haven to the proceeds of crime.We will support other countries efforts to do the same,including anti-corruption safeguards and transparency mechanisms in the delivery of humanitarian aid to ensure that aid,required in times of natural disaster and other emergencies including the COVID-

12、19 pandemic,reaches intended beneficiaries.We also reaffirm our commitment to putting in place measures that promote transparency in the beneficial ownership of legal entities.We further commit to promoting the effective implementation of the Financial Action Task Force(FATF)Standards,the global sta

13、ndard setter for combatting money laundering,terrorist financing and proliferation finance.”3 1.8 The focus of OIIs preventive function is to ensure that the IDB Group complies with its fiduciary role to prevent or minimize the adverse effects of fraud and corruption,such as financial losses and pot

14、ential reputational damage,and that the IDB Group is perceived as an agent of change in the region.In the past five years,OII has stepped up its proactive engagement with the IDB Groups operational teams and Management to address integrity risks in IDB Group-financed activities.OIIs advisory service

15、s on integrity risk management have increased significantly,not only in numbers but also in complexity.This is the result of greater awareness at all levels of the importance of responding to risk indicators at the earliest opportunity and complying with the requirements of IDB Group policies,as wel

16、l as best practices developed throughout OIIs experience.1.9 In Sovereign Guaranteed(SG)operations,OII pursues an integrated risk management strategy that serves as a tool to add value to the Banks contribution to development outcomes.It has done so by(i)extracting lessons from investigations,consul

17、tations,and analyses to inform programs risk management strategies throughout the project cycle,(ii)building capacity of executing agencies and other stakeholders to manage integrity risks,and(iii)incorporating integrity risk management elements into the IDBs policies and guidelines.1.10 In Non-Sove

18、reign Guaranteed(NSG)operations,Integrity Due Diligence(IDD)has evolved to be a central element of IDB Invest project evaluations and one that frequently impacts other risks,including credit,environmental,and corporate governance.OII,in coordination with IDB Invest,has(i)strengthened risk management

19、 tools for operations throughout the project cycle,including projects in the supervision(execution)phase,and(ii)developed policies and procedures to ensure adequate controls and monitoring of projects.These efforts built on significant structural reforms that were adopted in connection with the 2016

20、 reorganization(“merge-out”)relating to the IDB Groups NSG operations,including the adoption of the Integrity Framework.1.11 A Framework for Anti-Money Laundering and Combating the Financing of Terrorism(AML/CFT)for the IDB.Building upon integrity risk prevention efforts and OIIs expertise,and consi

21、stent with the 360-degree approach,an AML/CFT Framework formalizing the IDBs commitment to the management of risks related to money laundering and terrorist financing was approved in May 2018.The AML/CFT Framework,which applies to the IDBs operational and corporate transactions,ensures that the IDB

22、has AML/CFT controls that meet industry best practices,correspond to the risks faced by the IDB,and consider its legal status as an international financial institution.1.12 Investigations and Sanctions.Recently,OII has made a concerted and strategic effort to pivot from purely reactive complaint-cen

23、tric approaches for investigations to a hybrid model that proactively seeks out indicators of prohibited practices,resulting in greater vigilance and higher-impact investigations,some of which have resulted in high-profile negotiated resolution agreements(NRAs)and sanctions.These efforts gained visi

24、bility including when OII and the IDB Group were recognized by the Global Investigations Review as the 2020 Emerging Enforcer of the Year.In addition,these efforts have allowed for a greater focus on the detection and remediation of systemic integrity risks in the region.1.13 The Sanctions System ha

25、s become an agent of change for integrity in the region and in the different sectors in which the IDB Group is fostering development.The Office of the Sanctions Officer(SO)has enhanced its role by becoming a key player in the implementation of NRAs and by using compliance programs as a part of sanct

26、ion remedies.Additionally,the Sanctions Committee(SNC)has increased the number of hearings conducted based on a greater number of requests submitted by investigated parties often represented by larger law firms.As an improvement in the transparency of the Sanctions System,the SO and SNC have been sh

27、aring knowledge with different stakeholders by publishing synopses of the decisions taken in the cases they consider.1.14 Harmonization and Cooperation with International Financial Institutions(IFIs)and National Authorities.Since 2006,the IDB Group has been working with other IFIs to harmonize the e

28、lements of an effective strategy to fight corruption and fraud4 and to share and discuss best practices.The harmonization efforts were further strengthened by the 2010 Agreement on Mutual Enforcement of Debarment Decisions(Cross-Debarment Agreement).5 The Cross-Debarment Agreement allows for parties

29、 sanctioned by one MDB to be excluded from participating in activities financed by all other MDBs who are parties to the agreement.Cross-debarment raises the cost and reputational impact of engaging in corruption and other prohibited practices,generating a strong deterrent effect.OII also has develo

30、ped broad cooperation with counterpart national authorities and international agencies to coordinate investigative efforts(see Appendix III).1.4 The most recent developments under the Systemic Framework include those summarized below.1.5 A 360-Degree Integrity Approach.The Office of Institutional In

31、tegrity(OII)and the Sanctions System have adopted a coordinated 360-degree approach to protect and add value to IDB Group-financed activities.This approach safeguards Sovereign Guaranteed(SG)and Non-Sovereign Guaranteed(NSG)operations,as well as corporate projects and services,throughout the complet

32、e transaction cycle by(i)developing and strengthening actions that prevent and mitigate integrity risks and(ii)taking appropriate enforcement actions when prohibited practices occur.1.6 A Proactive Approach to Address Integrity Risks in IDB Group-Financed Operations.The Systemic Framework emphasizes

33、 the importance of prevention in the fight against corruption.“ALLEGATIONS OF CORRUPTION SHOULD NOT PARALYZE THE BANKS ASSISTANCE,FOR THEN THE BANK WOULD BE CONTRIBUTING TO WORSENING THE CONDITIONS FOR ECONOMIC AND SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS WILL RESULT IN A RIGOROUS RISK ANAL

34、YSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED PROJECTS.”-SYSTEMIC FRAMEWORK.1.1 In 2021,OII and the Sanctions System commemorated 20 years since the approval by the Board of Directors of the IDBs anti-corruption framework:“Strengthening a Systemic Framework Against Corruption fo

35、r the Inter-American Development Bank”(the“Systemic Framework”).The Systemic Framework emphasizes the need to consider integrity in the design and execution of operations and recognizes the importance of having a mechanism to address allegations of fraud and corruption in IDB-financed activities.1.2

36、 Since the adoption of the Systemic Framework,the IDB Group has developed an extensive set of policies,best practices,and specialized mechanisms to address potential weaknesses and strive for IDB Group-financed programs that are free from prohibited practices.These best practices have positioned the

37、 IDB Group as one of the leaders,along with other Multilateral Development Banks(MDBs),in transparency and integrity standards.1.3 An independent system to address allegations of fraud and corruption.The Systemic Framework also recognized the need for a mechanism to address allegations of fraud and

38、corruption in IDB Group-financed activities.In 2003,OII was created to receive and investigate such allegations.1 Subsequently,in 2011,the IDB Group created the current Sanctions System,comprised of the Sanctions Officer2 and the Sanctions Committee,to adjudicate cases resulting from OIIs investigat

39、ions.1.7 The importance of prevention has been reinforced by member countries;for example,in the recent G7 Ministers Statement on the UN General Assembly Special Session Against Corruption issued on June 2,2021,the G7 commits to“work to ensure there are strong measures in place to prevent corruption

40、 and other forms of illicit finance to protect our financial centers and deny safe haven to the proceeds of crime.We will support other countries efforts to do the same,including anti-corruption safeguards and transparency mechanisms in the delivery of humanitarian aid to ensure that aid,required in

41、 times of natural disaster and other emergencies including the COVID-19 pandemic,reaches intended beneficiaries.We also reaffirm our commitment to putting in place measures that promote transparency in the beneficial ownership of legal entities.We further commit to promoting the effective implementa

42、tion of the Financial Action Task Force(FATF)Standards,the global standard setter for combatting money laundering,terrorist financing and proliferation finance.”3 1.8 The focus of OIIs preventive function is to ensure that the IDB Group complies with its fiduciary role to prevent or minimize the adv

43、erse effects of fraud and corruption,such as financial losses and potential reputational damage,and that the IDB Group is perceived as an agent of change in the region.In the past five years,OII has stepped up its proactive engagement with the IDB Groups operational teams and Management to address i

44、ntegrity risks in IDB Group-financed activities.OIIs advisory services on integrity risk management have increased significantly,not only in numbers but also in complexity.This is the result of greater awareness at all levels of the importance of responding to risk indicators at the earliest opportu

45、nity and complying with the requirements of IDB Group policies,as well as best practices developed throughout OIIs experience.1.9 In Sovereign Guaranteed(SG)operations,OII pursues an integrated risk management strategy that serves as a tool to add value to the Banks contribution to development outco

46、mes.It has done so by(i)extracting lessons from investigations,consultations,and analyses to inform programs risk management strategies throughout the project cycle,(ii)building capacity of executing agencies and other stakeholders to manage integrity risks,and(iii)incorporating integrity risk manag

47、ement elements into the IDBs policies and guidelines.1.10 In Non-Sovereign Guaranteed(NSG)operations,Integrity Due Diligence(IDD)has evolved to be a central element of IDB Invest project evaluations and one that frequently impacts other risks,including credit,environmental,and corporate governance.O

48、II,in coordination with IDB Invest,has(i)strengthened risk management tools for operations throughout the project cycle,including projects in the supervision(execution)phase,and(ii)developed policies and procedures to ensure adequate controls and monitoring of projects.These efforts built on signifi

49、cant structural reforms that were adopted in connection with the 2016 reorganization(“merge-out”)relating to the IDB Groups NSG operations,including the adoption of the Integrity Framework.1.11 A Framework for Anti-Money Laundering and Combating the Financing of Terrorism(AML/CFT)for the IDB.Buildin

50、g upon integrity risk prevention efforts and OIIs expertise,and consistent with the 360-degree approach,an AML/CFT Framework formalizing the IDBs commitment to the management of risks related to money laundering and terrorist financing was approved in May 2018.The AML/CFT Framework,which applies to

51、the IDBs operational and corporate transactions,ensures that the IDB has AML/CFT controls that meet industry best practices,correspond to the risks faced by the IDB,and consider its legal status as an international financial institution.1.12 Investigations and Sanctions.Recently,OII has made a conce

52、rted and strategic effort to pivot from purely reactive complaint-centric approaches for investigations to a hybrid model that proactively seeks out indicators of prohibited practices,resulting in greater vigilance and higher-impact investigations,some of which have resulted in high-profile negotiat

53、ed resolution agreements(NRAs)and sanctions.These efforts gained visibility including when OII and the IDB Group were recognized by the Global Investigations Review as the 2020 Emerging Enforcer of the Year.In addition,these efforts have allowed for a greater focus on the detection and remediation o

54、f systemic integrity risks in the region.1.13 The Sanctions System has become an agent of change for integrity in the region and in the different sectors in which the IDB Group is fostering development.The Office of the Sanctions Officer(SO)has enhanced its role by becoming a key player in the imple

55、mentation of NRAs and by using compliance programs as a part of sanction remedies.Additionally,the Sanctions Committee(SNC)has increased the number of hearings conducted based on a greater number of requests submitted by investigated parties often represented by larger law firms.As an improvement in

56、 the transparency of the Sanctions System,the SO and SNC have been sharing knowledge with different stakeholders by publishing synopses of the decisions taken in the cases they consider.1.14 Harmonization and Cooperation with International Financial Institutions(IFIs)and National Authorities.Since 2

57、006,the IDB Group has been working with other IFIs to harmonize the elements of an effective strategy to fight corruption and fraud4 and to share and discuss best practices.The harmonization efforts were further strengthened by the 2010 Agreement on Mutual Enforcement of Debarment Decisions(Cross-De

58、barment Agreement).5 The Cross-Debarment Agreement allows for parties sanctioned by one MDB to be excluded from participating in activities financed by all other MDBs who are parties to the agreement.Cross-debarment raises the cost and reputational impact of engaging in corruption and other prohibit

59、ed practices,generating a strong deterrent effect.OII also has developed broad cooperation with counterpart national authorities and international agencies to coordinate investigative efforts(see Appendix III).Cataloging-in-Publication data provided by the Inter-American Development Bank Felipe Herr

60、era Library Ofce of institutional Integrity and Sanctions System:Annual Report 2021/Inter-American Development Bank.p.cm.1.Development banks.2.Transparency in international agencies.3.Corruption-Prevention.I.Inter-American Development Bank.Ofce of Institutional Integrity.II.Inter-American Developmen

61、t Bank.Sanctions Ofcer.III.Inter-American Development Bank.Sanctions Committee.IDB-AN-328 Copyright 2022 Inter-American Development Bank.This work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives(CC-IGO BY-NC-ND 3.0 IGO)license(http:/creativecommons.org/licenses/b

62、y-nc-nd/3.0/igo/legalcode)and may be reproduced with attribution to the IDB and for any non-commercial purpose.No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules.The use

63、 of the IDBs name for any purpose other than for attribution,and the use of IDBs logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license.Note that link provided above includes additional terms and conditions of t

64、he license.The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank,its Board of Directors,or the countries they represent.OFFICE OF INSTITUTIONAL INTEGRITY AND SANCTIONS SYSTEM2O21 Annual Report1.4 The most r

65、ecent developments under the Systemic Framework include those summarized below.1.5 A 360-Degree Integrity Approach.The Office of Institutional Integrity(OII)and the Sanctions System have adopted a coordinated 360-degree approach to protect and add value to IDB Group-financed activities.This approach

66、 safeguards Sovereign Guaranteed(SG)and Non-Sovereign Guaranteed(NSG)operations,as well as corporate projects and services,throughout the complete transaction cycle by(i)developing and strengthening actions that prevent and mitigate integrity risks and(ii)taking appropriate enforcement actions when

67、prohibited practices occur.1.6 A Proactive Approach to Address Integrity Risks in IDB Group-Financed Operations.The Systemic Framework emphasizes the importance of prevention in the fight against corruption.“ALLEGATIONS OF CORRUPTION SHOULD NOT PARALYZE THE BANKS ASSISTANCE,FOR THEN THE BANK WOULD B

68、E CONTRIBUTING TO WORSENING THE CONDITIONS FOR ECONOMIC AND SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS WILL RESULT IN A RIGOROUS RISK ANALYSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED PROJECTS.”-SYSTEMIC FRAMEWORK.1.1 In 2021,OII and the Sanctions System commemorated 20 y

69、ears since the approval by the Board of Directors of the IDBs anti-corruption framework:“Strengthening a Systemic Framework Against Corruption for the Inter-American Development Bank”(the“Systemic Framework”).The Systemic Framework emphasizes the need to consider integrity in the design and executio

70、n of operations and recognizes the importance of having a mechanism to address allegations of fraud and corruption in IDB-financed activities.1.2 Since the adoption of the Systemic Framework,the IDB Group has developed an extensive set of policies,best practices,and specialized mechanisms to address

71、 potential weaknesses and strive for IDB Group-financed programs that are free from prohibited practices.These best practices have positioned the IDB Group as one of the leaders,along with other Multilateral Development Banks(MDBs),in transparency and integrity standards.1.3 An independent system to

72、 address allegations of fraud and corruption.The Systemic Framework also recognized the need for a mechanism to address allegations of fraud and corruption in IDB Group-financed activities.In 2003,OII was created to receive and investigate such allegations.1 Subsequently,in 2011,the IDB Group create

73、d the current Sanctions System,comprised of the Sanctions Officer2 and the Sanctions Committee,to adjudicate cases resulting from OIIs investigations.1.7 The importance of prevention has been reinforced by member countries;for example,in the recent G7 Ministers Statement on the UN General Assembly S

74、pecial Session Against Corruption issued on June 2,2021,the G7 commits to“work to ensure there are strong measures in place to prevent corruption and other forms of illicit finance to protect our financial centers and deny safe haven to the proceeds of crime.We will support other countries efforts t

75、o do the same,including anti-corruption safeguards and transparency mechanisms in the delivery of humanitarian aid to ensure that aid,required in times of natural disaster and other emergencies including the COVID-19 pandemic,reaches intended beneficiaries.We also reaffirm our commitment to putting

76、in place measures that promote transparency in the beneficial ownership of legal entities.We further commit to promoting the effective implementation of the Financial Action Task Force(FATF)Standards,the global standard setter for combatting money laundering,terrorist financing and proliferation fin

77、ance.”3 1.8 The focus of OIIs preventive function is to ensure that the IDB Group complies with its fiduciary role to prevent or minimize the adverse effects of fraud and corruption,such as financial losses and potential reputational damage,and that the IDB Group is perceived as an agent of change i

78、n the region.In the past five years,OII has stepped up its proactive engagement with the IDB Groups operational teams and Management to address integrity risks in IDB Group-financed activities.OIIs advisory services on integrity risk management have increased significantly,not only in numbers but al

79、so in complexity.This is the result of greater awareness at all levels of the importance of responding to risk indicators at the earliest opportunity and complying with the requirements of IDB Group policies,as well as best practices developed throughout OIIs experience.1.9 In Sovereign Guaranteed(S

80、G)operations,OII pursues an integrated risk management strategy that serves as a tool to add value to the Banks contribution to development outcomes.It has done so by(i)extracting lessons from investigations,consultations,and analyses to inform programs risk management strategies throughout the proj

81、ect cycle,(ii)building capacity of executing agencies and other stakeholders to manage integrity risks,and(iii)incorporating integrity risk management elements into the IDBs policies and guidelines.1.10 In Non-Sovereign Guaranteed(NSG)operations,Integrity Due Diligence(IDD)has evolved to be a centra

82、l element of IDB Invest project evaluations and one that frequently impacts other risks,including credit,environmental,and corporate governance.OII,in coordination with IDB Invest,has(i)strengthened risk management tools for operations throughout the project cycle,including projects in the supervisi

83、on(execution)phase,and(ii)developed policies and procedures to ensure adequate controls and monitoring of projects.These efforts built on significant structural reforms that were adopted in connection with the 2016 reorganization(“merge-out”)relating to the IDB Groups NSG operations,including the ad

84、option of the Integrity Framework.1.11 A Framework for Anti-Money Laundering and Combating the Financing of Terrorism(AML/CFT)for the IDB.Building upon integrity risk prevention efforts and OIIs expertise,and consistent with the 360-degree approach,an AML/CFT Framework formalizing the IDBs commitmen

85、t to the management of risks related to money laundering and terrorist financing was approved in May 2018.The AML/CFT Framework,which applies to the IDBs operational and corporate transactions,ensures that the IDB has AML/CFT controls that meet industry best practices,correspond to the risks faced b

86、y the IDB,and consider its legal status as an international financial institution.1.12 Investigations and Sanctions.Recently,OII has made a concerted and strategic effort to pivot from purely reactive complaint-centric approaches for investigations to a hybrid model that proactively seeks out indica

87、tors of prohibited practices,resulting in greater vigilance and higher-impact investigations,some of which have resulted in high-profile negotiated resolution agreements(NRAs)and sanctions.These efforts gained visibility including when OII and the IDB Group were recognized by the Global Investigatio

88、ns Review as the 2020 Emerging Enforcer of the Year.In addition,these efforts have allowed for a greater focus on the detection and remediation of systemic integrity risks in the region.1.13 The Sanctions System has become an agent of change for integrity in the region and in the different sectors i

89、n which the IDB Group is fostering development.The Office of the Sanctions Officer(SO)has enhanced its role by becoming a key player in the implementation of NRAs and by using compliance programs as a part of sanction remedies.Additionally,the Sanctions Committee(SNC)has increased the number of hear

90、ings conducted based on a greater number of requests submitted by investigated parties often represented by larger law firms.As an improvement in the transparency of the Sanctions System,the SO and SNC have been sharing knowledge with different stakeholders by publishing synopses of the decisions ta

91、ken in the cases they consider.1.14 Harmonization and Cooperation with International Financial Institutions(IFIs)and National Authorities.Since 2006,the IDB Group has been working with other IFIs to harmonize the elements of an effective strategy to fight corruption and fraud4 and to share and discu

92、ss best practices.The harmonization efforts were further strengthened by the 2010 Agreement on Mutual Enforcement of Debarment Decisions(Cross-Debarment Agreement).5 The Cross-Debarment Agreement allows for parties sanctioned by one MDB to be excluded from participating in activities financed by all

93、 other MDBs who are parties to the agreement.Cross-debarment raises the cost and reputational impact of engaging in corruption and other prohibited practices,generating a strong deterrent effect.OII also has developed broad cooperation with counterpart national authorities and international agencies

94、 to coordinate investigative efforts(see Appendix III).Preface by Mauricio Claver-Carone,IDB President1.Introduction A.Two Decades of a Powerful Commitment to Anti-CorruptionB.Our Performance in 2021 at a Glance2.Prevention Results A.Advice to Sovereign Guaranteed OperationsB.Integrity Due Diligence

95、 SupportC.Anti-Money Laundering/Combating the Financing of Terrorism FrameworkD.Trainings and Outreach ActivitiesE.Key Takeaways and Challenges3.Results of Investigations A.Outputs of InvestigationsB.Key Takeaways and Challenges4.Sanctions Officer,Sanctions Committee,and its Executive Secretariat A.

96、Sanctions Officer OutputsB.General Overview of the Sanctions Committee (SNC)ActivitiesC.Key Takeaways and ChallengesAppendix I:Prohibited Practices Appendix II:Entities and Individuals Sanctioned in 2021 Appendix III:Cooperation Agreements Appendix IV:Glossary Page594444749505961647277808

97、18284TABLE OF CONTENTS1.4 The most recent developments under the Systemic Framework include those summarized below.1.5 A 360-Degree Integrity Approach.The Office of Institutional Integrity(OII)and the Sanctions System have adopted a coordinated 360-degree approach to protect and add value to IDB Gro

98、up-financed activities.This approach safeguards Sovereign Guaranteed(SG)and Non-Sovereign Guaranteed(NSG)operations,as well as corporate projects and services,throughout the complete transaction cycle by(i)developing and strengthening actions that prevent and mitigate integrity risks and(ii)taking a

99、ppropriate enforcement actions when prohibited practices occur.1.6 A Proactive Approach to Address Integrity Risks in IDB Group-Financed Operations.The Systemic Framework emphasizes the importance of prevention in the fight against corruption.“ALLEGATIONS OF CORRUPTION SHOULD NOT PARALYZE THE BANKS

100、ASSISTANCE,FOR THEN THE BANK WOULD BE CONTRIBUTING TO WORSENING THE CONDITIONS FOR ECONOMIC AND SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS WILL RESULT IN A RIGOROUS RISK ANALYSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED PROJECTS.”-SYSTEMIC FRAMEWORK.1.1 In 2021,OII and th

101、e Sanctions System commemorated 20 years since the approval by the Board of Directors of the IDBs anti-corruption framework:“Strengthening a Systemic Framework Against Corruption for the Inter-American Development Bank”(the“Systemic Framework”).The Systemic Framework emphasizes the need to consider

102、integrity in the design and execution of operations and recognizes the importance of having a mechanism to address allegations of fraud and corruption in IDB-financed activities.1.2 Since the adoption of the Systemic Framework,the IDB Group has developed an extensive set of policies,best practices,a

103、nd specialized mechanisms to address potential weaknesses and strive for IDB Group-financed programs that are free from prohibited practices.These best practices have positioned the IDB Group as one of the leaders,along with other Multilateral Development Banks(MDBs),in transparency and integrity st

104、andards.1.3 An independent system to address allegations of fraud and corruption.The Systemic Framework also recognized the need for a mechanism to address allegations of fraud and corruption in IDB Group-financed activities.In 2003,OII was created to receive and investigate such allegations.1 Subse

105、quently,in 2011,the IDB Group created the current Sanctions System,comprised of the Sanctions Officer2 and the Sanctions Committee,to adjudicate cases resulting from OIIs investigations.1.7 The importance of prevention has been reinforced by member countries;for example,in the recent G7 Ministers St

106、atement on the UN General Assembly Special Session Against Corruption issued on June 2,2021,the G7 commits to“work to ensure there are strong measures in place to prevent corruption and other forms of illicit finance to protect our financial centers and deny safe haven to the proceeds of crime.We wi

107、ll support other countries efforts to do the same,including anti-corruption safeguards and transparency mechanisms in the delivery of humanitarian aid to ensure that aid,required in times of natural disaster and other emergencies including the COVID-19 pandemic,reaches intended beneficiaries.We also

108、 reaffirm our commitment to putting in place measures that promote transparency in the beneficial ownership of legal entities.We further commit to promoting the effective implementation of the Financial Action Task Force(FATF)Standards,the global standard setter for combatting money laundering,terro

109、rist financing and proliferation finance.”3 1.8 The focus of OIIs preventive function is to ensure that the IDB Group complies with its fiduciary role to prevent or minimize the adverse effects of fraud and corruption,such as financial losses and potential reputational damage,and that the IDB Group

110、is perceived as an agent of change in the region.In the past five years,OII has stepped up its proactive engagement with the IDB Groups operational teams and Management to address integrity risks in IDB Group-financed activities.OIIs advisory services on integrity risk management have increased sign

111、ificantly,not only in numbers but also in complexity.This is the result of greater awareness at all levels of the importance of responding to risk indicators at the earliest opportunity and complying with the requirements of IDB Group policies,as well as best practices developed throughout OIIs expe

112、rience.1.9 In Sovereign Guaranteed(SG)operations,OII pursues an integrated risk management strategy that serves as a tool to add value to the Banks contribution to development outcomes.It has done so by(i)extracting lessons from investigations,consultations,and analyses to inform programs risk manag

113、ement strategies throughout the project cycle,(ii)building capacity of executing agencies and other stakeholders to manage integrity risks,and(iii)incorporating integrity risk management elements into the IDBs policies and guidelines.1.10 In Non-Sovereign Guaranteed(NSG)operations,Integrity Due Dili

114、gence(IDD)has evolved to be a central element of IDB Invest project evaluations and one that frequently impacts other risks,including credit,environmental,and corporate governance.OII,in coordination with IDB Invest,has(i)strengthened risk management tools for operations throughout the project cycle

115、,including projects in the supervision(execution)phase,and(ii)developed policies and procedures to ensure adequate controls and monitoring of projects.These efforts built on significant structural reforms that were adopted in connection with the 2016 reorganization(“merge-out”)relating to the IDB Gr

116、oups NSG operations,including the adoption of the Integrity Framework.1.11 A Framework for Anti-Money Laundering and Combating the Financing of Terrorism(AML/CFT)for the IDB.Building upon integrity risk prevention efforts and OIIs expertise,and consistent with the 360-degree approach,an AML/CFT Fram

117、ework formalizing the IDBs commitment to the management of risks related to money laundering and terrorist financing was approved in May 2018.The AML/CFT Framework,which applies to the IDBs operational and corporate transactions,ensures that the IDB has AML/CFT controls that meet industry best pract

118、ices,correspond to the risks faced by the IDB,and consider its legal status as an international financial institution.1.12 Investigations and Sanctions.Recently,OII has made a concerted and strategic effort to pivot from purely reactive complaint-centric approaches for investigations to a hybrid mod

119、el that proactively seeks out indicators of prohibited practices,resulting in greater vigilance and higher-impact investigations,some of which have resulted in high-profile negotiated resolution agreements(NRAs)and sanctions.These efforts gained visibility including when OII and the IDB Group were r

120、ecognized by the Global Investigations Review as the 2020 Emerging Enforcer of the Year.In addition,these efforts have allowed for a greater focus on the detection and remediation of systemic integrity risks in the region.1.13 The Sanctions System has become an agent of change for integrity in the r

121、egion and in the different sectors in which the IDB Group is fostering development.The Office of the Sanctions Officer(SO)has enhanced its role by becoming a key player in the implementation of NRAs and by using compliance programs as a part of sanction remedies.Additionally,the Sanctions Committee(

122、SNC)has increased the number of hearings conducted based on a greater number of requests submitted by investigated parties often represented by larger law firms.As an improvement in the transparency of the Sanctions System,the SO and SNC have been sharing knowledge with different stakeholders by pub

123、lishing synopses of the decisions taken in the cases they consider.1.14 Harmonization and Cooperation with International Financial Institutions(IFIs)and National Authorities.Since 2006,the IDB Group has been working with other IFIs to harmonize the elements of an effective strategy to fight corrupti

124、on and fraud4 and to share and discuss best practices.The harmonization efforts were further strengthened by the 2010 Agreement on Mutual Enforcement of Debarment Decisions(Cross-Debarment Agreement).5 The Cross-Debarment Agreement allows for parties sanctioned by one MDB to be excluded from partici

125、pating in activities financed by all other MDBs who are parties to the agreement.Cross-debarment raises the cost and reputational impact of engaging in corruption and other prohibited practices,generating a strong deterrent effect.OII also has developed broad cooperation with counterpart national au

126、thorities and international agencies to coordinate investigative efforts(see Appendix III).ACRONYMSADB Asian Development BankAfDB African Development BankAML/CFT Anti-Money Laundering/Combating the Financing of TerrorismAUG Office of the Executive AuditorEBRD European Bank for Reconstruction and Dev

127、elopmentEA Executing AgencyEIB European Investment BankFMP Financial Management and Procurement ServicesIDB Inter-American Development BankIDD Integrity Due DiligenceIFI International Financial InstitutionIIC Inter-American Investment Corporation(“IDB Invest”)IT Information TechnologyKIC Knowledge,I

128、nnovation,and Communications Sector(KIC)LAC Latin America and the CaribbeanMDB Multilateral Development BankNRA Negotiated Resolution AgreementNSG Non-Sovereign GuaranteedOII Office of Institutional IntegrityORP Office of Outreach and PartnershipsPCR Project Completion ReportRMG Office of Risk Manag

129、ementSG Sovereign GuaranteedSLA Service Level AgreementSNC Sanctions CommitteeSO Sanctions OfficerSOC Statement(s)of Charges and EvidenceWBG World Bank Group1.4 The most recent developments under the Systemic Framework include those summarized below.1.5 A 360-Degree Integrity Approach.The Office of

130、Institutional Integrity(OII)and the Sanctions System have adopted a coordinated 360-degree approach to protect and add value to IDB Group-financed activities.This approach safeguards Sovereign Guaranteed(SG)and Non-Sovereign Guaranteed(NSG)operations,as well as corporate projects and services,throug

131、hout the complete transaction cycle by(i)developing and strengthening actions that prevent and mitigate integrity risks and(ii)taking appropriate enforcement actions when prohibited practices occur.1.6 A Proactive Approach to Address Integrity Risks in IDB Group-Financed Operations.The Systemic Fram

132、ework emphasizes the importance of prevention in the fight against corruption.“ALLEGATIONS OF CORRUPTION SHOULD NOT PARALYZE THE BANKS ASSISTANCE,FOR THEN THE BANK WOULD BE CONTRIBUTING TO WORSENING THE CONDITIONS FOR ECONOMIC AND SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS WILL RESULT IN A RI

133、GOROUS RISK ANALYSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED PROJECTS.”-SYSTEMIC FRAMEWORK.1.1 In 2021,OII and the Sanctions System commemorated 20 years since the approval by the Board of Directors of the IDBs anti-corruption framework:“Strengthening a Systemic Framework Again

134、st Corruption for the Inter-American Development Bank”(the“Systemic Framework”).The Systemic Framework emphasizes the need to consider integrity in the design and execution of operations and recognizes the importance of having a mechanism to address allegations of fraud and corruption in IDB-finance

135、d activities.1.2 Since the adoption of the Systemic Framework,the IDB Group has developed an extensive set of policies,best practices,and specialized mechanisms to address potential weaknesses and strive for IDB Group-financed programs that are free from prohibited practices.These best practices hav

136、e positioned the IDB Group as one of the leaders,along with other Multilateral Development Banks(MDBs),in transparency and integrity standards.1.3 An independent system to address allegations of fraud and corruption.The Systemic Framework also recognized the need for a mechanism to address allegatio

137、ns of fraud and corruption in IDB Group-financed activities.In 2003,OII was created to receive and investigate such allegations.1 Subsequently,in 2011,the IDB Group created the current Sanctions System,comprised of the Sanctions Officer2 and the Sanctions Committee,to adjudicate cases resulting from

138、 OIIs investigations.1.7 The importance of prevention has been reinforced by member countries;for example,in the recent G7 Ministers Statement on the UN General Assembly Special Session Against Corruption issued on June 2,2021,the G7 commits to“work to ensure there are strong measures in place to pr

139、event corruption and other forms of illicit finance to protect our financial centers and deny safe haven to the proceeds of crime.We will support other countries efforts to do the same,including anti-corruption safeguards and transparency mechanisms in the delivery of humanitarian aid to ensure that

140、 aid,required in times of natural disaster and other emergencies including the COVID-19 pandemic,reaches intended beneficiaries.We also reaffirm our commitment to putting in place measures that promote transparency in the beneficial ownership of legal entities.We further commit to promoting the effe

141、ctive implementation of the Financial Action Task Force(FATF)Standards,the global standard setter for combatting money laundering,terrorist financing and proliferation finance.”3 1.8 The focus of OIIs preventive function is to ensure that the IDB Group complies with its fiduciary role to prevent or

142、minimize the adverse effects of fraud and corruption,such as financial losses and potential reputational damage,and that the IDB Group is perceived as an agent of change in the region.In the past five years,OII has stepped up its proactive engagement with the IDB Groups operational teams and Managem

143、ent to address integrity risks in IDB Group-financed activities.OIIs advisory services on integrity risk management have increased significantly,not only in numbers but also in complexity.This is the result of greater awareness at all levels of the importance of responding to risk indicators at the

144、earliest opportunity and complying with the requirements of IDB Group policies,as well as best practices developed throughout OIIs experience.1.9 In Sovereign Guaranteed(SG)operations,OII pursues an integrated risk management strategy that serves as a tool to add value to the Banks contribution to d

145、evelopment outcomes.It has done so by(i)extracting lessons from investigations,consultations,and analyses to inform programs risk management strategies throughout the project cycle,(ii)building capacity of executing agencies and other stakeholders to manage integrity risks,and(iii)incorporating inte

146、grity risk management elements into the IDBs policies and guidelines.1.10 In Non-Sovereign Guaranteed(NSG)operations,Integrity Due Diligence(IDD)has evolved to be a central element of IDB Invest project evaluations and one that frequently impacts other risks,including credit,environmental,and corpor

147、ate governance.OII,in coordination with IDB Invest,has(i)strengthened risk management tools for operations throughout the project cycle,including projects in the supervision(execution)phase,and(ii)developed policies and procedures to ensure adequate controls and monitoring of projects.These efforts

148、built on significant structural reforms that were adopted in connection with the 2016 reorganization(“merge-out”)relating to the IDB Groups NSG operations,including the adoption of the Integrity Framework.1.11 A Framework for Anti-Money Laundering and Combating the Financing of Terrorism(AML/CFT)for

149、 the IDB.Building upon integrity risk prevention efforts and OIIs expertise,and consistent with the 360-degree approach,an AML/CFT Framework formalizing the IDBs commitment to the management of risks related to money laundering and terrorist financing was approved in May 2018.The AML/CFT Framework,w

150、hich applies to the IDBs operational and corporate transactions,ensures that the IDB has AML/CFT controls that meet industry best practices,correspond to the risks faced by the IDB,and consider its legal status as an international financial institution.1.12 Investigations and Sanctions.Recently,OII

151、has made a concerted and strategic effort to pivot from purely reactive complaint-centric approaches for investigations to a hybrid model that proactively seeks out indicators of prohibited practices,resulting in greater vigilance and higher-impact investigations,some of which have resulted in high-

152、profile negotiated resolution agreements(NRAs)and sanctions.These efforts gained visibility including when OII and the IDB Group were recognized by the Global Investigations Review as the 2020 Emerging Enforcer of the Year.In addition,these efforts have allowed for a greater focus on the detection a

153、nd remediation of systemic integrity risks in the region.1.13 The Sanctions System has become an agent of change for integrity in the region and in the different sectors in which the IDB Group is fostering development.The Office of the Sanctions Officer(SO)has enhanced its role by becoming a key pla

154、yer in the implementation of NRAs and by using compliance programs as a part of sanction remedies.Additionally,the Sanctions Committee(SNC)has increased the number of hearings conducted based on a greater number of requests submitted by investigated parties often represented by larger law firms.As a

155、n improvement in the transparency of the Sanctions System,the SO and SNC have been sharing knowledge with different stakeholders by publishing synopses of the decisions taken in the cases they consider.1.14 Harmonization and Cooperation with International Financial Institutions(IFIs)and National Aut

156、horities.Since 2006,the IDB Group has been working with other IFIs to harmonize the elements of an effective strategy to fight corruption and fraud4 and to share and discuss best practices.The harmonization efforts were further strengthened by the 2010 Agreement on Mutual Enforcement of Debarment De

157、cisions(Cross-Debarment Agreement).5 The Cross-Debarment Agreement allows for parties sanctioned by one MDB to be excluded from participating in activities financed by all other MDBs who are parties to the agreement.Cross-debarment raises the cost and reputational impact of engaging in corruption an

158、d other prohibited practices,generating a strong deterrent effect.OII also has developed broad cooperation with counterpart national authorities and international agencies to coordinate investigative efforts(see Appendix III).1.4 The most recent developments under the Systemic Framework include thos

159、e summarized below.1.5 A 360-Degree Integrity Approach.The Office of Institutional Integrity(OII)and the Sanctions System have adopted a coordinated 360-degree approach to protect and add value to IDB Group-financed activities.This approach safeguards Sovereign Guaranteed(SG)and Non-Sovereign Guaran

160、teed(NSG)operations,as well as corporate projects and services,throughout the complete transaction cycle by(i)developing and strengthening actions that prevent and mitigate integrity risks and(ii)taking appropriate enforcement actions when prohibited practices occur.1.6 A Proactive Approach to Addre

161、ss Integrity Risks in IDB Group-Financed Operations.The Systemic Framework emphasizes the importance of prevention in the fight against corruption.“ALLEGATIONS OF CORRUPTION SHOULD NOT PARALYZE THE BANKS ASSISTANCE,FOR THEN THE BANK WOULD BE CONTRIBUTING TO WORSENING THE CONDITIONS FOR ECONOMIC AND

162、SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS WILL RESULT IN A RIGOROUS RISK ANALYSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED PROJECTS.”-SYSTEMIC FRAMEWORK.1.1 In 2021,OII and the Sanctions System commemorated 20 years since the approval by the Board of Directors of the IDB

163、s anti-corruption framework:“Strengthening a Systemic Framework Against Corruption for the Inter-American Development Bank”(the“Systemic Framework”).The Systemic Framework emphasizes the need to consider integrity in the design and execution of operations and recognizes the importance of having a me

164、chanism to address allegations of fraud and corruption in IDB-financed activities.1.2 Since the adoption of the Systemic Framework,the IDB Group has developed an extensive set of policies,best practices,and specialized mechanisms to address potential weaknesses and strive for IDB Group-financed prog

165、rams that are free from prohibited practices.These best practices have positioned the IDB Group as one of the leaders,along with other Multilateral Development Banks(MDBs),in transparency and integrity standards.1.3 An independent system to address allegations of fraud and corruption.The Systemic Fr

166、amework also recognized the need for a mechanism to address allegations of fraud and corruption in IDB Group-financed activities.In 2003,OII was created to receive and investigate such allegations.1 Subsequently,in 2011,the IDB Group created the current Sanctions System,comprised of the Sanctions Of

167、ficer2 and the Sanctions Committee,to adjudicate cases resulting from OIIs investigations.1.7 The importance of prevention has been reinforced by member countries;for example,in the recent G7 Ministers Statement on the UN General Assembly Special Session Against Corruption issued on June 2,2021,the

168、G7 commits to“work to ensure there are strong measures in place to prevent corruption and other forms of illicit finance to protect our financial centers and deny safe haven to the proceeds of crime.We will support other countries efforts to do the same,including anti-corruption safeguards and trans

169、parency mechanisms in the delivery of humanitarian aid to ensure that aid,required in times of natural disaster and other emergencies including the COVID-19 pandemic,reaches intended beneficiaries.We also reaffirm our commitment to putting in place measures that promote transparency in the beneficia

170、l ownership of legal entities.We further commit to promoting the effective implementation of the Financial Action Task Force(FATF)Standards,the global standard setter for combatting money laundering,terrorist financing and proliferation finance.”3 1.8 The focus of OIIs preventive function is to ensu

171、re that the IDB Group complies with its fiduciary role to prevent or minimize the adverse effects of fraud and corruption,such as financial losses and potential reputational damage,and that the IDB Group is perceived as an agent of change in the region.In the past five years,OII has stepped up its p

172、roactive engagement with the IDB Groups operational teams and Management to address integrity risks in IDB Group-financed activities.OIIs advisory services on integrity risk management have increased significantly,not only in numbers but also in complexity.This is the result of greater awareness at

173、all levels of the importance of responding to risk indicators at the earliest opportunity and complying with the requirements of IDB Group policies,as well as best practices developed throughout OIIs experience.1.9 In Sovereign Guaranteed(SG)operations,OII pursues an integrated risk management strat

174、egy that serves as a tool to add value to the Banks contribution to development outcomes.It has done so by(i)extracting lessons from investigations,consultations,and analyses to inform programs risk management strategies throughout the project cycle,(ii)building capacity of executing agencies and ot

175、her stakeholders to manage integrity risks,and(iii)incorporating integrity risk management elements into the IDBs policies and guidelines.1.10 In Non-Sovereign Guaranteed(NSG)operations,Integrity Due Diligence(IDD)has evolved to be a central element of IDB Invest project evaluations and one that fre

176、quently impacts other risks,including credit,environmental,and corporate governance.OII,in coordination with IDB Invest,has(i)strengthened risk management tools for operations throughout the project cycle,including projects in the supervision(execution)phase,and(ii)developed policies and procedures

177、to ensure adequate controls and monitoring of projects.These efforts built on significant structural reforms that were adopted in connection with the 2016 reorganization(“merge-out”)relating to the IDB Groups NSG operations,including the adoption of the Integrity Framework.1.11 A Framework for Anti-

178、Money Laundering and Combating the Financing of Terrorism(AML/CFT)for the IDB.Building upon integrity risk prevention efforts and OIIs expertise,and consistent with the 360-degree approach,an AML/CFT Framework formalizing the IDBs commitment to the management of risks related to money laundering and

179、 terrorist financing was approved in May 2018.The AML/CFT Framework,which applies to the IDBs operational and corporate transactions,ensures that the IDB has AML/CFT controls that meet industry best practices,correspond to the risks faced by the IDB,and consider its legal status as an international

180、financial institution.1.12 Investigations and Sanctions.Recently,OII has made a concerted and strategic effort to pivot from purely reactive complaint-centric approaches for investigations to a hybrid model that proactively seeks out indicators of prohibited practices,resulting in greater vigilance

181、and higher-impact investigations,some of which have resulted in high-profile negotiated resolution agreements(NRAs)and sanctions.These efforts gained visibility including when OII and the IDB Group were recognized by the Global Investigations Review as the 2020 Emerging Enforcer of the Year.In addit

182、ion,these efforts have allowed for a greater focus on the detection and remediation of systemic integrity risks in the region.1.13 The Sanctions System has become an agent of change for integrity in the region and in the different sectors in which the IDB Group is fostering development.The Office of

183、 the Sanctions Officer(SO)has enhanced its role by becoming a key player in the implementation of NRAs and by using compliance programs as a part of sanction remedies.Additionally,the Sanctions Committee(SNC)has increased the number of hearings conducted based on a greater number of requests submitt

184、ed by investigated parties often represented by larger law firms.As an improvement in the transparency of the Sanctions System,the SO and SNC have been sharing knowledge with different stakeholders by publishing synopses of the decisions taken in the cases they consider.1.14 Harmonization and Cooper

185、ation with International Financial Institutions(IFIs)and National Authorities.Since 2006,the IDB Group has been working with other IFIs to harmonize the elements of an effective strategy to fight corruption and fraud4 and to share and discuss best practices.The harmonization efforts were further str

186、engthened by the 2010 Agreement on Mutual Enforcement of Debarment Decisions(Cross-Debarment Agreement).5 The Cross-Debarment Agreement allows for parties sanctioned by one MDB to be excluded from participating in activities financed by all other MDBs who are parties to the agreement.Cross-debarment

187、 raises the cost and reputational impact of engaging in corruption and other prohibited practices,generating a strong deterrent effect.OII also has developed broad cooperation with counterpart national authorities and international agencies to coordinate investigative efforts(see Appendix III).Prefa

188、ceby Mauricio Claver-Carone,IDB President 1.4 The most recent developments under the Systemic Framework include those summarized below.1.5 A 360-Degree Integrity Approach.The Office of Institutional Integrity(OII)and the Sanctions System have adopted a coordinated 360-degree approach to protect and

189、add value to IDB Group-financed activities.This approach safeguards Sovereign Guaranteed(SG)and Non-Sovereign Guaranteed(NSG)operations,as well as corporate projects and services,throughout the complete transaction cycle by(i)developing and strengthening actions that prevent and mitigate integrity r

190、isks and(ii)taking appropriate enforcement actions when prohibited practices occur.1.6 A Proactive Approach to Address Integrity Risks in IDB Group-Financed Operations.The Systemic Framework emphasizes the importance of prevention in the fight against corruption.“ALLEGATIONS OF CORRUPTION SHOULD NOT

191、 PARALYZE THE BANKS ASSISTANCE,FOR THEN THE BANK WOULD BE CONTRIBUTING TO WORSENING THE CONDITIONS FOR ECONOMIC AND SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS WILL RESULT IN A RIGOROUS RISK ANALYSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED PROJECTS.”-SYSTEMIC FRAMEWORK.1.

192、1 In 2021,OII and the Sanctions System commemorated 20 years since the approval by the Board of Directors of the IDBs anti-corruption framework:“Strengthening a Systemic Framework Against Corruption for the Inter-American Development Bank”(the“Systemic Framework”).The Systemic Framework emphasizes t

193、he need to consider integrity in the design and execution of operations and recognizes the importance of having a mechanism to address allegations of fraud and corruption in IDB-financed activities.1.2 Since the adoption of the Systemic Framework,the IDB Group has developed an extensive set of polic

194、ies,best practices,and specialized mechanisms to address potential weaknesses and strive for IDB Group-financed programs that are free from prohibited practices.These best practices have positioned the IDB Group as one of the leaders,along with other Multilateral Development Banks(MDBs),in transpare

195、ncy and integrity standards.1.3 An independent system to address allegations of fraud and corruption.The Systemic Framework also recognized the need for a mechanism to address allegations of fraud and corruption in IDB Group-financed activities.In 2003,OII was created to receive and investigate such

196、 allegations.1 Subsequently,in 2011,the IDB Group created the current Sanctions System,comprised of the Sanctions Officer2 and the Sanctions Committee,to adjudicate cases resulting from OIIs investigations.1.7 The importance of prevention has been reinforced by member countries;for example,in the re

197、cent G7 Ministers Statement on the UN General Assembly Special Session Against Corruption issued on June 2,2021,the G7 commits to“work to ensure there are strong measures in place to prevent corruption and other forms of illicit finance to protect our financial centers and deny safe haven to the pro

198、ceeds of crime.We will support other countries efforts to do the same,including anti-corruption safeguards and transparency mechanisms in the delivery of humanitarian aid to ensure that aid,required in times of natural disaster and other emergencies including the COVID-19 pandemic,reaches intended b

199、eneficiaries.We also reaffirm our commitment to putting in place measures that promote transparency in the beneficial ownership of legal entities.We further commit to promoting the effective implementation of the Financial Action Task Force(FATF)Standards,the global standard setter for combatting mo

200、ney laundering,terrorist financing and proliferation finance.”3 1.8 The focus of OIIs preventive function is to ensure that the IDB Group complies with its fiduciary role to prevent or minimize the adverse effects of fraud and corruption,such as financial losses and potential reputational damage,and

201、 that the IDB Group is perceived as an agent of change in the region.In the past five years,OII has stepped up its proactive engagement with the IDB Groups operational teams and Management to address integrity risks in IDB Group-financed activities.OIIs advisory services on integrity risk management

202、 have increased significantly,not only in numbers but also in complexity.This is the result of greater awareness at all levels of the importance of responding to risk indicators at the earliest opportunity and complying with the requirements of IDB Group policies,as well as best practices developed

203、throughout OIIs experience.1.9 In Sovereign Guaranteed(SG)operations,OII pursues an integrated risk management strategy that serves as a tool to add value to the Banks contribution to development outcomes.It has done so by(i)extracting lessons from investigations,consultations,and analyses to inform

204、 programs risk management strategies throughout the project cycle,(ii)building capacity of executing agencies and other stakeholders to manage integrity risks,and(iii)incorporating integrity risk management elements into the IDBs policies and guidelines.1.10 In Non-Sovereign Guaranteed(NSG)operation

205、s,Integrity Due Diligence(IDD)has evolved to be a central element of IDB Invest project evaluations and one that frequently impacts other risks,including credit,environmental,and corporate governance.OII,in coordination with IDB Invest,has(i)strengthened risk management tools for operations througho

206、ut the project cycle,including projects in the supervision(execution)phase,and(ii)developed policies and procedures to ensure adequate controls and monitoring of projects.These efforts built on significant structural reforms that were adopted in connection with the 2016 reorganization(“merge-out”)re

207、lating to the IDB Groups NSG operations,including the adoption of the Integrity Framework.1.11 A Framework for Anti-Money Laundering and Combating the Financing of Terrorism(AML/CFT)for the IDB.Building upon integrity risk prevention efforts and OIIs expertise,and consistent with the 360-degree appr

208、oach,an AML/CFT Framework formalizing the IDBs commitment to the management of risks related to money laundering and terrorist financing was approved in May 2018.The AML/CFT Framework,which applies to the IDBs operational and corporate transactions,ensures that the IDB has AML/CFT controls that meet

209、 industry best practices,correspond to the risks faced by the IDB,and consider its legal status as an international financial institution.1.12 Investigations and Sanctions.Recently,OII has made a concerted and strategic effort to pivot from purely reactive complaint-centric approaches for investigat

210、ions to a hybrid model that proactively seeks out indicators of prohibited practices,resulting in greater vigilance and higher-impact investigations,some of which have resulted in high-profile negotiated resolution agreements(NRAs)and sanctions.These efforts gained visibility including when OII and

211、the IDB Group were recognized by the Global Investigations Review as the 2020 Emerging Enforcer of the Year.In addition,these efforts have allowed for a greater focus on the detection and remediation of systemic integrity risks in the region.1.13 The Sanctions System has become an agent of change fo

212、r integrity in the region and in the different sectors in which the IDB Group is fostering development.The Office of the Sanctions Officer(SO)has enhanced its role by becoming a key player in the implementation of NRAs and by using compliance programs as a part of sanction remedies.Additionally,the

213、Sanctions Committee(SNC)has increased the number of hearings conducted based on a greater number of requests submitted by investigated parties often represented by larger law firms.As an improvement in the transparency of the Sanctions System,the SO and SNC have been sharing knowledge with different

214、 stakeholders by publishing synopses of the decisions taken in the cases they consider.1.14 Harmonization and Cooperation with International Financial Institutions(IFIs)and National Authorities.Since 2006,the IDB Group has been working with other IFIs to harmonize the elements of an effective strate

215、gy to fight corruption and fraud4 and to share and discuss best practices.The harmonization efforts were further strengthened by the 2010 Agreement on Mutual Enforcement of Debarment Decisions(Cross-Debarment Agreement).5 The Cross-Debarment Agreement allows for parties sanctioned by one MDB to be e

216、xcluded from participating in activities financed by all other MDBs who are parties to the agreement.Cross-debarment raises the cost and reputational impact of engaging in corruption and other prohibited practices,generating a strong deterrent effect.OII also has developed broad cooperation with cou

217、nterpart national authorities and international agencies to coordinate investigative efforts(see Appendix III).The COVID-19 pandemic has had significant economic and social repercussions in Latin America and the Caribbean,and it has amplified preexisting development gaps in the region.To assist memb

218、er countries and clients in overcoming these unprecedented challenges,the IDB Group has been developing rapid and innovative solutions,while taking a strong stance against corruption and other integrity violations.Prohibited practices,such as fraud and corruption,negatively impact the most vulnerabl

219、e,hamper economic systems,weaken democracies,exacerbate inequality,and reduce access to essential services.The need for robust strategies and actions to promote integrity and transparency is now more crucial than ever and is a priority in the IDB Groups Vision 2025 the blueprint for accelerating our

220、 regions recovery and for fostering more sustainable and inclusive economic growth.In 2021,the IDB commemorated 20 years since the adoption of its Anti-Corruption Framework.The IDB Group is committed to advancing its actions by focusing on reforms aimed at improving the quality of institutions and r

221、egulations,implementing accountability mechanisms,and reinforcing the role of agencies responsible for promoting public and private sector integrity.Additionally,the IDB Group will continue to step up the fight against corruption through its leadership and alignment with international transparency a

222、nd integrity-related standards,promoting good governance and public management openness in line with our regions needs.Throughout the pandemic,the Office of Institutional Integrity(OII)has been ensuring 6OFFICE OF INSTITUTIONAL INTEGRITY AND SANCTIONS SYSTEM/ANNUAL REPORT 2O21Anti-Corruption Efforts

223、and IntegrityKey to the Road to Recoverythat the IDB Groups ongoing COVID-19 recovery efforts encompass a proactive risk management strategy that balances the need to take action with the priority of safeguarding transparency.OII has focused on giving advice to the IDB Groups operational staff on pr

224、eventing and mitigating the heightened integrity risks associated with the COVID-19 pandemic and is now turning its attention to helping ensure that the public and private sectors in the region can build back with integrity as a core element of their recovery.Because integrity requires collective ac

225、tion,OII continues to work with different stakeholders to build their capacity to manage integrity risks and reputational impact.By investigating and sanctioning those who have engaged in prohibited practices,OII and the Sanctions System reinforce our zero-tolerance message.They are essential enforc

226、ement tools to address integrity shortfalls,contributing to raising the level of public and private transparency and compliance in local and regional markets across Latin America and the Caribbean.OII and the Sanctions System also continue to intensify cooperation and harmonization efforts with thei

227、r Multilateral Development Bank(MDB)counterparts to ensure that the tools and approaches to managing these risks are consistent among MDBs,maximizing the exchange of information and taking stock of best practices.Increased cooperation between OII and national authorities also has been key to expandi

228、ng the reach of our integrity efforts.In a context in which resources are scarce and integrity risks are complex,the IDB Group is committed to constantly innovating and bringing the highest integrity and transparency standards to support our public and private sector clients on their road to recover

229、y.Mauricio Claver-Carone President of the Inter-American Development Bank1.4 The most recent developments under the Systemic Framework include those summarized below.1.5 A 360-Degree Integrity Approach.The Office of Institutional Integrity(OII)and the Sanctions System have adopted a coordinated 360-

230、degree approach to protect and add value to IDB Group-financed activities.This approach safeguards Sovereign Guaranteed(SG)and Non-Sovereign Guaranteed(NSG)operations,as well as corporate projects and services,throughout the complete transaction cycle by(i)developing and strengthening actions that p

231、revent and mitigate integrity risks and(ii)taking appropriate enforcement actions when prohibited practices occur.1.6 A Proactive Approach to Address Integrity Risks in IDB Group-Financed Operations.The Systemic Framework emphasizes the importance of prevention in the fight against corruption.“ALLEG

232、ATIONS OF CORRUPTION SHOULD NOT PARALYZE THE BANKS ASSISTANCE,FOR THEN THE BANK WOULD BE CONTRIBUTING TO WORSENING THE CONDITIONS FOR ECONOMIC AND SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS WILL RESULT IN A RIGOROUS RISK ANALYSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED P

233、ROJECTS.”-SYSTEMIC FRAMEWORK.1.1 In 2021,OII and the Sanctions System commemorated 20 years since the approval by the Board of Directors of the IDBs anti-corruption framework:“Strengthening a Systemic Framework Against Corruption for the Inter-American Development Bank”(the“Systemic Framework”).The

234、Systemic Framework emphasizes the need to consider integrity in the design and execution of operations and recognizes the importance of having a mechanism to address allegations of fraud and corruption in IDB-financed activities.1.2 Since the adoption of the Systemic Framework,the IDB Group has deve

235、loped an extensive set of policies,best practices,and specialized mechanisms to address potential weaknesses and strive for IDB Group-financed programs that are free from prohibited practices.These best practices have positioned the IDB Group as one of the leaders,along with other Multilateral Devel

236、opment Banks(MDBs),in transparency and integrity standards.1.3 An independent system to address allegations of fraud and corruption.The Systemic Framework also recognized the need for a mechanism to address allegations of fraud and corruption in IDB Group-financed activities.In 2003,OII was created

237、to receive and investigate such allegations.1 Subsequently,in 2011,the IDB Group created the current Sanctions System,comprised of the Sanctions Officer2 and the Sanctions Committee,to adjudicate cases resulting from OIIs investigations.1.7 The importance of prevention has been reinforced by member

238、countries;for example,in the recent G7 Ministers Statement on the UN General Assembly Special Session Against Corruption issued on June 2,2021,the G7 commits to“work to ensure there are strong measures in place to prevent corruption and other forms of illicit finance to protect our financial centers

239、 and deny safe haven to the proceeds of crime.We will support other countries efforts to do the same,including anti-corruption safeguards and transparency mechanisms in the delivery of humanitarian aid to ensure that aid,required in times of natural disaster and other emergencies including the COVID

240、-19 pandemic,reaches intended beneficiaries.We also reaffirm our commitment to putting in place measures that promote transparency in the beneficial ownership of legal entities.We further commit to promoting the effective implementation of the Financial Action Task Force(FATF)Standards,the global st

241、andard setter for combatting money laundering,terrorist financing and proliferation finance.”3 1.8 The focus of OIIs preventive function is to ensure that the IDB Group complies with its fiduciary role to prevent or minimize the adverse effects of fraud and corruption,such as financial losses and po

242、tential reputational damage,and that the IDB Group is perceived as an agent of change in the region.In the past five years,OII has stepped up its proactive engagement with the IDB Groups operational teams and Management to address integrity risks in IDB Group-financed activities.OIIs advisory servic

243、es on integrity risk management have increased significantly,not only in numbers but also in complexity.This is the result of greater awareness at all levels of the importance of responding to risk indicators at the earliest opportunity and complying with the requirements of IDB Group policies,as we

244、ll as best practices developed throughout OIIs experience.1.9 In Sovereign Guaranteed(SG)operations,OII pursues an integrated risk management strategy that serves as a tool to add value to the Banks contribution to development outcomes.It has done so by(i)extracting lessons from investigations,consu

245、ltations,and analyses to inform programs risk management strategies throughout the project cycle,(ii)building capacity of executing agencies and other stakeholders to manage integrity risks,and(iii)incorporating integrity risk management elements into the IDBs policies and guidelines.1.10 In Non-Sov

246、ereign Guaranteed(NSG)operations,Integrity Due Diligence(IDD)has evolved to be a central element of IDB Invest project evaluations and one that frequently impacts other risks,including credit,environmental,and corporate governance.OII,in coordination with IDB Invest,has(i)strengthened risk managemen

247、t tools for operations throughout the project cycle,including projects in the supervision(execution)phase,and(ii)developed policies and procedures to ensure adequate controls and monitoring of projects.These efforts built on significant structural reforms that were adopted in connection with the 201

248、6 reorganization(“merge-out”)relating to the IDB Groups NSG operations,including the adoption of the Integrity Framework.1.11 A Framework for Anti-Money Laundering and Combating the Financing of Terrorism(AML/CFT)for the IDB.Building upon integrity risk prevention efforts and OIIs expertise,and cons

249、istent with the 360-degree approach,an AML/CFT Framework formalizing the IDBs commitment to the management of risks related to money laundering and terrorist financing was approved in May 2018.The AML/CFT Framework,which applies to the IDBs operational and corporate transactions,ensures that the IDB

250、 has AML/CFT controls that meet industry best practices,correspond to the risks faced by the IDB,and consider its legal status as an international financial institution.1.12 Investigations and Sanctions.Recently,OII has made a concerted and strategic effort to pivot from purely reactive complaint-ce

251、ntric approaches for investigations to a hybrid model that proactively seeks out indicators of prohibited practices,resulting in greater vigilance and higher-impact investigations,some of which have resulted in high-profile negotiated resolution agreements(NRAs)and sanctions.These efforts gained vis

252、ibility including when OII and the IDB Group were recognized by the Global Investigations Review as the 2020 Emerging Enforcer of the Year.In addition,these efforts have allowed for a greater focus on the detection and remediation of systemic integrity risks in the region.1.13 The Sanctions System h

253、as become an agent of change for integrity in the region and in the different sectors in which the IDB Group is fostering development.The Office of the Sanctions Officer(SO)has enhanced its role by becoming a key player in the implementation of NRAs and by using compliance programs as a part of sanc

254、tion remedies.Additionally,the Sanctions Committee(SNC)has increased the number of hearings conducted based on a greater number of requests submitted by investigated parties often represented by larger law firms.As an improvement in the transparency of the Sanctions System,the SO and SNC have been s

255、haring knowledge with different stakeholders by publishing synopses of the decisions taken in the cases they consider.1.14 Harmonization and Cooperation with International Financial Institutions(IFIs)and National Authorities.Since 2006,the IDB Group has been working with other IFIs to harmonize the

256、elements of an effective strategy to fight corruption and fraud4 and to share and discuss best practices.The harmonization efforts were further strengthened by the 2010 Agreement on Mutual Enforcement of Debarment Decisions(Cross-Debarment Agreement).5 The Cross-Debarment Agreement allows for partie

257、s sanctioned by one MDB to be excluded from participating in activities financed by all other MDBs who are parties to the agreement.Cross-debarment raises the cost and reputational impact of engaging in corruption and other prohibited practices,generating a strong deterrent effect.OII also has devel

258、oped broad cooperation with counterpart national authorities and international agencies to coordinate investigative efforts(see Appendix III).that the IDB Groups ongoing COVID-19 recovery efforts encompass a proactive risk management strategy that balances the need to take action with the priority o

259、f safeguarding transparency.OII has focused on giving advice to the IDB Groups operational staff on preventing and mitigating the heightened integrity risks associated with the COVID-19 pandemic and is now turning its attention to helping ensure that the public and private sectors in the region can

260、build back with integrity as a core element of their recovery.Because integrity requires collective action,OII continues to work with different stakeholders to build their capacity to manage integrity risks and reputational impact.By investigating and sanctioning those who have engaged in prohibited

261、 practices,OII and the Sanctions System reinforce our zero-tolerance message.They are essential enforcement tools to address integrity shortfalls,contributing to raising the level of public and private transparency and compliance in local and regional markets across Latin America and the Caribbean.O

262、II and the Sanctions System also continue to intensify cooperation and harmonization efforts with their Multilateral Development Bank(MDB)counterparts to ensure that the tools and approaches to managing these risks are consistent among MDBs,maximizing the exchange of information and taking stock of

263、best practices.Increased cooperation between OII and national authorities also has been key to expanding the reach of our integrity efforts.In a context in which resources are scarce and integrity risks are complex,the IDB Group is committed to constantly innovating and bringing the highest integrit

264、y and transparency standards to support our public and private sector clients on their road to recovery.Mauricio Claver-Carone President of the Inter-American Development Bank71.4 The most recent developments under the Systemic Framework include those summarized below.1.5 A 360-Degree Integrity Appr

265、oach.The Office of Institutional Integrity(OII)and the Sanctions System have adopted a coordinated 360-degree approach to protect and add value to IDB Group-financed activities.This approach safeguards Sovereign Guaranteed(SG)and Non-Sovereign Guaranteed(NSG)operations,as well as corporate projects

266、and services,throughout the complete transaction cycle by(i)developing and strengthening actions that prevent and mitigate integrity risks and(ii)taking appropriate enforcement actions when prohibited practices occur.1.6 A Proactive Approach to Address Integrity Risks in IDB Group-Financed Operation

267、s.The Systemic Framework emphasizes the importance of prevention in the fight against corruption.“ALLEGATIONS OF CORRUPTION SHOULD NOT PARALYZE THE BANKS ASSISTANCE,FOR THEN THE BANK WOULD BE CONTRIBUTING TO WORSENING THE CONDITIONS FOR ECONOMIC AND SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS

268、WILL RESULT IN A RIGOROUS RISK ANALYSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED PROJECTS.”-SYSTEMIC FRAMEWORK.1.1 In 2021,OII and the Sanctions System commemorated 20 years since the approval by the Board of Directors of the IDBs anti-corruption framework:“Strengthening a Syste

269、mic Framework Against Corruption for the Inter-American Development Bank”(the“Systemic Framework”).The Systemic Framework emphasizes the need to consider integrity in the design and execution of operations and recognizes the importance of having a mechanism to address allegations of fraud and corrup

270、tion in IDB-financed activities.1.2 Since the adoption of the Systemic Framework,the IDB Group has developed an extensive set of policies,best practices,and specialized mechanisms to address potential weaknesses and strive for IDB Group-financed programs that are free from prohibited practices.These

271、 best practices have positioned the IDB Group as one of the leaders,along with other Multilateral Development Banks(MDBs),in transparency and integrity standards.1.3 An independent system to address allegations of fraud and corruption.The Systemic Framework also recognized the need for a mechanism t

272、o address allegations of fraud and corruption in IDB Group-financed activities.In 2003,OII was created to receive and investigate such allegations.1 Subsequently,in 2011,the IDB Group created the current Sanctions System,comprised of the Sanctions Officer2 and the Sanctions Committee,to adjudicate c

273、ases resulting from OIIs investigations.1.7 The importance of prevention has been reinforced by member countries;for example,in the recent G7 Ministers Statement on the UN General Assembly Special Session Against Corruption issued on June 2,2021,the G7 commits to“work to ensure there are strong meas

274、ures in place to prevent corruption and other forms of illicit finance to protect our financial centers and deny safe haven to the proceeds of crime.We will support other countries efforts to do the same,including anti-corruption safeguards and transparency mechanisms in the delivery of humanitarian

275、 aid to ensure that aid,required in times of natural disaster and other emergencies including the COVID-19 pandemic,reaches intended beneficiaries.We also reaffirm our commitment to putting in place measures that promote transparency in the beneficial ownership of legal entities.We further commit to

276、 promoting the effective implementation of the Financial Action Task Force(FATF)Standards,the global standard setter for combatting money laundering,terrorist financing and proliferation finance.”3 1.8 The focus of OIIs preventive function is to ensure that the IDB Group complies with its fiduciary

277、role to prevent or minimize the adverse effects of fraud and corruption,such as financial losses and potential reputational damage,and that the IDB Group is perceived as an agent of change in the region.In the past five years,OII has stepped up its proactive engagement with the IDB Groups operationa

278、l teams and Management to address integrity risks in IDB Group-financed activities.OIIs advisory services on integrity risk management have increased significantly,not only in numbers but also in complexity.This is the result of greater awareness at all levels of the importance of responding to risk

279、 indicators at the earliest opportunity and complying with the requirements of IDB Group policies,as well as best practices developed throughout OIIs experience.1.9 In Sovereign Guaranteed(SG)operations,OII pursues an integrated risk management strategy that serves as a tool to add value to the Bank

280、s contribution to development outcomes.It has done so by(i)extracting lessons from investigations,consultations,and analyses to inform programs risk management strategies throughout the project cycle,(ii)building capacity of executing agencies and other stakeholders to manage integrity risks,and(iii

281、)incorporating integrity risk management elements into the IDBs policies and guidelines.1.10 In Non-Sovereign Guaranteed(NSG)operations,Integrity Due Diligence(IDD)has evolved to be a central element of IDB Invest project evaluations and one that frequently impacts other risks,including credit,envir

282、onmental,and corporate governance.OII,in coordination with IDB Invest,has(i)strengthened risk management tools for operations throughout the project cycle,including projects in the supervision(execution)phase,and(ii)developed policies and procedures to ensure adequate controls and monitoring of proj

283、ects.These efforts built on significant structural reforms that were adopted in connection with the 2016 reorganization(“merge-out”)relating to the IDB Groups NSG operations,including the adoption of the Integrity Framework.1.11 A Framework for Anti-Money Laundering and Combating the Financing of Te

284、rrorism(AML/CFT)for the IDB.Building upon integrity risk prevention efforts and OIIs expertise,and consistent with the 360-degree approach,an AML/CFT Framework formalizing the IDBs commitment to the management of risks related to money laundering and terrorist financing was approved in May 2018.The

285、AML/CFT Framework,which applies to the IDBs operational and corporate transactions,ensures that the IDB has AML/CFT controls that meet industry best practices,correspond to the risks faced by the IDB,and consider its legal status as an international financial institution.1.12 Investigations and Sanc

286、tions.Recently,OII has made a concerted and strategic effort to pivot from purely reactive complaint-centric approaches for investigations to a hybrid model that proactively seeks out indicators of prohibited practices,resulting in greater vigilance and higher-impact investigations,some of which hav

287、e resulted in high-profile negotiated resolution agreements(NRAs)and sanctions.These efforts gained visibility including when OII and the IDB Group were recognized by the Global Investigations Review as the 2020 Emerging Enforcer of the Year.In addition,these efforts have allowed for a greater focus

288、 on the detection and remediation of systemic integrity risks in the region.1.13 The Sanctions System has become an agent of change for integrity in the region and in the different sectors in which the IDB Group is fostering development.The Office of the Sanctions Officer(SO)has enhanced its role by

289、 becoming a key player in the implementation of NRAs and by using compliance programs as a part of sanction remedies.Additionally,the Sanctions Committee(SNC)has increased the number of hearings conducted based on a greater number of requests submitted by investigated parties often represented by la

290、rger law firms.As an improvement in the transparency of the Sanctions System,the SO and SNC have been sharing knowledge with different stakeholders by publishing synopses of the decisions taken in the cases they consider.1.14 Harmonization and Cooperation with International Financial Institutions(IF

291、Is)and National Authorities.Since 2006,the IDB Group has been working with other IFIs to harmonize the elements of an effective strategy to fight corruption and fraud4 and to share and discuss best practices.The harmonization efforts were further strengthened by the 2010 Agreement on Mutual Enforcem

292、ent of Debarment Decisions(Cross-Debarment Agreement).5 The Cross-Debarment Agreement allows for parties sanctioned by one MDB to be excluded from participating in activities financed by all other MDBs who are parties to the agreement.Cross-debarment raises the cost and reputational impact of engagi

293、ng in corruption and other prohibited practices,generating a strong deterrent effect.OII also has developed broad cooperation with counterpart national authorities and international agencies to coordinate investigative efforts(see Appendix III).1.4 The most recent developments under the Systemic Fra

294、mework include those summarized below.1.5 A 360-Degree Integrity Approach.The Office of Institutional Integrity(OII)and the Sanctions System have adopted a coordinated 360-degree approach to protect and add value to IDB Group-financed activities.This approach safeguards Sovereign Guaranteed(SG)and N

295、on-Sovereign Guaranteed(NSG)operations,as well as corporate projects and services,throughout the complete transaction cycle by(i)developing and strengthening actions that prevent and mitigate integrity risks and(ii)taking appropriate enforcement actions when prohibited practices occur.1.6 A Proactiv

296、e Approach to Address Integrity Risks in IDB Group-Financed Operations.The Systemic Framework emphasizes the importance of prevention in the fight against corruption.“ALLEGATIONS OF CORRUPTION SHOULD NOT PARALYZE THE BANKS ASSISTANCE,FOR THEN THE BANK WOULD BE CONTRIBUTING TO WORSENING THE CONDITION

297、S FOR ECONOMIC AND SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS WILL RESULT IN A RIGOROUS RISK ANALYSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED PROJECTS.”-SYSTEMIC FRAMEWORK.1.1 In 2021,OII and the Sanctions System commemorated 20 years since the approval by the Board of D

298、irectors of the IDBs anti-corruption framework:“Strengthening a Systemic Framework Against Corruption for the Inter-American Development Bank”(the“Systemic Framework”).The Systemic Framework emphasizes the need to consider integrity in the design and execution of operations and recognizes the import

299、ance of having a mechanism to address allegations of fraud and corruption in IDB-financed activities.1.2 Since the adoption of the Systemic Framework,the IDB Group has developed an extensive set of policies,best practices,and specialized mechanisms to address potential weaknesses and strive for IDB

300、Group-financed programs that are free from prohibited practices.These best practices have positioned the IDB Group as one of the leaders,along with other Multilateral Development Banks(MDBs),in transparency and integrity standards.1.3 An independent system to address allegations of fraud and corrupt

301、ion.The Systemic Framework also recognized the need for a mechanism to address allegations of fraud and corruption in IDB Group-financed activities.In 2003,OII was created to receive and investigate such allegations.1 Subsequently,in 2011,the IDB Group created the current Sanctions System,comprised

302、of the Sanctions Officer2 and the Sanctions Committee,to adjudicate cases resulting from OIIs investigations.1.7 The importance of prevention has been reinforced by member countries;for example,in the recent G7 Ministers Statement on the UN General Assembly Special Session Against Corruption issued

303、on June 2,2021,the G7 commits to“work to ensure there are strong measures in place to prevent corruption and other forms of illicit finance to protect our financial centers and deny safe haven to the proceeds of crime.We will support other countries efforts to do the same,including anti-corruption s

304、afeguards and transparency mechanisms in the delivery of humanitarian aid to ensure that aid,required in times of natural disaster and other emergencies including the COVID-19 pandemic,reaches intended beneficiaries.We also reaffirm our commitment to putting in place measures that promote transparen

305、cy in the beneficial ownership of legal entities.We further commit to promoting the effective implementation of the Financial Action Task Force(FATF)Standards,the global standard setter for combatting money laundering,terrorist financing and proliferation finance.”3 1.8 The focus of OIIs preventive

306、function is to ensure that the IDB Group complies with its fiduciary role to prevent or minimize the adverse effects of fraud and corruption,such as financial losses and potential reputational damage,and that the IDB Group is perceived as an agent of change in the region.In the past five years,OII h

307、as stepped up its proactive engagement with the IDB Groups operational teams and Management to address integrity risks in IDB Group-financed activities.OIIs advisory services on integrity risk management have increased significantly,not only in numbers but also in complexity.This is the result of gr

308、eater awareness at all levels of the importance of responding to risk indicators at the earliest opportunity and complying with the requirements of IDB Group policies,as well as best practices developed throughout OIIs experience.1.9 In Sovereign Guaranteed(SG)operations,OII pursues an integrated ri

309、sk management strategy that serves as a tool to add value to the Banks contribution to development outcomes.It has done so by(i)extracting lessons from investigations,consultations,and analyses to inform programs risk management strategies throughout the project cycle,(ii)building capacity of execut

310、ing agencies and other stakeholders to manage integrity risks,and(iii)incorporating integrity risk management elements into the IDBs policies and guidelines.1.10 In Non-Sovereign Guaranteed(NSG)operations,Integrity Due Diligence(IDD)has evolved to be a central element of IDB Invest project evaluatio

311、ns and one that frequently impacts other risks,including credit,environmental,and corporate governance.OII,in coordination with IDB Invest,has(i)strengthened risk management tools for operations throughout the project cycle,including projects in the supervision(execution)phase,and(ii)developed polic

312、ies and procedures to ensure adequate controls and monitoring of projects.These efforts built on significant structural reforms that were adopted in connection with the 2016 reorganization(“merge-out”)relating to the IDB Groups NSG operations,including the adoption of the Integrity Framework.1.11 A

313、Framework for Anti-Money Laundering and Combating the Financing of Terrorism(AML/CFT)for the IDB.Building upon integrity risk prevention efforts and OIIs expertise,and consistent with the 360-degree approach,an AML/CFT Framework formalizing the IDBs commitment to the management of risks related to m

314、oney laundering and terrorist financing was approved in May 2018.The AML/CFT Framework,which applies to the IDBs operational and corporate transactions,ensures that the IDB has AML/CFT controls that meet industry best practices,correspond to the risks faced by the IDB,and consider its legal status a

315、s an international financial institution.1.12 Investigations and Sanctions.Recently,OII has made a concerted and strategic effort to pivot from purely reactive complaint-centric approaches for investigations to a hybrid model that proactively seeks out indicators of prohibited practices,resulting in

316、 greater vigilance and higher-impact investigations,some of which have resulted in high-profile negotiated resolution agreements(NRAs)and sanctions.These efforts gained visibility including when OII and the IDB Group were recognized by the Global Investigations Review as the 2020 Emerging Enforcer o

317、f the Year.In addition,these efforts have allowed for a greater focus on the detection and remediation of systemic integrity risks in the region.1.13 The Sanctions System has become an agent of change for integrity in the region and in the different sectors in which the IDB Group is fostering develo

318、pment.The Office of the Sanctions Officer(SO)has enhanced its role by becoming a key player in the implementation of NRAs and by using compliance programs as a part of sanction remedies.Additionally,the Sanctions Committee(SNC)has increased the number of hearings conducted based on a greater number

319、of requests submitted by investigated parties often represented by larger law firms.As an improvement in the transparency of the Sanctions System,the SO and SNC have been sharing knowledge with different stakeholders by publishing synopses of the decisions taken in the cases they consider.1.14 Harmo

320、nization and Cooperation with International Financial Institutions(IFIs)and National Authorities.Since 2006,the IDB Group has been working with other IFIs to harmonize the elements of an effective strategy to fight corruption and fraud4 and to share and discuss best practices.The harmonization effor

321、ts were further strengthened by the 2010 Agreement on Mutual Enforcement of Debarment Decisions(Cross-Debarment Agreement).5 The Cross-Debarment Agreement allows for parties sanctioned by one MDB to be excluded from participating in activities financed by all other MDBs who are parties to the agreem

322、ent.Cross-debarment raises the cost and reputational impact of engaging in corruption and other prohibited practices,generating a strong deterrent effect.OII also has developed broad cooperation with counterpart national authorities and international agencies to coordinate investigative efforts(see

323、Appendix III).1.I N T R O D U CT I ON1.4 The most recent developments under the Systemic Framework include those summarized below.1.5 A 360-Degree Integrity Approach.The Office of Institutional Integrity(OII)and the Sanctions System have adopted a coordinated 360-degree approach to protect and add v

324、alue to IDB Group-financed activities.This approach safeguards Sovereign Guaranteed(SG)and Non-Sovereign Guaranteed(NSG)operations,as well as corporate projects and services,throughout the complete transaction cycle by(i)developing and strengthening actions that prevent and mitigate integrity risks

325、and(ii)taking appropriate enforcement actions when prohibited practices occur.1.6 A Proactive Approach to Address Integrity Risks in IDB Group-Financed Operations.The Systemic Framework emphasizes the importance of prevention in the fight against corruption.“ALLEGATIONS OF CORRUPTION SHOULD NOT PARA

326、LYZE THE BANKS ASSISTANCE,FOR THEN THE BANK WOULD BE CONTRIBUTING TO WORSENING THE CONDITIONS FOR ECONOMIC AND SOCIAL DEVELOPMENT.INSTEAD,ANY POTENTIAL CONCERNS WILL RESULT IN A RIGOROUS RISK ANALYSIS AND THE ESTABLISHMENT OF PREVENTIVE CONTROLS IN BANK-FINANCED PROJECTS.”-SYSTEMIC FRAMEWORK.1.1 In

327、2021,OII and the Sanctions System commemorated 20 years since the approval by the Board of Directors of the IDBs anti-corruption framework:“Strengthening a Systemic Framework Against Corruption for the Inter-American Development Bank”(the“Systemic Framework”).The Systemic Framework emphasizes the ne

328、ed to consider integrity in the design and execution of operations and recognizes the importance of having a mechanism to address allegations of fraud and corruption in IDB-financed activities.1.2 Since the adoption of the Systemic Framework,the IDB Group has developed an extensive set of policies,b

329、est practices,and specialized mechanisms to address potential weaknesses and strive for IDB Group-financed programs that are free from prohibited practices.These best practices have positioned the IDB Group as one of the leaders,along with other Multilateral Development Banks(MDBs),in transparency a

330、nd integrity standards.1.3 An independent system to address allegations of fraud and corruption.The Systemic Framework also recognized the need for a mechanism to address allegations of fraud and corruption in IDB Group-financed activities.In 2003,OII was created to receive and investigate such alle

331、gations.1 Subsequently,in 2011,the IDB Group created the current Sanctions System,comprised of the Sanctions Officer2 and the Sanctions Committee,to adjudicate cases resulting from OIIs investigations.1.7 The importance of prevention has been reinforced by member countries;for example,in the recent

332、G7 Ministers Statement on the UN General Assembly Special Session Against Corruption issued on June 2,2021,the G7 commits to“work to ensure there are strong measures in place to prevent corruption and other forms of illicit finance to protect our financial centers and deny safe haven to the proceeds

333、 of crime.We will support other countries efforts to do the same,including anti-corruption safeguards and transparency mechanisms in the delivery of humanitarian aid to ensure that aid,required in times of natural disaster and other emergencies including the COVID-19 pandemic,reaches intended beneficiaries.We also reaffirm our commitment to putting in place measures that promote transparency in th