Show me the detail - Financial Integrity System Assessment

FISA Objective and Outcomes

Transparency International New Zealand’s (TINZ’s) objective is to ensure that strong, effective practices are in place throughout society and the economy with mechanisms for strengthening integrity systems. These reinforce core ethical values and conduct, preventing corruption.

This approach also involves engaging public and private organisations to work with independent civil society watchdogs to ensure that there is transparency.

The Financial Integrity System Assessment’s objective is to assess the factors that contribute to preventing corruption and strengthening integrity in the financial system. It is designed to see if the financial sector, having implemented conduct and integrity measures that prevent corruption, has enhanced its brand and harvested the benefits.

This assessment of the financial system includes organisations within the banking, finance, insurance sector and their regulators. The financial organisations are:

• Registered banks
• KiwiSaver providers
• Finance companies
• Credit union and building societies
• Insurers.

The key regulators and oversight organisations are:

• Reserve Bank of New Zealand (RBNZ)
• the Financial Markets Authority (FMA)
• the Commerce Commission
• the Department of Internal Affairs (DIA, AML)
• the Ministry for Business, Innovation and Employment (MBIE)
• Ministry of Justice
• the Banking Ombudsman
• the Insurance and Financial Services Ombudsman
• Financial Services Complaints Limited. And,
• Financial Disputes Limited.
• Trustee Corporations

Other organisations with a key role in the sector include:

• the New Zealand Bankers’ Association
• Financial Services Federation
• Co-op Money NZ
• paymentsNZ
• Financial Services Council (FSC)
• and other professional bodies.

Excluded for the purposes of FISA (out of scope) are credit card issuers, financial advisors and providers of store credit cards and similar.

FISA outcomes will impact on all New Zealanders, investors and financial organisations. If the assessment is adopted elsewhere, it will impact on world security through reducing corruption.


TINZ supports the New Zealand Story (see that demonstrates New Zealand’s reputation for integrity is recognised internationally. This international recognition is an opportunity which potentially provides widespread benefits to citizens that can be harvested:

• via access to capital on better terms than present
• by our banking and financial organisations attracting off shore deposits
• by our insurance companies seeking quality re-insurance
• and through the activities of financial organisations, customers having better access to quality terms for borrowing and insurance.

In support of this opportunity, the prevention of corruption is important as the existence of corruption undermines public trust. Corruption threatens citizens’ security. It also impacts on the resilience of the economy to grow, attract responsible investors and create great organisations with good jobs and a sustainable future.

When financial organisations do the ‘right thing’, customers get better outcomes. Maintaining the trust that ordinary citizens and the community have in the financial system is the key factor that contributes to the national sense of security and cohesion.


Demonstration of a trusted financial system makes New Zealand increasingly attractive to foreign investment. In addition, the demonstration that the system is actively preventing, or at least minimising the risk of corruption in and through the conduits provided by the financial sector, lowers the risk premium in interest rates and insurance premiums. Ethical culture and conduct act provide an effective platform for preventing corruption.

Strong integrity systems reduce the risk of resource misallocation that arises when investments are made on the basis of corrupt decision-making. A growing number of responsible foreign investors are seeking to invest in financial organisations that have ethical cultures. This has the potential to attract more investment to a country also known for having strong anti-corruption policies and practices.


The local and international security of financial markets can be put at risk through corrupt agendas pursued under the guise of international cooperation and capital market operations. Also, corruption can lead to impunity where so-called leaders further undermine public trust. There is an increasing number of governments concerned that their financial organisations are characterised by lack of integrity and public trust, and a tolerance for corruption.

It is important to demonstrate the attributes of the New Zealand financial system that contribute to its striving for integrity so that our Government does not harbour such concerns. TINZ is dedicated to doing everything it can to support efforts to provide clarity about what is required to prevent corruption, to carrying out assessments to demonstrate the quality of corruption prevention activity, including the identification of gaps where further change is required and advice about addressing them. TINZ’s FISA assessment describes corruption risk across the financial system, hence making the risk of corruption visible. The assessment is also designed in a way to increase knowledge about the nature of ethical culture and conduct. In this way, it allows decision-makers and citizens to monitor the progress made in reducing this risk.


Globalisation and the development of transnational financial services have enabled well-organised, corrupt governments to hide funds gained through corruption, and to extract resources from their populations on a grand scale. Populations that pushed for democracy in post-colonial states have been disenfranchised through the establishment of kleptocratic regimes that operate the state apparatus entirely in that regime’s interest. In corrupt countries, small groups of elites divert state resources and control the institutions of the state for their personal enrichment and manage to retain power over their populations. This not only leads to the suffering of billions of people worldwide, but also - as these corrupt elites at the top of state institutions influence global politics and security - threatens the foundations of the rules-based global order.

Grand corruption and state capture mean that elites can redirect public spending from sectors which benefit the population to those where opportunities for graft and kickbacks are greatest; they can extract natural resource rents to the detriment of the population’s well-being; and turn defence and security forces into predators either by repurposing them for wealth extraction or neglecting them entirely.


Western banking systems have combined with regulatory loopholes and a shadow network of high-secrecy jurisdictions to enable theft on a massive scale. The 2016 Panama Papers investigation showed that kleptocratic rulers often exploit the anonymity of Western banking and lax corporate legislation that allows structures which can hide wealth and financial flows from other sources.

The OECD’s 2018 Exporting Corruption report listed instances of fraud that have been company specific rather than systematic. Bribery has not been a feature in the finance sector; however, in 2016 the Panama Papers provided evidence of the proceeds of corruption being laundered in New Zealand.


The New Zealand financial system has the potential to be resilient, responsible, responsive, safe and secure – the country’s future prosperity depends on it. FISA is designed to ensure that those organisations that make up the financial system understand the impact of any bribery, corruption or fraud and minimise risk associated with this.

Lack of awareness and complacency mean that there is limited knowledge of what may be bribery, corruption and fraud within the New Zealand financial system. The recent Auckland Transport case provides many examples of corrupt behaviour in procurement. Vulnerability to grand corruption from offshore sources has the potential to have a massive impact on the NZ financial system.

Appropriate and consistent regulation and regulatory oversight backed up by awareness of the roots of these inappropriate activities and how they can best be prevented is FISA’s aim.

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