Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Cyber Security, Quantum, Hacks, Fraud Alerts, Risks, InsurTech
The History of Currency Crises and Lessons for Modern Traders
Jan 8, 2025
Image: Pexels/Nataliya Vaitkevich
A currency crisis is a term referring to an economic instability caused by a sharp, significant fall in the value of the national currency. In most cases, a loss of confidence in the country's economy, lack of foreign exchange reserves, or excessive public debt is what it is most often associated with. Such crises also involve the economic effects of countries, but they also have a 'global' consequence.
See: AI’s Double-Edged Sword of Retail Investing
This is my dedication to the traders out there planning on joining Forex. Not to drive them away and to change their mind but to reap important historical knowledge from it. With the benefit of what the previous generations have learned, a trader can acquire a few important lessons and maybe save his capital.
The Mexican Peso Crisis (1994)
A sharp depreciation of the currency due to unbalanced economic policies is an example of the Mexican crisis of 1994 (or the Tequila Crisis). The government's decision to keep the peso fixed to the dollar when the current account deficit was strong was the main cause of the crisis. The result was that citizens lost confidence, capital outflows started in earnest, and the peso devalued by over 50 percent.
This crisis shows how important transparency and investor confidence are for today’s traders. If policies appear too unsustainable, or insufficiently explained, markets can overreact.
The Asian Financial Crisis (1997-1998)
The collapse of the baht started the Asian financial crisis in Thailand but spread to the rest of Southeast Asia. The main causes of the crisis were:
- Accumulating short-term external debt;
- Overvalued assets in the real sector;
- Weak banking supervision.
That heavy investment panic and capital withdrawal made the crisis even worse, as banks and firms defaulted. Lesson for traders: Risk management is about diversification. It is also necessary to consider the level of external debt of the countries where it invests funds.
The Russian Financial Crisis (1998)
Falling oil prices, huge government debt, and a weak tax system all contributed to the 1998 crisis. And the ruble fell spectacularly and the country defaulted on its domestic debt. It created serious economic turmoil and social instability.
However, this crisis reminds modern traders to scrutinize their commodity markets, especially if a country’s economy is dependent on exporting natural resources.
The Argentine Economic Crisis (1999-2002)
The crisis was a prime example of how excessive government debt and a hard currency pegged to the dollar can lead to disaster. The problems were exacerbated by:
- Reduced exports;
- Austerity measures;
- The government's inability to restructure the debt.
When the crisis reached its peak, the government was forced to abandon the peg of the peso to the dollar, which caused a deep recession and mass protests. Lesson for traders: tight monetary policy can be dangerous in the face of external shocks. Flexibility is the key to resilience.
The Global Financial Crisis (2008)
The global financial crisis, which began with the collapse of the mortgage market in the United States, showed how quickly problems in one economy can spread around the world. It was a period of high volatility for the foreign exchange market, with many national currencies depreciating.
The main lessons for traders are:
- Always consider global trends;
- Avoid excessive use of leverage;
- Understand the relationship between foreign exchange markets and other financial sectors.
This is the moment when falling real estate prices in the US led to massive mortgage defaults, which in turn set off a chain reaction in financial institutions around the world. Investors began to panic, selling assets en masse, which exacerbated the fall in currency and stock prices. As a result of this crisis, many traders realized the importance of diversifying their investments and being prepared for unexpected changes in the market.
Traders who were able to adapt and incorporate the lessons of the past are now better prepared for future shocks. Developing strategies that incorporate flexibility and preparedness for rapid change has become a key element of successful online trading. In addition, knowledgeable traders realized how important it is to choose a trusted broker that will not withdraw all their assets and will not leave them without a single cent. This is how platforms such as https://www.xchief.com came into being. These are reliable traders who have proven their integrity over the years.
Key Takeaways for Modern Traders
Based on the analysis of the above crises, there are several important takeaways for traders:
- Closely monitor macroeconomic indicators such as debt levels, trade balance, and foreign exchange reserves;
- Study the policies of central banks, especially with regard to fixed or floating exchange rates;
- Be prepared for sharp volatility in markets during crises.
In addition, modern traders should use risk management tools such as stopping losses and diversifying their portfolios.
Conclusion
The history of currency crises is not just a list of economic disasters, but also a treasure trove of valuable information for modern traders. By analyzing the causes and consequences of such events, one can better prepare for future challenges in the financial markets. The key is to be flexible, informed, and ready for change.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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OSC Crypto Trading Platform Compliance Review Findings
Regulation | Dec 20, 2024
Image: Freepik/upklyak
Are Restricted Dealer Crypto Platforms Doing Enough to Protect Investors? The OSC Weights In
The Ontario Securities Commission (OSC) recently conducted a compliance review of 6 restricted dealers operating crypto asset trading platforms (CTPs) in Ontario, and published a summary of their findings, "Staff Notice 33-757" (see press release). The results? A mix of compliance successes and serious gaps, especially in investor protection practices. Here’s what the OSC found, why it matters, and key takeaways.
Focus of the Review and Findings
This was about the fundamentals: are platforms doing enough to ensure that the people using them actually understand the risks involved? Are they setting limits to protect clients from losing more than they can afford? Specifically, there were 3 areas of concern being investigated:
1. "Account Appropriateness Assessments"
Are platforms making sure accounts are appropriate for their users,based on their individual financial situations and crypto knowledge? CTPs are required to evaluate clients based on their experience with crypto assets, financial circumstances, and risk tolerance.
See: OSC Urges Stricter Rules on Gamified Investing Features
The OSC found that some platforms are using inadequate processes, such as relying only on self-reported user information without sufficient verification. Many platforms use a bare-bones approach to assess whether accounts are appropriate for their clients. They rely too heavily on online forms and didn’t follow up on inconsistencies or update/maintain client information over time. This means people are being approved to trade without a clear understanding of whether the crypto investment is the right fit for them.
2. "Investment Limits"
Are clients being prevented from investing more than they should in a high risk investment or asset? The OSC sets investment limits on certain crypto assets to protect investors (especially retail investors).
The OSC found that most crypto trading platforms implemented the 'investment limits' but lacked an effective monitoring system. CTPs need a good mechanism to enforce the limits and also prevent clients from exceeding them, which is a problem because of crypto's volatility.
3. "Client Limits"
Are there suitable safeguards in place to stop users from losing too much money? Client limits refer to the maximum value of crypto assets a client can hold on a platform.
See: Regulatory Updates for Crypto Asset Trading Platforms
The OSC observed that some platforms do not have clear policies or systems in place to monitor client holdings (and compare them against the limits). This appears to be the biggest issue in the compliance review since CTPs are supposed to restrict people from losing more than they can afford. Too often platforms either ignore the limits or don't act quickly enough if client limits are breached. Clients aren't being warned in time and in some cases no action is taken at all.
Takeaways for Your Business
These findings should be a wake-up call if you operate a fintech or crypto business. The OSC is sending the industry and specifically CTPs a message to review their policies and internal systems to ensure they comply and tighten the ship. Here are some takeaways.
- Think of on-boarding as your chance to really understand your clients. what their financial situation is, their knowledge of crypto, and how much risk they can handle. Make sure you check in with them regularly and all information is verified and documented. Not just once a year but whenever things change for them or in the market.
- Limits are there for a reason. It's how much a client can invest or how much they can lose, so baking these guardrails into your system is critical. Have systems in place to monitor and track these limits in real time. Don't wait until it's too late - automate the alert process.
See: UK vs. Canada: A Tale of Two Different Crypto Consumers
- Communication is key. When clients are getting close to their limits, let them know. But do it in a way that’s clear and educational. This isn't financial advice. You're giving them the tools to make better decisions.
- Stay up to date with all regulatory updates and changes that may impact your business, and to remain compliant.
Final Thought
Consider this your advanced warning. Are your processes strong enough? Are your systems up to date? Are you putting your clients first? The OSC’s findings are an opportunity to plug gaps, strengthen your approach, and turn compliance into a competitive advantage.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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TD Bank Scandal Update: $3B Fine, Arrests, and Scrutiny
AML | Dec 18, 2024
Image: Pixabay/Alexandra Koch
TD Bank Under Pressure as ex-Employee Arrested and U.S. Senators Demanding Answers
Back in May 2024, the TD Bank money-laundering scandal hit wires with the CEO Bharat Masrani departing amid a monstrous $3B fine. Yes, that's the same TD Bank Chief that was seeking a level playing field with startup fintechs back in 2016. In October 2024, TD Bank pleaded guilty to violating U.S. anti-money laundering laws and agreed to pay over $3 billion in penalties, the largest fine ever in AML regulations. The bank also received an asst cap of approx $434 billion that restricts growth in U.S. operations until AML deficiencies meet regulatory requirements.
See: 4 AML Challenges for 2024 and Beyond
Since then, as reported in the Wall Street Journal, U.S. Senators Ron Wyden and Elizabeth Warren have written to TD’s Bharat Masrani asking for clarity on what bank executives knew and how they responded to a scheme that laundered over $470 million of drug sales through the Canadian bank, raising accountability questions.
Former TD Employees Arrested
While Da Ying Sze was the mastermind behind the $470 million laundering scheme, he was external to the bank and exploited the bank's vulnerabilities. In February 2022, Sze (also called David) pleaded guilty to multiple money laundering related charges and worked with at least 3 now arrested former TD Bank employees who facilitated.
- The first arrest took place in March 2024. Gerardo Aquino who worked at a branch in Hollywood, Florida was charged with taking bribes to open fake accounts that were used to transfer millions of dollars to Colombia, bypassing AML safeguards.
- The second arrest was in November 2024. Daria Sewell who worked in TD Bank's AML department in Manhattan, New York was charged with stealing personal customer data, and sharing this information on Telegram, which was used to bypass the bank's compliance efforts.
- The latest arrest came in December 2024, when Leonardo Ayala, a former employee in Doral, Florida who accepted bribes to issue debit cards and set up shell accounts that criminals used to launder money through the bank.
See: Elliptic Publishes New Research on AI and Money Laundering
According to the WSJ article, TD Bank employees flagged Da Ying Sze’s suspicious activity - some even joking about it in emails. One store manager warned a colleague, “You guys really need to shut this down LOL,” while another expressed concern that tellers felt uncomfortable handling the transactions. Higher-level executives were also aware of the risks. Senators are questioning the bank's accountability and how much executives knew about what was going on.
TD Bank's Repsponse
Spokesperson said:
“We appreciate the concerns expressed by Senators Warren and Wyden. TD has taken full responsibility for its AML [anti-money-laundering] program failures and is making significant investments and enhancements to meet regulatory obligations and help protect the financial system.”
Canadian Regulatory Response
In response, the Canadian government has proposed stronger anti-money laundering rules including tougher penalties, criminal charges for providing false information, and expanded powers for FINTRAC. The Fall Economic Statement (FES) of December 2024 included these changes but this year's FES was largely derailed by Chrystia Freeland, Canada's Finance Ministers' sudden resignation.
Closing
TD Bank’s AML scandal has adversely impacted the bank's financial performance and reputation. Fourth quarter profits fell short of expectations prompting a suspension of mid-term financial growth targets. More likely to come...
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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US Financial Surveillance Report Shows Privacy in Crisis
Privacy Report | Dec 13, 2024
How U.S. Surveillance Practices Threaten Financial Privacy and Innovation
Financial privacy is at a crossroads. Another 'eye opening' report dropped December 6, 2024 by the U.S. House Judiciary Committee and the Select Subcommittee on the Weaponization of the Federal Government titled, "How the Federal Government Weaponized the Bank Secrecy Act to Spy on Americans" (47 page PDF) reveals alarming financial surveillance systems being used in the United States. Using laws like the Bank Secrecy Act (BSA), federal agencies use financial institutions to monitor millions of Americans without their knowledge or consent. These findings have serious implications for fintech, innovation, and consumer trust. There's a tug of war between security and privacy and it's reaching a breaking point.
The Scale of Financial Surveillance
Last year in 2023, financial institutions filed 4.6 million Suspicious Activity Reports (SARs) and 20.8 million Currency Transaction Reports (CTRs) with the Financial Crimes Enforcement Network (FinCEN). Over 25,000 government officials at various levels accessed this data without legal warrants to conduct over 3.3 million searches using the FinCEN Query system. FinCEN's integrated access program allowed approx. 27,000 users across nine federal agencies to download entire datasets of financial records with minimal oversight.
Financial institutions often outsource compliance tasks to third party vendors which raises questions about data security and privacy breaches under the confidentiality rules under the Bank Secrecy Act. Another layer of exposure risk.
See: Opinion: The Financial Surveillance System May Be Less a Tool for Crime Prevention than a Means of Bureaucratic Ass Covering
The report describes a system that encourages banks to over-report SARs to avoid penalties for non-compliance (even when the reported activity is unlikely to be connected with a crime or wrongdoing).
Jimmy Kirby, FinCEN Deputy Director:
"There’s the mandatory requirement and then there’s the ability to voluntarily file, as the statutory construct laid out by Congress really is to encourage filing. So... there’s the ones you’re required to file, but there’s also very much an encouragement for people to voluntarily file beyond what they’re required to file."
Weaponization of Financial Data
The use of financial data to target specific individuals or groups is critical issue for policymakers, and has been increasing in recent years. Especially after Jan 6, 2021 uprising in the U.S. where institutions were told to flag individuals on politically charged criteria, such as purchasing firearms, travel to Washington, D.C., staying at specific hotels etc.
See: Surveillance Capitalism: Policymakers must put an end to abusive practices
A similar situation happened here in Canada too during the trucker protests of 2022. Canadian federal agencies used the Emergencies Act to direct banks to freeze accounts of individuals and organizations linked to the protest. They also instructed crypto exchanges to cut off crypto user accounts linked to the protests. Donation- based crowdfunding platforms were also caught in the fire as FINTRAC's knee jerk reaction to impose unwarranted AML/ATF requirements on them without any data-driven analysis.
Daryl Hatton, Founder and CEO of FundRazr:
“In summary, the regulations are ineffective, burdensome, anti-competitive, and damaging to both the domestic donation crowdfunding sector and the Canadian nonprofit/charitable sector. The goal of protecting Canadians from money laundering and terrorism is laudable, but these regulations should be scrapped, and new regulations drafted in full consultation with stakeholders.”
Implications for Fintech and Innovation
Fintech firms operating in the U.S. (especially smaller ones) in some capacity can find themselves swamped by compliance costs which eat up valuable resources away from innovation. For example, a Canadian payment processor may find that routine transactions under Canadian regulations could trigger SARs in the U.S., adding to compliance and operational costs.
See: Privacy and Crypto Shaken as Telegram’s CEO Arrested
Or consider, a crypto platform doing business in the U.S. could encounter conflicting demands such as when U.S. regulators request data but Canadian privacy laws protect that data. These different regulatory environments create frictions.
Why It Matters
Excessive surveillance hurts consumer trust and adversely impacts the adoption of fintech solutions. Use your voice and emerging technology to demand accountability and create private, ethical systems that balance security with individual rights, ensuring a future free from weaponizing financial data inappropriately.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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BCSC Fines Fraudulent Crypto Platform ezBtc $18 Million
Enforcement | Dec 4, 2024
Image: Freepik
BC Securities Commission Issues $18.4M Penalty for Crypto Platform ezBTC and Founder for Fraudulent Practices
On Dec 2, 2024, the British Columbia Securities Commission (BCSC) announced an $18.4 million CAD fine to BC-based crypto platform, ezBtc and David Smillie, for misappropriation of investor funds. A BCSC panel made the decision and issued the order on November 27, 2024 for what is now known as the largest fine against a cryptocurrency platform in Canada to date, surpassing previous fines such as $6 million CAD penalty issued to Binance by Canada's Financial Transactions and Reports Analysis Centre (FINTRAC) for anti-money laundering compliance failures.
Fraud Uncovered
David Smillie and his company, ezBtc (registered as 081627 B.C. Ltd.), told customers that their crypto assets were safe in cold storage but it was a blatant lie. Instead, over 935 Bitcoin and 159 Ether were funnelled to personal accounts and used for personal spending including gambling. The BCSC said this was serious fraud that damaged trust in the market. Smillie and ezBtc were found guilty of fraud under section 57(b) of the British Columbia Securities Act.
BCSC Panel said:
”In this case, the respondents’ misconduct eroded trust in the capital markets."
See: Alberta Launches ScamSheild Investor Protection Challenge
Customer testified:
"[I experienced] loss of trust in bitcoin for sure, crypto currency in general, even banking to some degree.”
Penalties and Fines
Smillie didn't even show up to his own hearing and was represented by his lawyer Cody Reedman. Below is the punishment. Note that the panel wasn't aware if David Smillie could pay the fine or not when they issued:
- A $10.4 million disgorgement fine was issued to Smillie and ezBtc to replay the equivalent value of the misappropriated funds/assets.
- An additional $8 million fine was issued to Smillie to serve as a deterrent against future misconduct.
- David Smillie is also permanently barred from trading, promoting, or holding positions in the securities market except for personal investments made through a registered dealer.
As of now, there is no public information about any criminal charges and the BCSC didn't disclose whether or not they recommended criminal charges to law enforcement agencies.
5 Ways to Spot a Fraudulent Crypto Platform
Stay alert and aware. Do your research and homework. If you suspect something is wrong, better to be safe than sorry. Walk away and consider alerting authorities for review.
See: Fraud Prevention Month: CSA encourages Canadians to ask questions before investing in crypto assets
- Over promising (too good to be true) - if a platform 'guarantees' huge profits, be skeptical. All real investments come with some uncertainty but anything that seems too good to be true, probably is.
- Registration with securities regulators? -Check if the platform is properly registered with Canadian regulators to do business with Canadians. If it’s not, it might be operating in a legal gray area.
- Overly confusing or complicated terms - If you can't figure out how your funds will be managed, then best to avoid.
- Pressure tactics - Scammers and fraudsters often try to pressure prospects into making quick decisions without thinking. Legitimate companies should be more professional allowing you to ask questions and take time to evaluate your options.
- Lack of transparency - If a crypto platform doesn't provide clear details of how it operates then that's a massive red flag. This includes websites that are not transparent about their leadership and hide behind numbered companies and don't show their face.
Why This Matters
As the digital asset market grows, clear regulations, investor awareness and robust enforcement are critical to creating a safer and and more trustworthy ecosystem.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Is the BRICS Alternative Currency Plan Falling Apart?
BRICS | Dec 3, 2024
Image: Freepik/ibrandify
BRICS Nations Weigh Gains and Risks as New Currency Idea Faces Challenges
The original BRICS member nations including Brazil, Russia, India, China, and South Africa previously announced their bold vision to challenge the dominance of the U.S. dollar by creating a shared currency. The plan hatched and promised an alternative currency and payment system that would be free from the influence of U.S. sanctions and monetary policy.
See: Central Banks Favour USD and Gold Amidst De-dollarization
Lord Lamont of Lerwick stated:
"If it ever happened, it would be a major threat to the Western-led financial system, but above all it would make it impossible for the West to impose sanctions on countries like Russia, China or Iran or other malign countries."
But is the dream now unravelling?
Trump Threatens 100% Tariffs
Just a few days ago, U.S. President-elect Donald Trump announced that American wasn't going to sit by idly while BRICS trading bloc tries to circumvent the U.S. dollar and threatened to implement a 100% tariff on BRICS nations if they launch an alternative currency. He also demanded commitment from these countries that that would and abandon any de-dollarization efforts.
The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they…
— Donald J. Trump (@realDonaldTrump) November 30, 2024
Growing Divide Among BRICS Members
Russia isn’t backing down arguing that Trump's threats could backfire by pushing even more countries to consider alternatives other than the dollar.
See: Credit Suisse: Statecraft and De-dollarization
Dmitry Peskov, Kremlin spokesman:
"[The dollar is losing its appeal as a reserve currency for many countries, a trend that is gathering pace]. More and more countries are switching to the use of national currencies in their trade and foreign economic activities. If the U.S. uses force, as they say economic force, to compel countries to use the dollar it will further strengthen the trend of switching to national currencies (in international trade)."
Recent reports say that some BRICS members may be stepping back from the initiative due to varying economies and conflicting monetary policies that are anticipated to be difficult to overcome. Each country has unique economic needs so a one size fits all approach to a currency solution is tricky. For example, China is an economic powerhouse and may prioritize its own currency at the expense of smaller nations.
What Does Each BRICS Nation Stand to Gain?
Is it a zero sum game with a clear winner and loser?
China is best positioned to benefit if a BRICS currency takes off. They are the largest economy in the BRICS trading bloc and Beijing could use the initiative as a stepping stone to boost the yuan's role in global trade. China is strategically looking to increase its global influence so its beyond just economics. Critics are concerned that such dominance by China would come at the expense of smaller BRICS members.
See: SWIFT Launching CBDC Solution Within 2 Years (to Compete with BRICS)
Russia, currently at war with the Ukraine and constantly at loggerheads with the U.S. has a lot riding on the idea of an alternative BRICS currency. Russia is currently facing a litany of sanctions and economic isolation so an alternative to the U.S. dollar could help stabilize Russia's economy and offer it a better hand on the geopolitical global stage. Conversely, a failed BRICS currency could force Russia into a rock and a hard place.
India is being more cautious as it understands that while a BRICS currency may make trading easier within a bloc, it could give China more control. India has its own massively growing economy and aspirations so it's walking a fine line that balances cooperation while protecting its independence.
For Brazil and South Africa the risks are high with smaller rewards since their economies are much smaller and they may struggle to stay competitive in a system dominated by China and Russia. So while they may be benefits for a larger block, their smaller interests could easily get pushed to the side so the benefits aren't as clear nor are they guaranteed. Having said that Brazil has been a strong advocate for a BRICS currency system over the dollar.
Global Financial Shift in the Making
While the U.S. dollar is still dominant, cracks are appearing as some countries are seeking alternatives to U.S. economic sanctions or geopolitical strategies. Since trading nations are deeply integrated and affect global markets, any significant changes to currency dynamics could have serious global impact. It could appear as shifting exchanges rates, new supply chains / trade flows and different financial alliances.
See: Tax-Free Bitcoin Zone Proposed by the USABTC
Companies and policymakers need to remain agile. Even if the BRICS currency initiative fails, its a movement that gained momentum and certainly a trend that the world cannot ignore.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Governance Health Check Framework: How to Perform a Corporate Governance Review
November 29, 2024
Image: Freepik/master1305
Every organization should be carrying out a regular governance health check — but what should businesses focus on? Governance expert reveals their trusted health check framework.
Effective governance can never be a ‘set and forget’ endeavor — it needs to be continually monitored, reviewed, and modernized for the business to see its full benefits.
As Marc Hodak, Partner at Farient Advisors, said at Diligent’s user conference, “Good governance is ultimately what is right for the long-term health of the company.”
Diligent, a leader in modern governance, highlights the need for organizations to conduct regular health checks in order to maintain good governance, effectively manage risk, foster diversity and inclusion, and react to the needs of shareholders and the wider society.
In the same way you’d send your vehicle for a regular check-up to help to identify hidden issues so you can proactively address them and drive smoothly, regular governance health checks are also crucial. A deep governance check can uncover potential gaps or weaknesses in the governance structure, allowing businesses to quickly adapt to changing regulatory landscapes, emerging risks, and evolving business needs.
What steps do organizations need to take to complete a corporate governance health check? In the framework below, Diligent’s experts outline how to perform a governance health check to proactively respond to the evolving corporate landscape, empower sustainable growth, and uncover any hidden issues,
The fundamental principles of corporate governance
Good corporate governance considers the rules, practices and processes that guide an organization towards its goals through effective operations and clear decision-making.
Six key principles of corporate governance were issued by the G20 and the Organisation for Economic Co-operation and Development (OECD) in 2023. This guidance assists policymakers in evaluating and improving legal, regulatory, and institutional frameworks while also serving as a guide to help corporations innovate and adapt in a competitive world.
- A clear corporate governance framework. Just like a car requires a solid frame to remain effective over time, good corporate governance requires a strong foundation that supports efficient allocation of resources.
- The rights and equitable treatment of shareholders and key ownership functions. As the owners of a publicly traded corporation, shareholders must be allowed to participate and vote in general meetings, elect and remove members of the board, and approve or participate in fundamental corporate decisions.
- Institutional investors, stock markets, and other intermediaries. Considering those with an interest in the company is a foundational element of corporate governance; brokers, institutional investors, credit rating agencies, analysts, and proxy advisors all require oversight for fair and effective functioning.
- Transparency and disclosure. If a decision affects the material health of a publicly traded company, boards must make investors aware promptly. Corporate governance requires clear, transparent communication with all shareholders and stakeholders.
- The responsibilities of the board. It’s essential the board structure supports effective oversight and accountability so directors can exercise objective and independent judgment, oversee risk, and monitor managerial performance.
- Sustainability and resilience. To ensure a company can withstand change and thrive well into the future, sustainability frameworks, practices, policies, and incentives are integral elements of corporate governance that yield long-term success.
Diligent’s governance health check framework
- Keep up with the news and public opinion. News and public opinion are powerful yet often underutilized sources of information, with many organizations failing to recognize customer and stakeholder perceptions until it’s too late. Keeping abreast of industry news and public opinion helps you better understand public sentiment to ensure your actions don’t have a negative reaction.
- Pinpoint where your business stands. It’s important as part of your governance health to understand your risk and where you stand within your industry. Are you a leader in the field, or is there room for improvement? This data you gather will help you identify gaps and create SWOT analysis reports, which are the basis from which to generate risk and other corporate strategies.
See: UN’s Blueprint for AI Governance and Global Representation?
- Assess sustainability frameworks. Take climate change and the transition to net zero: do you understand the potential risks of moving from fossil-fueled operations to renewable energy sources? What are the risks of not doing so, like non-compliance with evolving regulations or a poor reputation among environmentally-minded future workers? Good corporate governance enables sound management of these risks.
- Review the diversity and inclusivity of your board. Effective governance’s “participatory” nature means boards and organizations must be equitable and diverse. Moreover, these diverse board members and employees need an active voice in corporate decision-making: does your board include and value the views of people with various skills, talents, abilities, experiences, and perspectives?
- Return to your organization’s strategic plan. A strategic plan ensures boards understand where the corporation is going and how it will get there. As part of a governance health check, it’s important to revisit your strategic plan to ensure the decisions you make about the future of the business align with the organization’s overall mission, vision, and values statements.
Once you’ve completed your governance health check, keep up with organizational changes and evolving stakeholder needs through real-time data dashboards for board and leadership collaboration.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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