It is time for anti-bribery: Financial institutions set the new strategic "roadmap" to mitigate illicit practices and corruption in the market

The financial sector is characterized by complexity due to the management of a large volume of transactions, which can lead to the difficulty of considering, identifying, and monitoring them. The lack of mechanisms in monitoring and control transactions can contribute to the development of illegal practices within a company, such as fraud, corruption, bribery, and money laundering. These phenomena can affect financial institutions negatively. Therefore, the development of an appropriate corporate governance system can ensure to members of the board and executives in a company that any illegal practice can be detected. This study aims to highlight the factors that contribute to the development of illegal practices within European financial institutions. This can help executives to plan and mitigate the illicit practices that may emerge. For this purpose, a binary logit regression analysis on panel data from 2018 to 2020 was applied to 336 European financial companies. The findings of this research emphasize the crucial role of corporate governance in the prevention of the development of illicit issues within European financial institutions, while human resources can be characterized as a pathway to corruption. Both factors, corporate governance and human resources, are main pillars of environmental, social, and corporate governance (ESG), which indicates the need of the financial sector in Europe for the elaboration of anti-corruption strategies. Thus, companies within the sector can improve their ESG score.