A Chinese Walls (also known as an ethical wall or information barrier) refers to a virtual barrier implemented within an organization to prevent internal conflicts of interest and the misuse of confidential information. It acts as a safeguard to ensure that sensitive information remains separate and confidential, especially in contexts like investment banking where maintaining confidentiality is crucial. It’s a set of procedures and controls aimed at restricting the flow of confidential information between different departments or teams.
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Benefits: ·
Reduced conflicts of
interest ·
Enhanced public trust ·
Regulatory compliance |
Limitations: ·
Potential communication
barriers ·
Relies on employee ethics |
Chinese
Walls are a valuable tool for organizations to manage conflicts of interest and
promote ethical conduct. However, they are most effective when combined with a
strong ethical culture, employee training and robust compliance monitoring.