Compliance officers in financial services are on a critical mission, one that looks to continually counter financial crimes that would otherwise harm the company, and greater society, with theft costs that run into the billions.
However, the mission is no easy matter. In fact, today, compliance officers face big challenges: they are working under high regulatory expectations, tighter budgets, and an increasing number of risks.
Chief among the factors optimising a culture of compliance at financial institutions and service providers is a solid training of compliance officer staff – this is the best solution resolving the above-described challenges. Of course, no one kind of training can address the variety of risk situations a financial institution can face. The compliance policies implemented must be varied so that the best can be done to address the different “beasts” of risk that charge through the door.
Training Compliance Officers Today vs. Yesterday
As the global financial system grows in complexity and financial criminals grow bolder and more sophisticated, government regulators are increasingly pressing compliance officers everywhere to rise to these great challenges.
In yesteryear, financial companies needed only to provide an annual compliance training event to satisfy government requirements. Today, regulators no longer accept this and require that training, instead, be tailored and risk-based throughout the year.
What does such a compliance programme entail?
It starts with a comprehensive training needs assessment and ends with the successful maintenance of an optimised compliance culture.
Regarding training assessment, financial companies must probe their mid-to-high-risk areas and develop customised training that “fit” these risk profiles. The goal of a rigorous training needs assessment is to identify such areas where tailored and targeted training is needed to protect the company.
Further, the organisation should constantly consider the regulatory expectations for skills training. More than ever before, regulators are examining the career paths and skills of bank and other financial services staffs. They want to know: Do staff employees, with a specific job title, have the right experience, skills, and knowledge to fulfil their compliance obligations? The answer as to whether or not such employees have the right expertise and skills should be a starting point of information for the creation of an effective long-term training programme.
Cultivating a Culture of Compliance
Once a training programme is developed and implemented, and the work of staying within compliance is undertaken every day by skilled compliance officers, it can happen that a financial entity will become easily bogged down by the details of compliance. Rather than making strides in addressing the systemic problems that source most complaints, the company may find itself unable to make progress beyond risk assessments, which can keep it solidly entrenched in a mountain of individual complaints.
There are six key advice steps to ensuring financial entities practice an effective culture of compliance that prevent it from falling into the kind of regulatory overload described above:
The Top-Bottom Approach
For compliance culture to thrive in a financial company, it has to be encouraged and reinforced from the top-down. Senior executives, board members, and higher management staff must communicate and revisit compliance values consistently. Internally, it must also be recognised that the top members of the company are primarily responsible for the enforcement of corporate governance, risk management, and compliance. In other words, such top officials must oversee the compliance programme, and supervise it directly on a day-to-day basis, rather than expecting compliance teams to manage all the risks alone, without constant, observational comments from top executives.
Develop Compliance Education and Awareness
It’s important to keep the compliance team updated on changing regulations, hard deadlines, and new developments, as well as resources that shed a bright light on complex rules. At all levels, from top-to-bottom, consistent training and education must be continually implemented. This kind of education enables the compliance officer to regularly identify gaps in his or her procedures and processes having to do with, say, Anti-Money Laundering (AML) or Client Due Diligence (CDD) or Know Your Client (KYC) and other compliance programmes.
Hold Compliance in a Positive Light
It’s vital that compliance is not regarded as an encumbrance or a necessary evil by financial sector employees. It would help the financial company greatly if compliance is seen as an advantage, one that warrants that customers and clients trust the company more and more rather than distrust it. Because compliance must be systemised as part of standard operating procedure, wherein staff members grasp and implement the policies and processes demanded of them on a daily basis, it’s key that senior employees “rise to the occasion” by continually striving to tweak and improve compliance measures of their day-to-day tasks. The mindset of corporate governance and compliance must be a highly positive one rooted in straight ethics.
Offer Good Rewards for Good Compliance Practices
Providing incentives is an effective way of stirring up a constant level of motivation for corporate compliance work. Rewarding team members for keeping to compliance rules and openly complimenting them for their good practice methods not only underlines the financial business’ commitment to good ethics, but also keeps the staff alert and engaged with financial crime prevention projects.
Develop Effective Reporting Procedures
When a red flag is raised, it’s clear and obvious there should be an effective process for addressing it. Each and every staff member should well know what to do after an individual complaint is logged. Proper counter financial terrorism (CFT) action hinges on timeliness and effective team cohesion regarding the in-depth analysis as to what may have sourced the complaint. As the compliance team gains more experience in addressing such issues in question, future complaints can be kept to a minimum.
Strive for Constant Honesty and Transparency
It’s essential to promote honest and open communication about not just the compliance tasks at hand, but about the mistakes and failures that inevitably arise. When such mistakes are openly admitted, the compliance culture is perceived by employees to be earnest and true. For example, if a compliance officer is terminated for poorly performed work, his fellow officers should be informed, within reason, as to the reasons for his dismissal. Some due regard to reputation and legalities can influence in-house transparency issues, however, in the event the company does not want to disclose every detail to the staff.