compliance

The growing role of compliance within banks

Compliance officers have been around for years, however, to financial institutions, their value significantly increased after the financial crisis of 2007-2009 with the influx of regulatory initiatives and fines.

US regulators, since then, have ramped up their efforts to crack down on financial institutions. This sudden surge in demand for compliance in financial recruitment has led to Financial Times calling it the “age of the compliance officer”.

Why is compliance so crucial right now?

Compliance has become an increasingly pivotal issue for banks today. As the laws, rules and regulations are modified and changed over time, a company failing to do their diligence on transactions and customers can lead to it being subjected to scrutiny and litigation.

“Regulators aren’t just more aggressively pursuing institutions who break the law. Higher penalties are being imposed on lawbreakers. Compliance has become a pivotal issue for banks, because failing to do their diligence on customers and transactions leaves a company open to scrutiny and litigation.” – Adrian Morrissey, Manager of the Compliance Division, Robert Walters, New York.

If the bank is found to benefit from a client’s fraudulent scheme and it willfully refrains from filing an SAR, the bank becomes a co-conspirator and becomes susceptible to private litigation. This in turn, motivates the financial institutions to keep a high check on their actions.

Where do compliance officers fit into all of this?

Compliance officers play a crucial role in setting a clear path for the organization for effective compliance in conjunction with the company’s strategic goals. With common compliance risks a company faces include data privacy, corruption, bribery and industry-specific risks; these officers are given the responsibility of protection the organization from all possible risks.

In view of that, CCOs (Chief Compliance Officers) are under constant pressure to prove the effectiveness of their programs. For that purpose, they develop simple protocols to review such compliance issues, ensure prompt filing of reports, train employees along with create internal control processes to review Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs).

Where do compliance officers come from?

Generally trained as accountants or lawyers, the increasing demand and number of opportunities have resulted in these professionals to step into the compliance field.

However, there are still many firms who are hesitant in showing flexibility when it comes to hiring. Yet with the importance of compliance increasing in a firm’s ability to conduct their business activities effectively, there is a certain degree of flexibility at the junior level of the market. This leads to candidates developing a better understanding of the business along with transferring their knowledge in to a more compliance related capacity.

Adrian Morrissey continues, “As the level of seniority increases, so does the level of difficulty in making the transition. With personal liability and more responsibility at the senior end of the market, no financial institution is considering non-compliance candidates for these key hires. If professionals are looking to transition into the compliance field and have no direct compliance experience, I would suggest looking for internal opportunities before looking elsewhere. Once this experience has been achieved, you will then be far more attractive to outside firms.”

Disclaimer:
CAC International Bank takes no responsibility of the contents of this article. The views expressed in this article are of the author and does not reflect the policy of the organization as the ownership of the article is solely of the publication with all the research conducted by the author. Our purpose of posting this article is to educate our audience about the issues highlighted within the article and have nothing to do with any sort of commercial intent. Please contact us on info@cacintbank.com for any queries or reservations about the article.

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