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Golden rules for those holding responsibility for Compliance, Risk and Financial Crime

Golden rules for those holding responsibility for Compliance, Risk and Financial Crime

  • United Kingdom
  • ES / Consulting - Briefings
  • Financial institutions - Retail finance

07-07-2016

1. Be part of the business

In order to fulfil your role as Compliance Officer, you and your teams need to be part of the business and not stand alone.

Compliance is integral to the sustainability of the business. Given this it is imperative for the compliance function to be structured such that the role of monitoring is separate to that of advisory. The advisory function should engage with, and work with, the business to develop new products and services. The monitoring teams can remain at ‘arm’s length’ so they can be an independent and effective second line of defence.

The Financial Conduct Authority has long discussed the need for compliance to be at the ‘top table’ of a business and to help develop and deploy a business’s strategy – with this is mind, it is vital for compliance to be part of the business.

2. Culture - drive the 'right' behaviours

It is imperative that the business culture drives positive and good customer outcomes. Consider what part you play in driving the ‘right’ behaviours within the organisation. The upcoming implementation of the Senior Managers regime (for firms previously not caught by the regime) is based upon the premise of accountability and driving the right behaviours, so you need to consider how you will play a part in this as Compliance Officer.

3. Know the firm's regulatory obligations and outcomes

Be familiar with not only the FCA and PRA rules but also with the strategies and thematic work of the regulators. Speeches are a good source of intelligence for supervisory trends and focus areas. Be at the forefront of industry regulatory thinking by attending forums and seminars – knowledge from your peers can help you benchmark your activities.

4. Integrate compliance with governance framework

Different businesses have different relationships with their compliance function, but it is imperative that you have a ‘voice on the board’ and are part of the governance arrangements within your organisation.

5. Elevate unmitigated risks to the relevant risk committee or direct to the board

As the Compliance Officer you have been delegated accountability for compliance but this does not dilute the need for collective accountability to drive through improvements or remediate problems. Maintain an audit trail outlining concerns to ensure there is clarity and that issues remain on the board agenda until resolved. In preparing such an audit trail, Compliance Officers should bear in mind the need to maintain privilege in some instances.

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