While the importance of compliance officers is well established, their value to financial institutions has taken on increasing significance with the influx of regulatory initiatives and fines following the financial crisis of 2007-2009.
Since then, Canada and US regulators have been ramping up their efforts to prevent money laundering and cracking down on small to medium financial institutions as well as the big name banks.
Why is compliance so crucial right now?
"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 due diligence on customers and transactions leaves a company open to scrutiny and litigation," says Martin Fox, Managing Director at Robert Walters Toronto.
If a client’s fraudulent scheme benefits a bank, and the bank willfully fails to file a Suspicious Transaction Reports (STR), the bank’s actions may make it a co-conspirator and susceptible to private litigation. This is motivating financial institutions to hold themselves to a much higher level of accountability for their actions.
Where do compliance officers fit into all of this?
Compliance officers help organizations set a path for effective compliance in conjunction with the organizations’ broader strategic goals. The most common compliance risks a company faces have to do with data privacy, bribery and corruption, and industry-specific risks. Compliance officers are charged with determining how to protect their particular organizations from all risks.
CCOs (Chief Compliance Officers) are always under pressure to prove that their programs are effective. They must develop simple protocols for reviewing compliance issues, create internal control processes to review STRs, ensure reports are filed promptly, and provide training to all employees whose jobs touch on compliance in any way. Officers must also be willing to undergo regular voluntary audits of their programs.
Where do compliance officers come from?
Generally, compliance officers are trained as lawyers or accountants. With the ever increasing number of opportunities in the market for compliance professionals, many people see this as a good time to try to make the move into this area.
For professionals interested in transitioning into compliance from law or accounting, most opportunities exist for junior roles in established teams. Where there is a team already in place and the function is built on a solid foundation, a new compliance professional with an accounting or legal background has the ability to learn from their peers as well as develop their transferrable skills.
Given the importance of compliance to any firm's ability to conduct business effectively, and with this only expected to grow, this is an exciting time to be working in compliance or considering a move into this area.
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