Diary of a Compliance Officer: How do you cope with the regulatory burden?
20 Dec 2017

In the so-called modern world, organisations are faced with a growing number of challenges and amongst them threats.

Whose responsibility they are varies from one organisation to another, but a few facts prevail: there is more responsibility on everyone’s plate in terms of breadth of topics, and there is more demand for depth in terms of specialised knowledge within individual topics.

What’s more, is that increasingly all these topics are being codified and contribute collectively to an ever-increasing regulatory burden.

In my case, I work for the European Investment Bank, which is a multi-lateral development bank (MDB).

At MDBs, regulatory compliance is a work in progress, there is no ‘off the shelf.’

Everything needs to be adapted to fit the business model, and yet comply with regulation where applicable.

Compliance is not a ‘quick fix’ job – it has to be done carefully, which may take  longer at MDBs than at some other organisations.

In addition, I believe that compliance officers at MDBs are at times stretched to ensure that operations are pristine in territories that commercial banks would long have deserted.

Generally, there is a difference in models which determines the geographic areas we cover.

For example, an MDB’s business model is driven by a political roadmap, such as the promotion of renewable energy or combatting youth unemployment.

This is radically different from commercial banks which seek to maximise returns to shareholders by seeking greatest profits correlated with least costs, typically in well-established and reliable jurisdictions.

The resulting challenge to compliance officers at MDBs can therefore be more humongous at times.

Whatever the case, compliance officers at both MDBs and commercial banks are still expected to conduct accurate checks and practice a high-level of professionalism by regulators.

How do you cope with the regulatory burden? I would recommend some of the following ingredients for compliance officers in the face of an increasing work load:

  • New threats need to trigger a fundamental re-think of roles and responsibilities within an organisation, as well as the allocation of the right resources to the right issues, including on the regulatory Horizon screening of new regulatory rules, implementing them in the various business areas, and ongoing monitoring are just a few key strands here.
  • Keep business ethics constantly in mind, it is an “ever-green” theme. Such themes have received wide regulatory scrutiny, as evidenced in the various regulatory references such as European Banking Authority and Basel Guidelines. They stress the importance of the “tone at the top”, and of compliance rules which are crucial in fostering the right compliance
  • Compliance officers should also periodically revisit their compliance risk assessment and watch for any trends and gaps, adequately taking corrective measures. In the logic of evolving threats, the risk assessment frameworks themselves need to be revisited and updated.
  • Lastly, new threats can also come from existing business relationships, hence the importance of monitoringand compliance testing existing business. This historically weak aspect is gaining momentum, as ignoring it might turn out to be very costly years later, as evidence by regulatory fines.

Pierre Antheaume is a compliance officer with the European Investment Bank.

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