10 things Compliance

officers need to do in 2015

SUMMARY – FLASH CARDS
1. Manage Personal Regulatory Risk

 Personal regulatory risk’s 3 main aspects

1. External environment
2. Internal environment
3. Establishment of personal archive
2. Regulatory Relationships

 Comprehensive , detailed notes of all regulatory meets shared

organisation wide
 Development of database of regulatory interactions to spot rends ,
uniformity of info & pre-empt briefings on emerging issues
 Full list of registered persons and licences held with regulator and regular
reconciliation of this list at organisation end to check discrepancies
3. Management Information

 Red – Amber – Green needs to talk to High – Medium – Low

 Compliance and Internal audit need to talk to each other to come up
with single combined view of state of risk management
4. Conduct Risk

 Conduct risk management is function of DREAM

 D stands for Define – what's good conduct
 R Stands for Reform – reforms where there are gaps
 E Stands for Evidence – maintain transparent audit trail
 A Stands for Assess – highlight where current process is out of step
 M Stands for measure – report on both qualitative and quantitative
elements
Conflict Of Interest

 It all begins with wholesale review of governance and control arrangement

 Management need to provide appropriate evidence they have taken appropriate
actions to check conflicts of interest
 One good practice firms may include in upholding culture of COI is “Express
inclusion of conflict of interest considerations in board of equivalent committee
headed by Non executive , Independent Director “
 5. FINANCIAL CRIME

 Financial crime includes but not limited to issues pertaining to KYC , AML , Counter
terrorists financing & Violations of U.S sanction
 New approach entails firms setting up a specialist function to manage risk in fin crime
space
 Many firms are reviewing the approach taken to comply with FATCA (foreign account
tax compliance act)
 It does not matter which department undertakes fin crime monitoring so long as its
appropriately resourced , has appropriate skill set and produces comprehensive reports
on both current state of compliance and progress made in remediating any issues found
6. Product Governance

 All aspects of PG came to the fore in 2014 with Europe leading the way in detailed policy pronouncement

 Focus on product design to achieve consistently good customer outcomes

 Organisations to focus on IOC’s of customers

 I – Interest I O – Objectives I C- Characteristics of consumers to be duly taken in account

 Manufactures should verify constantly that product matches the risk segment to which it is being offered

 BIG DATA – Predictive Analysis could come in handy here ! According to one study by XXXX
about 23 % of banking organisations are in stage of implementing BIG DATA initiatives in their
organisations to gain competitive advantage in predicting customer behaviour from live data
gathering from social media and internet !!!
8. Cyber Resilience

 Compliance officers need to ensure that cyber risks are identified ,

managed, mitigated , monitored and reported
 Upcoming trends in 2015 are “right to be forgotten” and possibility of
fortress Europe for personal data is on horizon
9. Complexity

 Firms need to demonstrate to regulators that entire business is in overt

control of the senior managers
 Those organisations which think are to complex to be managed, run the
risk of being eventually broken down by regulators if need be
 Readers are advised to go through the summary of Dodd Frank regulation
to get fair idea of how complexity is being tackled by regulators
10. Future Proofing

 Organisations to manage upcoming regulations via lobbying

 Current mismatch and divergence in rules for derivatives in USA and
Europe is case in point