This is part 1 of a five-part series with Tom Fox and the FCPA Compliance Report on defining and building an effective compliance program. The series will consider key challenges in compliance, why compliance needs a seat at the table, how to do compliance on a budget, compliance training and culture, and what is on the horizon for compliance.
What are the biggest compliance issues facing banks in the United States? Obviously, the coronavirus health crisis and the attendant economic dislocation are at the forefront of everyone’s mind. Compliance officers are struggling to keep their programs going and keep up with their alert volumes and regulatory filings. Now overlaid is the greater challenge of dealing with some of the emerging fraud scams that are coming out of coronavirus involving the government stimulus package, personal protection, and even fishing scams.
Finally, banks are being told by their financial regulators that they have to keep up with the regulatory requirements. Regulators have distributed various guidance to banks to help them through the situation and to make them aware of various types of fraud schemes that are out in the market right now. At the same time, they’re also very clear that the rules still apply. Banks are still required to keep up with the commitments of their compliance programs.
This lends an added challenge for financial institutions as most compliance teams are now having to work remotely. But these teams still have to collect information on and do periodic reviews of their clients and make sure that they still understand the risks associated with their relationships. They still have to conduct transaction monitoring. And all this must be accomplished during a period when a number of employees are likely to be out of the office due to personal illness or the illness of a family member, or have restrictions on their time because they are working from home. It has added much more complexity to the compliance infrastructure, which already must manage a number of challenges for an organization.
There are commonalities across U.S. and global financial institutions or foreign banking institutions operating in the United States in terms of the day-to-day challenges that they face as compliance officers. Both in the United States and the UK, there has been some consistency in the way that the regulators focus on AML and sanctions and their continued focus on these two types of financial crime risks globally across the board. There is still heightened attention on culture and conduct, particularly following certain scandals and other enforcement actions. This means compliance teams need to continue to make sure that they are implementing proper controls and being diligent in instituting the regulatory requirements. But then quite often, teams are also facing day-to-day pressures from line staff to support business and to support revenue generation.
How can these organizations keep pace? It is important for compliance managers to keep an eye on staff turnover and absenteeism to ensure that compliance programs continue to run to essentially the same standard as they would without a coronavirus epidemic underway. This means ensuring compliance teams have crisis management plans in place.
In environments where compliance teams are facing mounting cost pressures, with everyone essentially looking at a tightening economy, it is best to think about how to take existing resources and leverage them more broadly, and look to see where compliance resources can support similar needs. This holds for all types of programs, whether they are AML compliance, anti-bribery compliance, or antitrust compliance programs. Teams must be ready to make the most of the current situation by applying the resources at hand more broadly.
To listen to the next podcast in the series, please click here.
