In today’s climate of increasing regulation, compliance officers must be permanently alert to new requirements and changing patterns of enforcement. The use of a reliable training provider such as Interactive Services is a key element in keeping an organization in line with current practice. What are the compliance issues that will cause compliance officers most anxiety in 2019? Here, we list some of the most important.
Cyber risks grow month by month and the cost of good-quality cybersecurity risks at the same time. Artificial intelligence is being seen as a tool in protecting the organization, but AI solutions do not come cheap. Compliance officers may face some hard choices when justifying the need for extra expenditure on expertise and software which might soon be unfit for purpose.
Political enthusiasm for compliance regulation comes and goes. In the US, a Democratic Congress can be expected to halt or reverse the regulatory roll-back promoted by its Republican predecessor. In the UK, Brexit has created a near-chaotic atmosphere of preparation for change. In Europe, a movement to the center or right in many countries is likely to lead to support for deregulation; but the EU remains committed to legislation to protect the working public. Compliance officers will need to be nimble.
In a volatile market, particularly when stock prices are showing a downward trend, investors inevitably become more critical of their advisors and more likely to suspect mismanagement. The financial crisis of 2008 triggered an increase in investors seeking redress for inappropriate advice and ‘churning’; a return to market instability risks a recurrence.
The continuing multi-billion-dollar scandal involving Malaysia’s state-owned investment fund, 1MDB, demonstrates that AML cases can operate internationally and at the highest level. Combatting terrorist financing has been declared the top priority for the FATF (Financial Action Task Force), the intergovernmental body responsible for investigating money laundering, developing global standards and evaluating countries’ compliance. Increasing scrutiny is inevitable.
Harassment in the workplace is nothing new, but the growing trend towards victim empowerment has been strengthened by some prominent cases, such as those of Harvey Weinstein and Kevin Spacey. What was often treated as a Human Resources issue now needs to be ranked with other compliance responsibilities, as a risk which can incur severe penalties. The risks are not only of legal action; harassment within the workplace can create a climate of fear and distrust. Download our ebook A Learning Guide to Recognizing Harassment in the Workplace
Laws on discrimination within the workplace apply at both the federal and state level in the US, making discrimination a complicated issue for compliance officers. A proactive approach, rather than waiting to deal with incidents, is likely to save on resources and produce an enhanced working environment.
Situations in which an individual’s personal concerns are inconsistent with what is best for a customer, or where their personal interests are contrary to their business or public loyalties, are not inevitably illegal but are very likely to be unethical. Recent political conflicts in the United States are likely to raise the profile of these issues. Prohibiting all outside interests and activity by employees is a drastic and unpopular measure, but anything less will inevitably give rise to problematic cases.
In 2018, the U.S. Commodity Futures Trading Commission (CFTC) ordered Deutsche Bank to pay a $30 million penalty for manipulation, attempted manipulation, and ‘spoofing’ in the precious metals futures markets. However, Deutsche Bank’s penalty was substantially reduced in recognition of its ‘substantial cooperation and remediation’. The lesson to be learned is that the authorities will be expecting firms to play an active part in countering non-compliant behavior.
It’s no longer safe for compliance officers to suppose that their employers will protect them from the consequences of compliance failures. Since 2015, the year of publication of a Department of Justice (DOJ) memorandum “Individual Accountability for Corporate Wrongdoing, criminal and civil corporate investigations are encouraged to ‘focus on individuals from the inception of the investigation’. Compliance officers are now much more likely to be held individually responsible, although a lack of employer support and resources may be a defense.
Every commercial organization, particularly those operating internationally, needs to address these and other risks without delay. The costs of non-compliance are high, but a good e-learning provider can provide training which will not only minimize the risks but also help to ensure a confident and stable workforce. Contact Interactive Services for details of their comprehensive range of compliance training programs.