By: Dan Frechtling, SVP of Marketing and Chief Product Officer
Compliance officers have it harder this year as regulators look for flaws as intently as Olympic judges look to deduct points. Gathered from a pair of surveys of compliance practitioners and a poll of compliance experts, here are the three problems that keep compliance officers up at night.
Top Three Worries for Compliance Officers
1. Insufficient resources
Only one-third of respondents to DLA Piper’s CCOs Under Scrutiny report say they have enough resources to do their jobs. Thinner business margins cause banks to take a sharper view of ROI, and functions like compliance can get swept up into the “overhead” category. In some cases, this causes compliance leaders to shy away from requesting more budget. Regardless of cause, many compliance professionals feel the weight of increasing scrutiny and difficulty of enduring it.
“You always think of more that could be done if you had more people or more resources,” a senior CCO remarked in the DLA study. “But if you’re being held accountable and you don’t feel you have sufficient resources — and you’ve asked for them — that’s very problematic.”
2. Personal liability
As we wrote about last month, a full 94% of attendees at a Thomson Reuters Customer Summit in New York said they expect personal liability of compliance officers to increase in the next year. The hardest jobs to fill may be banks serving higher-risk customers. “You’re going to weigh the risk of whether it could destroy your career and your personal life,” a CCO remarked in the DLA study.
The danger goes far beyond being named in a regulatory action. RegTelligence, which tracks data on financial regulators, found that for every action directly against a CCO, there were nearly three where a CCO was involved but not directly accused. All of the above are career-limiting.
“We’ve seen global banks with a zero tolerance policy for any kind of regulation infraction. So any kind of breach, or any suspected breach, becomes a pink slip event,” said Robert Powell, director of compliance for financial technology provider IPC, as quoted by Joanna Belbey in Forbes.
3. Increasing penalties
The Federal Civil Penalties Inflation Adjustment Improvements Act of 2015 obligates the US Executive Branch and independent agencies to increase penalties on an annual basis commensurate with inflation. As we noted last month, FinCEN, the OCC and the FDIC are playing “catch-up” with adjustments. But these fines are about much more than getting even with wrongdoers. There’s a cogent economic argument for punishing the
“From a regulatory standpoint, big fines are important because a certain segment of the industry is making investments to improve compliance, particularly in technology, which is very expensive and difficult to implement well,” said lma Agnotti, managing director, Navigant, as quoted by Joanna Belbey in Forbes. “When other firms lag behind and don’t make those same type of investments, that puts them at a competitive advantage.”
Repercussions of Increased Burdens on KYC
All of the above present a vexing trend. But unlike conventional insomnia, compliance professionals’ sleeplessness has a permanent cure — switching jobs. In DLA Piper’s study, nearly two-thirds said the recent developments would affect their decision to stay in their field.
Those who stick with the increasing challenges of compliance can reap the rewards of higher pay and faster career advancement. G2 KYC Solutions help you with insight about your business customers unavailable anywhere else. Let G2 advance your knowledge and know-how about KYC, KYCC and related risks in