Wilmington's Risk & Compliance division is full of experts who turn knowledge into advantage. The division includes International Compliance Training, and we quizzed their Head of R&D David Robson on the state of compliance, now and in the future.
What does compliance mean to you?
That’s a great question. Let me tell you what many people assume it means, and then what I think it means.
We have all sorts of regulators, for all sorts of industries, in all sorts of countries. The traditional view of compliance is that it is about sticking to rules. Understanding the detail. Telling businesses what they aren’t allowed to do, because rule 17.2.6 C in Chapter 43 of the manual says that it is forbidden.
This used to be the view of compliance and compliance professionals. Hidden away in dimly lit offices, removed from the business. And by design - as they were effectively the ‘Business Prevention Unit’. That’s far from my view and far from the state of compliance today.
Compliance people (which I am using to describe both regulatory compliance and financial crime compliance) are enablers. Solution finders. Problem solvers. Compliance sits at the heart of a business and can have a hugely positive impact on commercial outcomes, as well as cultural approaches. It’s now a truly value-add profession.
What are your key predictions, or insights for the future?
The compliance environment continues to evolve. Markets and frameworks are global with new players emerging and others declining, both in terms of countries and firms. It’s not just financial services either. Other sectors such as energy and gaming operate worldwide in challenging environments, where robust compliance has a crucial role to play.
Noises from the Trump Administration are that regulations are too restrictive and should be relaxed. Yet the media and public often want increased scrutiny to be sure that their money is safe and that firms are acting in a way which is socially responsible. Firms themselves are also looking for efficiencies in their operating models. All of this adds up to quite the dynamic, fast-moving environment.
What are the implications of this?
There are many implications. In terms of how regulators regulate, we may well find further shifts in approaches. Global firms have to work to varying standards (although best practice is to operate to the highest). Any US changes have a profound impact but might be argued over for a while. Our colleagues at Compliance Week, also part of the Wilmington Risk & Compliance division, keep a close eye on these changes with their news and analysis service. And then in the UK for example, we are seeing an increase in the focus on individual accountability and the considerations around an outcomes-based regulatory approach. Coming back to compliance professionals as enablers and solutions providers, their role is about judgements and making calls on ‘what is the right thing to do?’; where the right thing to do can be viewed through many lenses.
Other implications include enhanced globalisation, the drive for continued professionalisation and qualified staff and the impact of RegTech and FinTech – all of which could form another article in themselves.
What are the hottest topics in compliance right now?
I have touched on some of these already but I’ll take a different stance and look at the customer groups with which I work at International Compliance Training.
On the public course side we are continuing to see increased demand right across the range of subject matters we offer. What is interesting is that the compliance professional tends to be somewhat cyclical between a generalist and a specialist. There are definitely signs of specialisms emerging at the moment – and this is reflected in our range of qualifications (managing sanctions risk and Know Your Customer/Customer Due Diligence for example). It’s important to note however, that even though specialisms exist, they must not operate as silos. Compliance risks are usually interrelated and should be viewed as such. We are also seeing professionals wanting more bite-sized content to keep them abreast of news and regulatory changes and the online Continuous Professional Development Centre offered by our awarding body, the International Compliance Association, is designed to do just that.
With our in-house clients, financial crime has been a huge focus. Anti money laundering and sanctions in particular, as well as the ownership of risk by the first line of defence. This has been partly driven by regulatory and public scrutiny, but also by a desire to do business in the right way. What’s interesting is the swing towards role specific, tailored training across various competency levels – which we at International Compliance Training are uniquely positioned to deliver.
What is your favourite case study and why?
The case studies we use on our courses tend to be examples of where it’s gone wrong. We pick these as they are really useful tools to identify weaknesses and challenge existing practices in order to help formulate best practice.
My favourite case study is about the (now defunct) Lebanese Canadian Bank. It’s a very in-depth case that rumbled on for five years or so as a settlement was made in the US but then civil cases followed.
The reason this one is so interesting is because it’s truly international and involves multiple financial crime elements: terrorist financing, money laundering, drug trafficking and international trade. These are just the sort of risks that make the area in which we work so fascinating. Risks also continue to evolve so we look at how they might be identified and how firms should respond.
So in summary, the risk landscape is constantly shifting which means the compliance professional must do the same. They are risk managers, communicators, horizon scanners, educators and more. Truly sitting at the heart of a modern firm.