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Corporate Compliance: Compliance Framework and Hot Topics
Tammy EisenbergExecutive Director, Corporate Compliance
CLS GroupMarch 6, 2014
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The views represented herein are solely those of the author and do not necessarily represent the views of the CLS Group.
Disclaimer
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At it’s most fundamental, a bank Corporate Compliance program is about ethics and managing conflicts of interest. Put simply, it’s about doing the right thing.
What is Corporate Compliance?
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Compliance Policy
Framework
Compliance Risk
Framework
TrainingMonitoring&
Testing
Elements of a Corporate Compliance Program
» How does your organization define “Compliance Risk?”
» Basel Committee on Banking Supervision – “Compliance and the Compliance Function in Banks.”
» Compliance Risk is the risk of legal or regulatory sanctions, material financial loss, or loss of reputation a bank may suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory standards, and codes of conduct applicable to its banking activities.
What is Compliance Risk
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» A Compliance Risk Framework is a tool that identifies, measures, documents and assesses compliance risk associated with a bank’s activities, including:
» Development of new products/services» New business practices» New types of business/customer relationships» Material changes to any of the above
What is a Compliance Risk Framework
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» Federal Reserve SR 08-8 “Compliance Risk Management Programs at Large Banking Organizations with Complex Compliance Profiles.”
» SEC Release Nos. IA-2204; IC-26299 “Compliance Programs of Investment Companies and Investment Advisers.”
» FINRA Rule 3012 “Supervisory Control System.”
Expectations of Regulators
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Board of Directors
Senior Management
Employees
Roles and Responsibilities
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Governance
Risk Assessment
Monitoring and Testing
Training
Reporting & Communication
Process
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• Define Roles & ResponsibilitiesStructure
• Initial Inventory of Laws• Updates to Inventory of LawsMethodology
• Document in PolicyPolicy
Governance
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Changes to Inventory of
Laws/Inherent Risk
Changes to Control
Environment
Changes to Residual
Risk
Monitoring and Testing
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» Ensure understanding of:
» Purpose of Compliance Risk Framework» Roles and Responsibilities» Methodologies» Information to be Reported
Training
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Business Units
Senior Management
Board of Directors
Reporting and Communication
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Classifications• Type of policy
documents
Governance• Approval process• Review process• Reporting of
violations• Training
Requirements• Format• Required content
What is a Compliance Policy Framework?
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Policy
• Describes how law/regulation/rule/standard applies and the requirements that must be met in order to achieve compliance.
• Generally, policies must be “reasonably designed” to achieve compliance.
Guidelines
• Additional guidance or specifications underlying the policy
Procedure
• A series of steps taken to accomplish the requirements of a policy or guideline.
• Describes: who is responsible, what must be done, how the procedure is followed, how often and how the procedure is documented.
Types of Policy Documents
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Compliance Risk
Framework (identifies type and severity of
risk)
Compliance Policy
Framework (policy +
procedures)
Compliance Program
Relationship between Frameworks
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Types of Compliance Policies
CODE OF CONDUCT
Anti-Money Laundering
Supervisory Affairs
Records Retention
Anti Bribery & Corruption
Gifts and Entertainment
Information Barrier Policy
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There are hot topics for almost every kind of compliance policy!
Hot Topics
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Hot topic• Any impact on
current/potential activity?
Assessment
• Is this risk identified in the Compliance Risk Framework?
Analysis•Are there policies and procedures which are reasonably designed to address (i.e., control environment)?
Lessons Learned
