A COMPLIANCE OFFICER’S GUIDE TO DECREASING RISK AND LIABILITY
The effectiveness of compliance officers is evaluated in hindsight, and often by a regulator that already formed a perspective on the design and operation of the compliance programme. In the US, there is only limited regulatory guidance on the criteria regulators use to determine whether a compliance officer will be held liable for the violations within an organisation. Regulators, like the US Securities and Exchange Commission, simply state that compliance officers must be knowledgeable, competent, empowered and adequately resourced. Presumably, when regulators bring an enforcement action against a compliance officer, it is the result of the regulator determining that the compliance officer lacked one or more of those attributes.
Without any guidance as to how regulators assess or define each of those required attributes, compliance officers and their counsel can only deduce the criteria from the forensics of enforcement actions. By analysing whether compliance officers were charged or not, compliance officers could identify potentially preventative actions and behaviours through the lens of the required attributes: knowledgeable, competent, empowered and adequately resourced.
The required attributes for an effective compliance officer are inherently successive. There is a natural hierarchy to the attributes and the degree of effectiveness is directly correlated to how each attribute builds upon another.
Knowledge is the foundation for the hierarchy. Without knowledge of the relevant regulations, a compliance officer could not be deemed competent, let alone effective. The ability to apply knowledge appropriately is an integral part of competence.
Oct-Dec 2024 Issue
Effective Compliance