Compliance Officer of the Future

Over the past few years, the field of compliance has evolved. It has gone from solely having a reliance on human capital towards a more digitalized approach with the implementation of artificial intelligence along with the usage of compliance software programs. Compliance has also become a major component in the fight against the growing trend of money laundering and terrorist financing. The compliance officer is an individual who is charged to ensure that the company he is employed by is adhering to the outside regulatory and legal requirements as well as internal policies and bylaws. The officer works will all departments to make sure breaches don’t occur and most importantly that adequate measures are in place when it comes to managing risks and that the business dealings are ethically sound and legal. A lot of questions have been raised about the role of the compliance officer in the future whether it will take a backseat to the artificial intelligence movement or continue evolving and having much more impact than before in the fight against money laundering and terrorist financing.

The increase in regulations along with its constant nature of change has led to more importance and attention being given to compliance. As discussed, banks and financial institutions have implemented training programs to educate and prepare their employees for future challenges. Compliance officers are the main beneficiary of this program with their expertise expanding and not being limited to knowing about laws and regulations but also about the whole business strategic side across multiple departments. Another notable skill the officer of the future has is the extended network of contacts he has externally due in large part of his interactions with regulators and thanks to it, he has an opportunity to showcase how he exhibits ethical values and follows the rules. This behavior can in return enhance his reputation and at the same time increases the company’s profile. The compliance officer of the future shall also have a much more hands-on approach with the business strategic side of the financial institution he’s employed by. With the growing number of regulations, the role of the officer is becoming much more important than ever with him bearing the responsibility of collaborating with different departments and making sure they are up to date with the latest regulatory changes and are conducting business by the book. This is the case right now with more regulatory focus than ever on consumer data protection especially with the introduction of the GDPR. The responsibility falls on the chief compliance officer to make sure that measures are applied along with conducting meetings with members of the board of directors and senior management level employees respectively.

The compliance officer of the future shall also embrace the technological advancements of the current generation. Recently, we are seeing a shift towards an analytical approach instead of the usual manual approach of the past with the analysis of data being a prime example. Previously, the compliance officer had to rely upon a manual approach that consisted of analyzing KYC forms and legal documents which is a time-consuming process. Today, compliance officers have a much easier way to access data due in large part of the investments being made in the IT Side with the usage of Regulatory Technology (RegTech) being a prime example of this shift. Compliance officers are now becoming more of data analysts instead of data collectors as the RegTech used is able to process large volumes of unstructured and structured data respectively and automates them. The officers now shift their focus to investigating and evaluating the data. The reports they generate are now more insightful and accurate plus they offer strategic insight into the risks and potential opportunities for the institution they work for. Most Importantly, the officers’ do not have to worry about the reports produced containing a mistake on them that could single-handedly cause a public relations nightmare and result in the financial institution being fined for committing an offense.

As much as there is noise that compliance officers shall take a backseat to artificial intelligence backed approaches and have a diminished role, their position remains as vital as ever especially in the fight against money laundering and terrorist financing threats. the compliance officer of the future shall not be limited to having a second line role but now he is shifting towards a first-line role due in large of his consistently and growing expertise and most importantly his ability to embrace the technological developments by using it for his own good and make the transition from the outdated manual approach. Overall we can conclude that the compliance officer of the future shall play a much bigger role than ever in this ongoing battle.

Fusion’s AML application is tailored for the current approaches when it comes to conducting an analysis for a compliance officer. as previously stated, the compliance officer is now employing an analytical approach and the application serves his purpose by providing him with a 360-degree view of the transaction he monitors along with the ability to generate detailed reports. He no longer has to rely upon conducting the time-consuming manual approach of having to go through scattered information research.

Sources:

1. Esrig, how RegTech helps Compliance Teams increase efficiency and reduce risk, 2018, ACA Compliance Group, https://www.acacompliancegroup.com/blog/how-regtech-helps-compliance-teams-increase-efficiency-and-reduce-risk
2. Hurst, Chief Compliance Officers Need Real Time Technology Just to Keep up these days, 2019, Corporate Compliance Insights, https://www.corporatecomplianceinsights.com/ccos-real-time-technology/
3. Chetwynd – Talbot, The Chief Compliance Officer of the Future: Five Key Skills, 2017, Hedley May, https://www.hedleymay.com/wp-content/uploads/2017/07/The-Chief-Compliance-Officer-of-the-Future-Five-Key-Skills.pdf