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This presentation explores the importance of a compliance program in ensuring proper adherence to laws and regulations, protecting a financial institution's reputation, and reporting non-compliance or suspicious activity. It covers the basic elements of a compliance program and the role of compliance in corporate governance and risk management. It also addresses the consequences of non-compliance and the value of compliance competencies and skills. Additionally, it discusses transparency, customer relationships, and the challenges faced in compliance.
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Prepared by: Hossam M. Abd El-Rahman CFE ,CFS , CFCI, CAMS , AMLP Founder & Managing Partner Allied Compliance Consultants “ACC” Member of IFAC, ACFE, ACFS, IAFCI, ACAMS & ISACA Fraud, AML, Compliance & Financial Crimes Consultant & Trainer ACAMS Middle East Task Force Member balancing between Business and Regulatory Objectives without tipping the scale
“ Note ” Incompetence is the inability to perform a specific task, action or function successfully. Competence • Competence is the ability to perform a specific task, action or function successfully.
“ Note ” Proper training helps enhance the ability and develop the skills required to carry out the job. Skill • Ability, proficiency or facility that is acquired or developed through training or experience
“ Note ” Proper training helps in increasing the awareness and understanding necessary to carry out the job. Knowledge • Knowledge: Familiarity, awareness, or understanding gained through experience or study
Skills Knowledge Competence = Knowledge + Skills
Four Key Goals! To ensure proper compliance with laws & regulations. To protect the Financial Institution’s reputation. To report any non-compliance or suspicious activity to Management & proper authority. To train all employees on the legal and internal procedures that must be followed Compliance Program
Basic elements include: Policies and procedures Designated compliance officer Training Independentaudit Compliance Program
The Role of Compliance Compliance The “Missing Link” is a Compliance Program and infrastructure to measure and monitor the effectiveness and alignment between corporate governance and business unit / functional risk management, compliance and quality activities.
WHY SOLUTION IMPLEMENTATION FAIL? How Project Leader understood it How Customer explained it How Consultant described it How Analyst designed it How Programmer wrote it How Project was documented How Operations installed it How Customer was billed How System was supported What Customer really needed
YearBankPenalty The following are examples of recent fines imposed on banks: • May 2004 UBS US$100 Million • May 2004 Riggs Bank US$ 25 Million • Oct. 2004 AmSouth US$ 50 Million • Oct. 2004 Citibank Japan License cancelled • Jan. 2005 Riggs Bank US$ 41 Million • Feb.2005 City National Bank US$ 750 Million • Aug 2005 Arab Bank US$ 24 Million • Nov 2005 Bank of New York US$ 38 Million
YearBankPenalty The following are examples of recent fines imposed on banks: • Jan 2006 ABN AMRO US$88 Million • Aug 2007 American Express US$ 65 Million • Sept 2007 Union Bank of California US$ 10 Million • +Deferred Charges to USDOJ US$ 21.6 Million • Oct 2007 Lloyds TSB US$130 Million • Oct 2007 Bank of Cyprus US$162 Million • Mar 2008 Wachovia US$154 Million • May 2008 Royal Bank of Scotland £ 750,000
Reputation Risk • Public confidence in financial institutions, and hence their stability, can be undermined by adverse publicity as a result of non-compliance or inadvertent association with criminal activities as fraud, money laundering, Terrorism Financing. • Reputation risk is the risk that negative publicity regarding an institution’s business practices will lead to a loss of revenue or litigation.
Compliance KNOWLEDGE • Awareness of: • Laws & Regulations • International best practices • Latest compliance trends • Latest compliance news • Organization wide policies & procedures
Compliance Skills • Explaining laws & Regulations • Facilitating training • Analyzing information • Communicating verbally & in writing • Proper Documentation ability • Focusing on details • Following up • Giving feedback to manager/board
Compliance Skills (cont.) • Handling multiple projects • Managing multiple priorities • Managing time • Meeting deadlines • Problem solving • Working effectively with a variety of personalities
Compliance COMPETENCES • Providing Compliance guidance to the organization • Responding to the Regulator(s) in a timely manner • Responding to Management in a timely manner • Responding to compliance Ad-hoc requests / queries • Protecting the Organization’s reputation • Protecting the Organization against non-compliance fines & penalties • Protecting the Organization against criminal activities (e.g. ML/TF) • Supporting the Business • Balancing between Business & Regulatory Requirements without tipping the scale.
Compliance pressure vs. customer relationships Compliance value vs. Compliance cost ? Compliance competences & skills Transparency Management Support Compliance Awareness New remote channels bring anonymity & speed Customer / Transaction data - Do we know enough? We have the data, Are we making use of it? Key Challenges
“ SPEAKER’S CONTACTS ” P.O. Box 53962 Dubai – UAE Telfax: +971 ( 4) 360-7998 Mobile: +971 (50) 724-6224 Hossam.El-Rahman@ACC-Co.com www.ACC-Co.com THANK YOU Best Wishes !!
