Top skills that make a good compliance officer

0 Comments

The fundamental duty of a compliance officer is to keep the ethical integrity of a company uninjured.

AML compliance officers and MLROs must make sure that the business activities of the organisation are carried out within a regulatory framework. To accomplish this, the compliance officer must possess a defined set of skills and expertise.

We originally published this list in August 2018 but in October 2020 we put it out to a survey of KYC360 users, asking you to tell us which skills you thought were particularly important. Hundreds of you answered, so thank you. These are the results, in order of importance, as well as some of your other suggestions as to the most important features needed to be a good AML compliance officer.

1. Integrity (59% felt this was particularly important)

Integrity is a must for any profession. Regulation management process can only be implemented and achieved effectively if the officers have strong moral principles and honest qualities. But it’s not just enough to know what the right thing is, it’s about having the courage of your convictions; the confidence to speak out; the determination to see things through. Courage was mentioned again and again by survey respondents, along with resilience, strength and developing a ‘thick skin’ – suggesting how daunting a job in compliance can sometimes feel.

The reassuring aspect is that you’re not alone – thousands of AML professionals are in the similar positions.  99% of the time you’ll know in your gut what the right thing to do is to fulfil your professional, and ethical, requirements. Finding the courage to carry it through is the next step. And the right one.

2. Industry knowledge (56%)

KYC360 itself wouldn’t exist if there weren’t an ongoing need from compliance officers to keep abreast of industry developments. As well as keeping on top of relevant regulatory requirements, professionals should also stay up to speed with the latest tactics and trends in financial crime and money laundering. Criminals are always going to move fast, so to some extent we’re playing catch-up, but we need to keep trying. Never give up.

You can keep abreast of the latest AML news with our daily or weekly emails (sign up here), and you can record your Continuing Professional Development in KYC360’s CPD wallet (register here).

It’s not just industry or regulatory knowledge, that’s important. Many of you mentioned the importance of taking a world view on situations, and encouraged compliance officers to be well-networked and globally connected

3. Risk assessment (55%)

Risk assessment is a vital component of the compliance function. It is important that the compliance officer takes into consideration all the factors that contribute towards risk scoring, and understands the implications of those risk scores for wider business decision-making.

In the survey, you reinforced how important it was not just to understand the risks you were involved in assessing, but how to balance commercial and regulatory risks (and sometimes personal vs business risks). Being able to consider the risk impact of your work in a wider commercial context is invaluable, particularly if you’re aiming to persuade colleagues of a certain course of action.

4. Communication (42%)

Written and verbal communication skills are vital. The compliance officer must have the ability to communicate at all levels in the organisation so that they can share relevant and comprehensive information at the appropriate times. Skills in negotiation (or diplomacy!) can also be useful, and with an approachable manner and a listening ear people won’t be afraid to ask you for help or advice about issues that may be significant.

5. Detail-oriented (28%)

With regulatory requirements changing rapidly, it is crucial that the compliance officer pays attention and understands them in detail. Requirements may be different between jurisdictions; screening tools may have differences in the parameters they apply; suspicious entities may operate under multiple aliases. Whether it’s the technology, the data, or the law, you’ll need to have a good eye for detail.

6. Problem-solving (25%)

Effective problem solving demands a blending of creative and analytical thinking. Compliance officers face the problem of unclear and obscure regulatory policies, cost issues and so on. The compliance officer should be able to identify the risk associated with particular policy-making so that they can draft a simple structured solution.

It helps to actually enjoy solving problems, to be curious and inquisitive about new situations and to be open-minded about possible solutions.

7. Interpret data (24%)

Not all the rules out there are black and white; there will sometimes be grey areas and the ability to create sense and policy out of these can be very useful. Logical analytical skills and critical thinking are valuable – as is (of course) common sense, and sometimes a sprinkling of scepticism…

8. Conflict management (10%)

Last but by no means least, a compliance officer should know how to manage conflict and handle dissension, as there will be times where they may encounter circumstances requiring them to explain and defend their point of view. They should also have confidence and resilience when faced with tough situations and dealing with external agencies such as regulators – as well as when handling internal conflict.

The skills to confidently assert yourself and carry out your job professionally are vital, but don’t neglect your softer side. Being approachable, collaborative and demonstrating good emotional intelligence with your peers and colleagues (both above and below you in the ranks) will stand you in good stead.

What else is important?

Although these attributes are weighted here, many respondents felt that they were all important. Indeed, it is hard to imagine how a good compliance officer could do their job well without needing skills across all eight areas. But if that’s not enough, there were some other key aspects that many of you felt should be highlighted:

  • Support from the top – It can make all the difference to your job satisfaction if you feel truly supported and empowered by senior management. We all know how miserable it can be if you feel you’re fighting internal forces in your effort to do a good job, with integrity, so ensuring you have your boss’s or board’s full support is invaluable.
  • Patience … or persistence / perseverance …. Or all three. Overseeing AML compliance work is not a job with quick wins or one that often delivers immediate results. The fight against financial crime is waged with many tiny decisions, and you may never directly see the impact of your actions. But take heart, as it’s a job worth doing, in particular, if you:
  • Love your job. You’ll rarely get the bonuses of a salesman or the applause of an actor. But that’s why discovering your own satisfaction in your work is so important, whether it’s through well-completed SARs, smoothly managed regulatory inspections, or improvements to internal processes that free up time for your team to concentrate on delivering an excellent client experience. (On that final note, KYC Global’s RiskScreen software is loved by our customers for its easy-to-use interface and up to 95% reduction in false positives – click here to set up a demo!)

Thank you, once again, to everyone who took part in this year’s AML compliance officer survey. For those new to the job, we hope this has been of help. For those already in these posts, we hope it reflects your reality with reasonable accuracy. You’re doing a great job.

By Suresh Chavali (August 2018), updated by KYC360 staff December 2020

The UK Government Has Bailed Out Companies Complicit in Bribery and Fraud

0 Comments

 

A VICE News investigation this month revealed that companies accessing billions in public funds through a government scheme have paid out an estimated £11.5 billion in dividends, while announcing the loss of 42,000 jobs.

VICE News can now reveal that government funds, currently totalling £18.9 billion, have been given to companies that have engaged in fraud, corruption, environmental destruction and the manufacture of chemical weaponry, as well as defence firms that have sold weapons to regimes accused of human rights abuses.

Only the UK’s biggest companies can access funds through the Covid Corporate Financing Facility (CCFF). They have a year to pay the money back, at interest rates of 0.2 to 0.6 percent. Smaller companies, unable to access funds through the CCFF, must take out loans through commercial banks at a rate of up to 6 percent.

Companies using the CCFF can extend the length of their loan, but only if they pledge to refrain from paying dividends and to cut executive pay. The CCFF is administered by the Bank of England (BoE) for the Treasury.

The funds were made available to companies from the end of March, 2020, with no environmental or economic stipulations attached – a move that has been criticised by campaigners and activists. Plans are afoot to take the government to court over the lack of environmental considerations applied to the bailouts.

Among those receiving bailouts are companies that have been fined for bribery and fraud. There are also companies that have been criticised for poor treatment of workers, chemical companies responsible for catastrophic pollution and defence companies linked to wars and repression across the globe.

FINED COMPANIES

As reported by VICE News, American oil giant Schlumberger announced it would be slashing 21,000 jobs worldwide on the 24th of July, just a day after paying out an estimated £135.2 million in dividends. A month earlier, the company – which is registered in Curacao, a tax haven – drew £415 million in UK government funds from the CCFF.

When previously contacted for comment, Schlumberger directed VICE News to its Q2 results, which show the company reported $5.2 billion (£3.9 billion) in worldwide revenue in the second quarter of 2020.

In 2015, Schlumberger was fined $232.7 million (£179.6 million) for violating sanctions in Iran and Sudan. At the time, the fine was the largest in US history for sanctions violations.

Airbus SE – a multinational aerospace company that accessed £500 million of public money through the CCFF – was fined a record breaking €3.6 billion (£3.2 billion) in January of this year following an investigation by the Serious Fraud Office. The investigation found that the company had used external consultants to bribe officials in Sri Lanka, Malaysia, Taiwan, Indonesia and Ghana to buy its civilian and military planes between 2011 and 2015.

A company spokesperson said, “Airbus had agreed to pay penalties of nearly €3.6 billion plus interest to the authorities. The company has taken significant steps to reform itself and ensure that this conduct will not reoccur. The company is committed to conducting business with integrity.”

The company was the seventh largest arms company in 2018 and had £369 million of Ministry of Defence procurements in the same year. According to Campaign Against the Arms trade, Airbus has applied for UK arms export licences to 88 countries,including UAE and Saudi Arabia.

In 2019, British arms sales to Saudi Arabia were halted by the High Court after it ruled that weapons had been sold to the country for use in the Yemen Civil War with no consideration of “whether the Saudi-led coalition had committed violations of international humanitarian law”.

Human Rights Watch has documented “abuses by the UAE and UAE proxy forces [in Yemen], including arbitrary detentions, forced disappearances and torture”.

Rentokil Initial, which had accessed £600 million from the CCFF by the 18th of April, was given a record fine of £27,000 for failing to comply with a UK competitions and markets information request in August of 2019. The company did not respond to requests for comment.

G4S, the private security company, drew £300 million through the CCFF. On the 10th of July, G4S was fined £44 million after it accepted responsibility for three fraud charges in relation to an electronic tagging scheme. The fraud was carried out in an effort to “dishonestly mislead” the government, so as to boost the company’s profits, according to the Serious Fraud Office.

A G4S spokesperson said, “The BoE facility is a one-year loan and is due to be repaid in full in May 2021. G4S employs 25,000 people in the UK working in our security and cash businesses. Our employees provide essential services to businesses across a number of sectors and to the government.”

The company confirmed that no public money was used to pay the £44 million fine.

By Ben Charlie Smoke, VICE News, 18 August 2020

 

Wolfsberg Group Issues Guidance on Source-of-Wealth, Source-of-Funds Checks

0 Comments

The Wolfsberg Group has published new guidance on how financial institutions (FIs) can identify, mitigate and manage money laundering risks by undertaking source of wealth (SoW) and source of funds (SoF) checks on customers.

SoW assessments seek to identify how a customer accumulated their wealth, while SoF information provides an FI with the understanding of how and for what purpose an account is going to be funded.

Such checks are to be considered among the key elements of customer risk assessment and risk management for certain customers, allowing FIs to recognise risks and potentially suspicious activity, and note any inconsistencies which should be mitigated or escalated for further review, the Wolfsberg Group says.

“In line with regulatory expectations, FIs should adopt a risk based approach with respect to the amount of information collected, and corroboration required, for SoW/SoF purposes.”

CBCS press release: Temporary monetary and prudential policy adjustments

0 Comments

The economic outlook for the monetary union of Curacao and Sint Maarten has significantly deteriorated due to the COVID-19 pandemic. The inevitable decision to close the borders in order to protect the local people against the virus will be at great cost. Tourism, the monetary union’s main export sector, is basically coming to a standstill. This will result in economic contractions on both Curaçao and Sint Maarten. For a substantial part of the population and local businesses, income is not guaranteed and will know a disruption the coming few months.

Therefore, the CBCS deems it necessary to enable the financial system to finance the economy, in order to keep the economy running smoothly in these extremely difficult times. This calls for measures to support the population and local businesses, to enable financial institutions to meet liquidity demands from their clients, and to help commercial banks withstand the unforeseeable shocks. In this light, it is required to make temporary monetary and prudential policy adjustments.

Consequently, CBCS has taken the following measures:

A. Monetary measures

  • To reduce the pledging rate by 150 basis points. As a result, the pledging rate will be back at the 2008 – 2009 financial crisis’ historical low level of 1.00 percent. The pledging rate is the rate at which the commercial banks can borrow at the Bank. Furthermore, the surcharge on the pledging rate of 200 basis points on loans exceeding NAf.20.0 million will be suspended. Besides this measure, the Bank’s overdraft facility for commercial banks will be reintroduced. Through this measure, the Bank aims at guaranteeing the commercial banks’ access to liquidity in case this may be required while maintaining the cost of financing low. Thereby, the financing of the economy can be ensured.
  • To lower the interest rates on Certificates of Deposit (CDs). Through this step the Bank will, within certain limits, temporarily ease the money market by absorbing less liquidity.
  • To suspend with immediate effect, the extension of foreign exchange licenses for transfers abroad. This also applies for submitted applications that have not yet been granted a license. Transfers that have yet to be executed based on licenses already granted can be carried out normally. The extension of foreign exchange licenses will be resumed at a date to be determined by the Bank. Transfers abroad that do not require a foreign exchange license can be carried out as usual.

B. Prudential measures

CBCS will implement more flexibility to the certain supervision rules:

  •  Commercial banks and credit institutions will be allowed to provide a 3 to 6-month payment moratorium on interest and principles of all outstanding loans, without having to make an adequate provision. This flexibilization will take effect immediately. The CBCS will closely monitor this provision.
  • Commercial banks may exceed the debt service ratio, which is currently set at 37%, to a maximum of 50%. This flexibilization will take effect immediately. The CBCS will closely monitor this provision.
  •  Life insurance companies and pension funds will be allowed to provide clients a 3 to 6- month payment moratorium on policy premiums without having to make an adequate provision. This flexibilization will take effect immediately. The CBCS will closely monitor this provision.

 

Willemstad, March 20, 2020

CENTRALE BANK VAN CURACAO EN SINT MAARTEN