Research Handbooks in Financial Law series
Edited by Barry Rider
Chapter 23: Compliance issues in the financial sector
With recent financial crises the compliance function has gained more currency as an issue of concern. What was taken for granted for many decades as a routine activity has now acquired a new dimension; there has indeed been a paradigm shift in terms of expectations, influence and interventions. With almost every postmortem in the aftermath of a crisis, there has been a finding that if the compliance officers were more proactive and alert some of the underlying factors leading to the crisis could possibly have been mitigated with the intervention of the regulator and the board and senior management of financial services firms. Compliance officers are expected to be the first to see the ‘red flag indicators’ and to be proactive in dealing with them. This chapter outlines some of the issues relevant to compliance officers or prospective compliance officers. The aim is to give a broad perspective of how expectations are changing the world over and to underline what compliance officers should address their minds to in order to be able to better cope with the changing realities and expanding responsibilities and expectations. Given the wide scope of the topic, the chapter naturally has its focus on certain selected aspects of immediate relevance to a global audience of compliance officers. The traditional role of compliance and that of compliance officers was based essentially on a 2005 paper produced by the Basel Committee on Banking Supervision. It pointed out, inter alia, that Compliance starts at the top.
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