Characteristics of a Good Compliance Officer

What makes a good Compliance Officer?  This is a very important question for every CEO and/or member of the Board of a regulated firm when looking to hire the best person to take on this vital role.

The compliance profession did not exist until a couple of decades ago, thus, compared to other professions it is still in its infancy. The main driver for the development of the profession has been the impact of new regulations in regulated sectors such as the financial services and health care sectors, especially in the USA and Europe.  In Europe new regulations are constantly coming in effect, and in the past few years we have witnessed many organizations facing considerable fines for failing to comply with all sorts of laws and regulations.  Companies begun to hire Compliance Officers to address the ever-increasing legal and regulatory expectations that have been placed on them from all angles.

What are the primary roles of the compliance officer?

In many organizations, compliance oversees both compliance and ethics.  Compliance tends to deal with the policies and procedures that are put into place for the business to ensure it is compliant with the law.  Ethics revolves around doing the right thing, corporate values and training people to act in a way that creates a culture of compliance.  While some organizations, particularly in financial services, separate the ethics and compliance elements, for most businesses compliance and ethics go together in one role.

Compliance Officers are generally assigned with three tasks: awareness, advice and reporting.  The Compliance Officer creates the compliance programme and ensures that people throughout the organization are aware of it, which includes ensuring understanding of the law, rules and procedures enforced by the company.  Compliance Officers must also be able to advise on legal and compliant methods and ways of conducting business, and then report to the business about programme implementation and specific issues requiring resources or responses.

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What is the role of the management and the Board?

This mindset and culture must first be demonstrated by the Board of Directors, the CEO and senior management. The tone from the top is crucial and cannot be merely cosmetic.   The enthusiasm and will to respect and incarnate these values, regardless of temptation, must be solid. In addition, exemplary behaviour at the top must be constant and unwavering.   The role of the Compliance Officer is key for the deployment of a compliance programme at all levels of the company.  The role commands the implementation of a compliance programme and the ability to link it to the most important strategic interests of the company.

What are the key characteristics required to be a good Compliance Officer?

A good Compliance Officer must have the following skills and qualities:

Skills:   A good understanding of the company’s business, global perspective on the company’s role, the stakes involved and the developments within the market.   Be familiar with the company’s overall strategy in order to align the compliance function with the overall business, and, understand the potential risks in order to anticipate them, thus securing and protecting the business.

Qualities and characteristics

•Leadership

•Independence

•Charisma

•Integrity

•Communicator and mentor

•Human and firm

And in addition:  Compliance Officers need to be terrific listeners so that they can hear and understand the pressure points between the business and the law.  Compliance Officers must be persuasive and able to influence the business, especially when the procedures or policies may be unpopular or difficult but necessary.

Lastly, Compliance Officers need to be skilled at designing simple and understandable processes and procedures to mitigate the risks identified by the business.

The compliance environment

The best Compliance Officers are those who can embrace change.  The regulatory environment is an ever-evolving one, and just when a Compliance Officer thinks that the programme is perfect, another law will come into force or an enforcement action will require the programme to shift.  Compliance Officers need to be naturally curious with a “can-do” attitude.  If a Compliance Officer learns to say “no” effectively to the business, using empathy and offering sound reasoning and explanations, this will go a long way towards building the trust that is critical for the Compliance Officer to maintain with management.

Ideally, Compliance Officers will come to the job with a belief that what they are doing is important, valuable and helpful to the business.  It’s been said that the Compliance Department’s job is to protect the business in five years.  Therefore, short-term sales goals and actions which may create reputational risk must be eschewed in favour of long-term thinking about what is going to make the business sustainable and profitable in the future.

The Compliance officer should be able to convince staff, and often management, that expanding the business is important but not at any price. By being compliant, the company can reduce risk and threat and still increase its business opportunities. By reducing non-compliance risk, a company commits itself to a path of even greater compliance, the creation of added value.

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