Compliance Reviews and Monitoring

Periodic reviews and monitoring of the compliance controls implemented by business are an important part of the compliance department’s responsibilities. A risk-based approach is typically taken to devise a compliance monitoring plan or programme, based on the size and complexity of the business, as well as the level of activity. This monitoring programme will drive the work to be carried out, including the testing of the controls. Monitoring programmes may include ongoing monitoring through the year, or periodic compliance reviews or a combination of both.

Based on the work done, the compliance team will identify any weaknesses, breaches against regulations or against internal policies, and may also identify systemic issues and best practice suggestions. All findings will form part of a report which will be shared with management and may even be escalated to the Board of Directors, depending on the severity. Breaches will need to be remediated within an agreed timeline, and in some cases, may even need to be reported to the local regulator. If controls have been deemed to be ineffective, these will need to be enhanced or new/ additional controls put in place.

Whilst the above process covers post transaction monitoring and reviews, there are also several controls which are introduced early in the process, especially to mitigate financial crime related issues. These are in the form of transaction monitoring tools such as alert management, which throw up unusual and/ or large transactions, based upon thresholds defined by each financial institution or a business area within the bank. There are also ongoing surveillance controls used to identify unusual patterns and potential issues around market abuse.

Whilst the cost of compliance may increase in the short term, a financial services entity with an effective and comprehensive compliance program will surely lead to more sustainable growth. The entity will also experience a competitive edge, with the ability to de-risk as well as reduce costs of sanctions from regulators.

Contact SYG Consulting for advice on creating an optimal compliance programme for your organisation!