What is financial services compliance and what does a financial services compliance specialist do?

Financial services compliance refers to a financial institution’s compliance with regulations, laws and guidelines, whether internal or external.

Its role is to prevent, detect and address breaches and irregularities in the institutions operations and is particularly useful for those involved with security, risk management and information processing.

A financial services compliance specialist monitors the accounting, investment and lending operations at financial institutions to ensure that they are compliant.

They monitor new developments in financial regulation, assess how new rules may affect the institution and advise senior management on how to revise policies and processes to adhere to the updated regulations.

Specialists will also identify and analyse risk areas, as well as ensuring the organisation acts within the law.

Key responsibilities:-

• Developing and implementing a compliance model to ensure the bank operates within acceptable standards.
• Liaising with senior management to ensure proper implementation of established compliance policies.
• Reviewing internal bank policies to ensure they align with external banking regulations.
• Keeping up to date with, and understanding, relevant laws and regulations.
• Monitoring client financial activities to ensure they are legal and in compliance with internal and external bank policies.
• Investigating irregularities and non-compliance issues.
• Highlighting and escalating areas of concern.
• Performing risk assessments to understand risk level, significance and scope – implementing preventative/corrective strategies where necessary.
• Providing regular reports to senior management on progress of compliance operations.

Why are they important?

A failure in compliance can result in litigation, financial penalties, regulatory constraints and reputational damage, all of which can strategically affect a financial institution. Focus in this area is increasingly important considering advancements in process automation, as well as globalisation of these institutions. The activities of financial institutions have come under unprecedented scrutiny following the 2008 global financial crisis.

Skills needed for this role

Banking compliance specialists need strong analytical and problem solving skills, along with a high level of integrity. Attention to detail and excellent project management skills are also essential for this role.

Career opportunities in this Domain

The increased focus of financial institutions on compliance, along with new and changing regulations in the banking sector has increased demand for experts in this area. Progression is well structured with opportunities at management and senior management levels available.

High level competencies required include:-

1- Audit and Assurance:-

a. Advises on and communicates effectively the role and scope of audit and assurance engagements to relevant stakeholders.

b. Applies regulatory, legal, professional and ethical standards relating to audit and assurance engagements.

c. Plans and prepares for audit and assurance engagements.

d. Performs effective audit, and assurance engagements.

e. Reviews and reports on the findings of audit and assurance engagements.

f. Guiding efficient and effective operations.

2- Corporate and Business Reporting:-

a. Prepares financial statements, corporate financial and integrated reports for external stakeholders using appropriate technology.

b. Leads effective decision making through analysing, evaluating and communicating performance and position of entities.

c. Prepares financial statements for groups of entities using appropriate technologies.

d. Monitors, critically evaluates, and advises on the relevant accounting standards, regulations, conceptual and financial reporting frameworks.

3- Governance, Risk and Control:-

a- Evaluates organisational structures and governance to protect the long-term interests of stakeholders.

b- Recommends appropriate strategies to ensure adherence to governance structures and application of best practice internal controls.

c- Identifies and manages risk appropriately.

d- Uses risk management for the best interests of an organisation and its stakeholders.

e- Monitors and applies relevant legislation, policies and procedures.

4- Stakeholder Relationship Management:-

a- Positively develops relationships with internal and external stakeholders.

b- Communicates and gains commitment from internal and external stakeholder.

c- Uses emerging technologies to collaborate and communicate effectively with stakeholders.

d- Applies professional and ethical judgement when engaging with stakeholders.

e- Aligns organisational strategic objectives with stakeholder needs and manages expectations.

This article has been written by CS Tanuj Chandra Saxenaa (ACS, M.COM, MBA (FINANCE), CFI (FMVA) (Pursuing) SAP FICO Certified. He is a Practicing Company Secretary and Trademark Agent in Tanuj Saxena & Associates in Lucknow, Uttar Pradesh.