Financial services companies are often advised to create a “culture of regulatory compliance” without anyone really discussing what that means or how to do it.
The Federal Bureau of Investigation has developed its own culture of compliance within its ranks. In the book, The FBI Way, Frank Figliuzzi, the former chief inspector for internal inquiries at the Bureau describes how it does that.
Getting everyone involved, particularly FBI leadership, is critical to success, he writes.
“I am convinced the FBI’s practice of mandatory leadership participation in both the [Office of Professional Responsibility] and inspection processes forges more knowledgeable and accountable leaders. Many companies unconsciously send the message to their employees that compliance and ethics is someone else’s job. Corporations often make audit staff assignments optional for executive trainees or fail to properly incentivize or reward such roles. When it comes to addressing allegations of misconduct, most companies allocate that responsibility solely to human resources or legal departments. Yet, how can you trust your leaders to comply with standards if you don't trust them to enforce those standards?”
Companies that want to make sure their own regulatory work goes beyond just checking box can apply the FBI model to their own organization. Executives and founders should ask themselves where regulatory compliance fits into their organization and how is it viewed by the rest of the company.
Is the compliance group viewed as the “no department” to be avoided as much as possible? Are regulatory questions viewed as “the lawyers’ problem” by leadership? Is the legal department viewed as a separate but equal part of the company?
If the answers to these questions are ‘yes,’ then it might be time to reevaluate how the company approaches compliance questions. One way to fix the culture may be to have more employees spend some training time with the compliance department. Another is to get leadership more actively involved in compliance decisions. It does not mean that the CEO needs to approve every transaction exception, but letting leadership see the process from time to time will help everyone be ready for those times when things go awry.
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