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Monday, November 25, 2013

Strategic CSR - Compliance Officers

According to the article in the first url below, Compliance Officers are “hot” on Wall Street!
 
“The kings of Wall Street used to be the traders and investment bankers who said yes to big deals and big trades, but today's power brokers increasingly are the compliance officers who quite often say no to risky proposals.”
 
I have seen a number of articles in the mainstream national business press in recent weeks, all with the same story line—there are insufficient qualified applicants for the number of compliance openings available. As noted in the article in the second url below, both JP Morgan and HSBC are reacting to increasing government oversight and enforcement (having suffered significant fines recently for past misdeeds):
 
“The Wall Street Journal previously reported that J.P. Morgan would spend $4 billion and commit 5,000 people to risk and compliance efforts and that HSBC added 1,600 compliance jobs in the first half of the year. But there is even more demand for compliance. The Institute of Internal Auditors shared with Risk & Compliance Journal some preliminary findings from its Pulse of the Profession survey, expected to be made public in November, which found 67% of internal auditors believe that audit committees see compliance as one of the top five risk areas, up from 59% at the same time last year.”
 
As the first article points out, although long in the making, the focus on compliance has gathered pace in recent years as the consequences of non-compliance become increasingly apparent:
 
“[Much of] Wall Street's focus on compliance … dates back to October 2003, when a provision of the Patriot Act that required financial institutions to verify the identities of certain customers went into effect. Banks were then forced to bolster so-called AML (anti-money laundering) compliance departments to monitor their customers and transactions. But it was only in recent years – after the 2008-2009 financial crisis – that regulators and prosecutors have intensified a crackdown on the flow of money tied to suspected terrorist activity, drug lords and tax evaders. Enforcement actions have stacked up across the industry, with anti-money laundering settlements, including some sanctions violations, spiking to total $3.5 billion in 2012, from $26.6 million in 2011, according to the Association of Certified Anti-Money Laundering Specialists. That jump includes last year's $1.9 billion blockbuster fine on HSBC for its failures to stop hundreds of millions of dollars of drug money routed through it from Mexico.”
 
Clearly, there is a market for business schools and organizations such as the Ethics & Compliance Officers Association (ECOA, http://www.theecoa.org/) that are training students with the necessary skills to conduct this work:
 
“There are no specialized degrees required for compliance officials, who were typically repurposed from other divisions of a bank. But as demand picked up, candidates with degrees from reputable law schools started moving into the field, recruiters say. At a bank or broker-dealer, a compliance employee with a couple years of experience might make between $65,000 and $85,000 plus a bonus; five to 10 years of experience generally commands a base salary of up to $150,000 per year; and top professionals can expect $1 million or more.”
 
Take care
David
 
David Chandler & Bill Werther
 
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Wall Street’s Hot Trade: Compliance Officers
By Aruna Viswanatha
October 9, 2013
Reuters
By Gregory J. Millman
October 22, 2013
The Wall Street Journal