Having an effective corporate compliance officer is the key to a well-run organisation, especially when it comes to financial institutions.

Compliance is the way of designing, developing and implementing the generally acceptable norms, rules, directives, guidelines, standard operating procedures, explains Paul Rwakahungu, a certified compliance and risk management professional, who manages compliance risks of a financial institution.

According to him, failure to have a mechanism that can effectively and efficiently help to implement required rules may lead to negative consequences.

Compliance involves monitoring a company’s operational processes and procedures to make certain that the company complies with all legal regulations and ethical standards.

The services are especially crucial for strengthening a financial institution, be it a fintech company, bank, remittance or forex bureau, compliance frameworks and functions are a key component of installation of second line of defence for managing risks. 

Their role is to ensure that the institution operates with integrity and adhere to applicable laws, regulations and internal policies. A strong, independent compliance function can mitigate risks related to misconduct, money laundering and other forms of non-compliance.

To fully grasp the notion of compliance, Rwakahungu points to other compliance elements that exist in other areas outside financial institutions. 

For example, for a journalist to have a meaningful story, there are rules to be followed while writing and failure to abide by them, the story maybe misleading. A police officer on the road is a compliance officer that makes sure that drivers and other road users abide by the set rules. "I guess that’s a picture well painted to introduce this subject,” he notes.

However in financial institutions, compliance as a discipline goes deeper than just the above. 

It handles the integration of the corporate governance of the financial institution into the set regulations and laws of the regulators or government.

Expectations of a compliance officer

The general view of what is expected of a good compliance officer includes;

Linkage between the regulators and the institution. As a compliance officer, Rwakahungu says it’s your responsibility to make sure that there is a positive working relationship between the two, you can only achieve this by making sure that you implement the requirements of the regulations that govern your institution.

Yet, as one in that position, you also must have knowledge of the policy development and implementation-you must have a deeper understanding of the regulation so that you can develop the internal policies aligned with the regulatory requirements to effectively achieve the goal of both the regulator and the institution. This helps to protect the license. 

In terms of training, a compliance officer is expected to have a mechanism of passing on information to all staff regarding the regulatory requirements and also the environment dynamics to protect the institution from being used as a conduit for criminals. 

There is also reporting to the management all the irregularities identified and putting in place mechanisms to fix them before they are identified by regulators, advising the business team on all areas of regulatory requirements and having a mechanism in place for risk assessment of customers, products, product channels and general internal operations that can result in loophole for criminals. 

Overseeing the internal audit; for some institutions, this is the work of internal audit function but depending on the size of the company, this can also be the role of a compliance officer, however this may result in conflict of interest. 

Skills needed for the job 

There are many skills that a compliance officer is required to have, though these are subjected to the kind of institution they are working with. 

Some of these include; 

General knowledge of the corporate governance of the institution you’re working with and the reporting structures. 

Deeper understanding of the regulations that govern the industry

Deeper analytical skills of the dynamics of the economy in which you’re operating from

Clear understanding of FATF (financial action task force) global body that fight against money laundering

Policy development skills, mostly anti-money laundering policies

Attention to details, a compliance officer is someone who cannot underestimate any element with suspicion.