The buzz word in today’s economy is Compliance. Basically, in the early 2000s the buzz of #Compliance was isolated to United States, which further spread into the world. The early part of Compliance was more equated to legal professionals and over the period the Compliance officer concept was like that of a sleeper cell, with a tick box approach. However, with new regulations and enforcements such as the Foreign Corrupt Practices Act, UK Bribery Act, Anti-tr
ust law, Yates memo, etc. these sleeper cells have become active with the activation of the Compliance program as a part of the regulations in countries such as Australia, France, Spain, India and many others.
What changed it all in the past?
Is it just the regulations? Well I would say not, the tipping point has been the scandals surrounding today’s work culture, such as the $521 Million Euribor Fine on JP Morgan Chase, HSBC And Credit Agricole, due to the violation of manipulating the EURIBOR rate, or the RICO/FCPA corruption case in which the USA indicted the glittering royals of FIFA federations, or the 1 MBDB scandal which saw enforcement in Singapore and also in Switzerland.
Why the buzz?
With the recent elections in the United States one of the candidates said that regulations would need to be toned down in order to allow the private sector to grow and to provide assurance to companies, especially the ones changing their base to countries outside the United States. The idea behind such a statement was to show industry giants that United States is still a.n attractive place for investment.
The big question
Will the Trump administration relax the regulations in order to help with the recession? Or will the U.S. continue to police the world?
Every company wants to generate revenue and wants to be profitable, however, if the regulations/Compliance enforcements are toned down, it would give rise to another risk, which is political risk due to lack of regulations or enforcements. This would lead to a chaos such as drug manufacturers could illegally marketing drugs, health care facilities could share patients’ personal records without consent, top international banks would control the lending rates, manufactures will deliver poor quality unsafe goods for kids and the list can go on and on. Those who get way for time being will suffer a natural fate which was suffered by ENRON, ZZZ Best, Lehman Brothers, WorldCom, SATYAM, etc. did when they tried to bend or bypass the regulations.
Giants such as Apple, National Australia bank, GE, Dell, TATA in India and other top ethical companies which hire major population and also control the economy are smart enough to understand the risk of no regulations pose for their companies than of heavy regulations. These companies are considered as ethical becuse they are self driven / motivated when it comes to the concept of ethics and compliance.
Closing the loop
In the yester years the role of a Compliance officer was seen as that of a police function as their role was confined to regulatory and legal Compliance. However, it is moving towards a flexible definition that also covers ethical standards and intersects in the gray zone of ethics, law and culture. Without a proper culture you are doomed anyways. From company point of view, those who stick to being ethical behavior and the management respect honesty in their employees will be the ones that sustain the brunt of bad time. Thus as far as I see, it is difficult to tone down regulations without inflicting self wounds