Updated Department of Justice guidance provides helpful pathway in fostering compliance
Due to the evolution of formal regulatory frameworks in recent years, risk management and compliance disciplines have undergone significant transformation and enhancement across various industries. However, the rapid development of financial products and technology, combined with intense market competition, the emergence of new business models, and high investor expectations, have all exerted tremendous pressure on these frameworks during a period of rapid change, according to Wolters Kluwer Compliance Solutions in a newly published thought piece.
“Assessment of (one’s) compliance program design and comprehensiveness occurs through a dynamic series of steps to determine the degree that a financial institution can accurately identify, assess, and define its conduct risk profile,” writes Thomas Grundy, regulatory compliance expert with Wolters Kluwer Compliance Solutions in his article, “Conduct Risk Management: Empowering Financial Institutions Through the DOJ’s Guidance for Compliance Programs,” published in ABA Risk & Compliance magazine.
Ultimately, he notes, it is critical for banks to evaluate the degree to which their compliance program can detect and prevent particular types of misconduct through the deliberate application formal regulatory frameworks, such as those offered by the Department of Justice (DOJ), to effectively manage conduct risk.
Grundy points to recently updated U.S. Department of Justice “Evaluation of Corporate Compliance Programs” (ECCP) guidance, asking banks to consider whether their risk-based compliance programs focus appropriate resources on higher-risk areas of the institution and activities where misconduct or ethical breaches are most likely to occur.
“With the present and future uncertainties and challenges facing financial institutions, having a strong compliance program that includes a robust conduct risk management program is essential. The DOJ’s ECCP provides guidance that serves as a useful and informative framework for financial institutions to apply in building an effective framework for managing conduct and ethics.”
Ultimately, he concludes, encouraging organizations to prevent and detect misconduct, as facilitated by an effective compliance and ethics program, encourages ethical conduct and compliance with all applicable laws.
ABA Risk & Compliance magazine, formerly ABA Bank Compliance magazine, has recently expanded its editorial focus beyond compliance to include risk-related topics and is a leading industry voice on U.S. bank legislation, regulation and case law. Published six times a year, the magazine reaches 5,000-plus certified bank regulatory compliance and risk officers, delivering regulatory analysis and insights.
