What is a Compliance Officer?

The corporate world today operates in a labyrinth of increasingly strict laws: fiscal, money laundering and fraud, etc. For that reason organizations no longer have to manage only the possible legal consequences stemming from their activity; they must also pre-empt them.

The increasingly common presence of Compliance Officers has become the answer to these challenges. Do you know their duties? What is their area of responsibility? And what relationship do they have with the Board of Directors?

In this post we will discuss this professional in charge of monitoring and managing compliance related issues in businesses.

Compliance Office: a professional in demand

Although at first this role was most often found in large companies, compliance services for small and medium companies increased on average 25% in 2017, with the unemployment rate for these professionals standing at almost zero.

Amongst the more than twenty groups of crimes companies can be found guilty of, there is a wide range of crimes such as bankruptcy fraud, Treasury and Social Security offences, money laundering, intellectual and industrial property crimes, and crimes against public health.

Non-compliance fines against organizations can be astronomical and can even include suspension of business activities or the closure of the company, as well as exclusion from public contracts, subsidies and fiscal incentives.

This role is therefore vital in helping companies to manage risk, maintain a positive reputation, and avoid lawsuits.

“In the current business climate, it is inconceivable that a modern, professional company would not have a compliance program”

Javier Goizueta, Managing Director at Vaciero.

1.- What is a Compliance Officer?

A Compliance Officer is in charge of making sure a company keeps up to date with changing regulatory norms.

Their purview includes applying for licenses and permits, establishing internal monitoring systems, and knowing the law so as to minimize the risk of penalties.

It can be summed up as making sure a company is doing business in accordance with all the national and international laws and regulations pertaining to their industry, as well as professional standards, accepted business practices, and internal standards.

2.- What does a Compliance Officer’s job involve?

A Compliance Officer usually works in two areas to ensure the company is compliant with all regulations. The first area focuses on complying with outside regulatory requirements and the second concerns putting in place internal control systems to ensure compliance with those outside regulatory requirements.

Their tasks can be broken down into: closely monitoring the financial status of the company, including the general ledger, tax returns and financial disclosure, to verify that no member of the organization is engaged in money laundering or fraud.

Other normal duties may include evaluating staff compliance, responding to consumer complaints, attending board meetings, and reviewing new laws.

Furthermore, their role is not only to make sure the company’s activities are ethically sound and law-abiding, but also to educate the whole company, including board members, and institute practices which will ensure the highest possible level of compliance.

3.- Are they criminally liable?

This is an ongoing debate amongst jurists specialised in the area, although current thinking is that a Compliance Officer may, in some cases, be responsible for a crime by commission through omission. Nevertheless, if he/she follows reporting procedures, such as making the Board of Directors aware of the issues, then, in principle, he/she should be exempt from criminal liability by having acted diligently.

4.- Compliance Officers and Boards of Directors

It is important to be clear on and recognise what areas fall within the remit of the Board of Directors:

• Design and implementation of the crime prevention system.
• Designation of the body in charge of its operation and compliance.

Whereas the Compliance Officer is responsible for:

• Monitoring the running of the company and compliance.
• Making information available and providing training to staff, directors, and third-parties.
• Reviewing and updating said information and training.

5.- Where do Compliance Officers work?

While the position originated in the United States as a result of the corporate financial scandals of the 2000s, many other countries have also included the position of Compliance Officer in legislation since then.

The financial services sector has seen the biggest increase in the size of risk management and compliance departments in response to new regulations.

However, there is still a need for this position in a wide range of sectors that similarly face some form of regulatory oversight: insurance, health, telecommunications, the oil industry, the pharmaceutical industry, agriculture, and new technologies.

6.- What skills are needed to be a Compliance Officer?

Most Compliance Officers have a degree in law, economics, or business management. Given the complexity of their position, extensive experience in legal and tax consultancy is also advisable. Additionally they must have an innate and intuitive knowledge of the company’s goals and culture, as well as the wider industry in which it operates.

One aspect of their work is to communicate compliance issues to employees throughout the organization. As such, a good Compliance Officer needs to have very good personal skills and be able to communicate and work with staff at all levels of the company.

Conclusion

Ultimately, Compliance Officers play a key role in helping organizations to manage risk, maintain a positive reputation, and avoid lawsuits.

Although ensuring that companies operate honestly and within the law can be a rewarding career, it can also be a highly stressful job given the huge responsibility it entails.

That’s why we recommend using all the tools necessary to make the job easier, such as the electronic signature which is of great use in increasing efficiency and ensuring that strict regulatory deadlines are met.

If you would like more information on the services we offer to help facilitate the work of Compliance Officers, regardless of the type of company or the sector, contact us at [email protected] or call us on +34 960 03 12 03.