Compliance

What is Compliance

Compliance refers to the conformity of an entity with rules, referring to a set of pre-determined standards established by the regulatory authority of the relevant sector. A company is required to be compliant, in any time, with the implementation and the updates of the rules governing its market. When a company is not compliant with the relevant provisions, it breaches the law and it can incur in severe financial penalties.

 

Compliance in the banking system

Regulatory Compliance and the introduction of the Compliance Manager origin from the authority’s need to regulate the system and its members, implementing a preventive control of risk and the relevant sectorial provisions.

In detail, banking Compliance deals with the control and the assessment of non-compliance with corporate rules, to avoid penalties and financial or reputational damages.

Following some severe failures, mainly in the United States, and a series of sectorial scandals, the Basel Committee on Banking Supervision introduced new regulations with the aim to safeguard the compliance with existing rules and introduced the role of the Compliance Manager, who is responsible of the control process.

 

The Compliance Manager

Banking governance has undergone a general review, with the introduction of the Compliance Manager, a second-level control function, which adds to other risk management roles involved in the company management process, such as the Risk Manager and the Internal Audit, which are third-level control functions.

The Risk Manager identifies and assesses risk components to which a bank can be exposed and that it can face during its business.

The Internal Audit (third-level control function) checks procedures and operations, and assesses the efficacy of internal controls.

An essential requirement of the Compliance Manager is independence. It follows that:

  • his/her mandate should be formalised
  • his/her tasks should be defined
  • s/he should have all the resources required to carry out his/her tasks within the company.

In 2010, within the scope of Compliance functions, the supervisory bodies introduced additional control functions related to anti-money laundering and contrast of terrorism financing.

 

Tasks of Compliance Manager

The main tasks of the Compliance Manager refer to:

  • Analysis of company compliance with relevant regulations;
  • Drafting of organisation or procedure changes, to avoid or manage risks of non-compliance;
  • Controls of the outcomes of activities and procedures developed;
  • Support and comparison with other risk control functions;
  • Reporting to management board on the activities carried out and the conditions of the company;
  • Reporting to supervisory authorities on the activities carried out and the conditions of the company;
  • Organisation of training events on regulatory updates addressed to company staff.

 

Advantages and added value

The monitoring of compliance with relevant regulations has become a key issue of corporate governance. Penalties and financial damages can impact significantly on business continuity.

In many cases, reputational impairment – following regulatory non-compliance – is not given due consideration or appropriately quantified. This aspect should not be disregarded, especially when it refers to an investment firm or a bank.

The Compliance function adds value, increasing company profitability, avoiding penalties and financial damages caused by reputational impairment, improving the relationship with clients and stabilising the relationship with shareholders.

Compliance function is required to perform an ex ante control, to avoid events with a negative impact on company value.

Find Out TIGREARM

An application suite to control banking and financial information.

Click on the button and go to the TIGREARM page to discover the modules or request a 15-day free trial (for a maximum of 3 modules)

Compliance Manager’s view and IT support

The process leading to regulatory non-compliance often involves different banking areas. In many cases, human resources are unaware of the fact that their behaviour is non-compliant.

The lack of training on regulatory areas, or even the occurrence of a behaviour that, together with similar ones, leads to a non-consistent process, represents one of the challenges the control function has to address.

The Compliance Manager has to gain a comprehensive view and deeply analyse corporate operative processes, to identify possible weaknesses that could trigger illicit behaviour, even non-voluntary ones.

Thanks to IT staff’s competence and to the available software, the supervision and the analysis of this function have become simpler.

 

Compliance in the TIGREARM Suite

Among the various IT solutions available, Compliance has always been a key aspect of TIGREARM suite’s processes.

In detail, the modules involved refer to:

The section of the application referring to data governance allows to produce the reports required by the Third Pillar of Basel framework, starting from the filing of regulatory reporting.

Within this module, the Risk Management function defines the control system and the possibility to audit information, also for regulatory compliance purposes.

The section of the suite dealing with primary reporting of harmonised reporting, designed to manage technical and qualitative aspects. One of the advantages of this module is that the structures used are compliant with current and previous versions of the DPM.

This module manages, in a simplified manner, the wide range of technical disclosure produced by the Bank of Italy, useful for the regulatory reporting process.

In detail, this section of the suite allows to document and check the compliance of the generation process with Bank of Italy regulatory provisions (‘circolari’) on harmonised reporting or with EU Regulations (mainly, Regulation 680/2014) and subsequent updates.

The ‘Ren+’ module allows for an analysis of Italian and European regulations, continuously updated. With this module users will have at their disposal a whole repository on compliance, which include Basel frameworks, Bank of Italy provisions, EBA and European Commission regulations.

Find out more on modules referring to compliance visiting the dedicated sections. Then, choose the one that best meets your needs: PILLAR 3 – XBRL CONVERSION – PUMEX – REN+.

The system works everywhere, since each module of TIGREARM suite is web-based.

Find Out TIGREARM

An application suite to control banking and financial information.

Click on the button and go to the TIGREARM page to discover the modules or request a 15-day free trial (for a maximum of 3 modules)