Although both Compliance Officers and Internal Auditors monitor business units with regards to regulations and policies, there are a few key differences between them. Compliance is part of the control structure of the organization — it provides real-time monitoring and correction of employee conduct and operations. Internal auditing, on the other hand, evaluates the effectiveness of the control structure and controls by examining the records and documentation after the fact, for example during a quarterly or year-end review. Compliance Officers are typically aligned to specific business units. By contrast, Internal Auditors are typically independent and conduct evaluations across business units.
Compliance Officers promote ethical conduct and compliance with rules, regulations and standard processes that govern how financial services organizations should conduct business. This applies to how financial transactions and trades are handled, how client accounts are maintained and processed and how the organization operates as a business. The role requires actively staying on top of the latest laws, regulations and business trends and being able to translate these into requirements for the operation of the organization.
Compliance Officers are generally internally facing, in that they do not interact with external clients, as their role is to support, educate and advise internal employees by checking-in on a regular basis to ensure policies are being followed. In more senior roles, external facing duties include liaising with regulators in compliance and networking with other compliance officers in their industry in order to stay current with regulatory issues and leading practices.
The major responsibility of Compliance Officers is to monitor whether the business is operating according to applicable regulatory requirements, operating processes and policies. When they find that these requirements have not been met, Compliance Officers are responsible for reporting non-compliance issues to management and then working with staff to correct the issue.
Potential drivers of non-compliance can include misunderstandings of policy, competing time priorities, technical systems issues or systemic policy issues. In this capacity, Compliance Officers require tact and diplomacy in dealing with others in situations of non-compliance in order to be effective in helping to correct non-compliant behaviours or practices.
At all times, Compliance Officers strive to maintain a balance of impartiality and fairness while promoting compliance excellence. Personal integrity is of the utmost importance in this role.
An important part of being a Compliance Officer is helping to develop and deliver training programs to increase understanding of regulatory requirements, compliance policies and ethical conduct within business lines and across the organization. Regulatory requirements and policies can be very technical and difficult to understand. For this reason, Compliance Officers must be able to relate and relay complex information to a variety of different audiences.
The breadth of focus for the role is often influenced by the size and complexity of the firm. In smaller, less complex firms, Compliance Officers may be responsible for monitoring activities across the firm. By contrast, in larger or more complex firms, Compliance Officers may be aligned to one specific business unit.
All financial institutions are required to comply with national regulations of the Office of the Superintendent of Financial Institutions (OSFI), as well as the rules of the applicable provincial regulator [e.g. the Financial Services Commission of Ontario (FSCO), the Ontario Securities Commission (OSC)], and it is the role of the Compliance Officer to ensure their organization complies.
For more information on the work context for this role, please refer to the PDF document provided at the top right-hand corner of this page.
Compliance officers typically work in an office environment and may be required to travel in order to monitor or investigate compliance issues at branches or office locations. In some organizations Compliance Officers may work at the corporate level or they may work within a line of business within a financial institution. Additionally they may be focused on a particular specialization (e.g., Anti-Money Laundering) or support a specific business (e.g., Investment Management or Banking). The nature of their daily work often changes as issues or projects arise. Compliance Officers typically work standard business hours, yet they may be called upon to work longer hours as issues and situations require.
Across the Financial Services sector, compliance officers may focus on different areas of compliance:
In summary, a thorough understanding of financial service sector conduct and practices, an aptitude for explaining policies and procedures to other employees and attention to detail helps make an employee successful in this role.
Employers in different segments of the financial services sector – e.g. banking, insurance, wealth and fund management – may require candidates to possess one or more of the following:
Specialized training may include:
Other training on special topics related to compliance including:
Compliance Officers work with the business to identify actions or changes in policy/procedures in order to remediate non-compliance incidents. As added value, Compliance Officers may work with senior management to advise them on preventative strategies to avoid potential non-compliance issues.
Compliance Officers are responsible for developing and advising on business policies to support compliance with all the applicable regulatory requirements. They are responsible for raising awareness of regulatory requirements and compliance policies and providing advice and recommendations on actions required to comply with regulations. Compliance Officers may be required to provide input on policy related training materials and in some cases may conduct the actual training for front line staff.
Compliance Officers are responsible for maintaining a current understanding of the regulatory environment in which the organization operates and having a comprehensive understanding of the implications of the regulations on their organization.
Compliance Officers ensure that internal policies are consistently being followed within the organization. When issues arise, Compliance Officers must create reports outlining how the event/situation is in non-compliance and file the report with the appropriate internal contacts.
For entry positions, you will require a strong business education with additional courses in compliance regulations. In general, you would be hired into compliance roles from the business line you will support as Compliance Officers. For example, experience in a branch location is highly valued for retail banking compliance. At a minimum, comprehensive knowledge and understanding of the related legislative and regulatory framework is needed.
Generally speaking, there is no set path you must follow to break into Compliance and Audit roles. However, having a firm understanding of the financial markets and experience within a firm is often a plus. Various stepping stones into the role may include experience in sales, trading, brokerage, clearing, operations or in a corporate control department (e.g. risk management) or experience working at a regulatory organization. The need for experience in financial services means that recent graduates are not usually hired into these roles.
Each financial segment has its own specialized courses that must be completed to progress into this position (see educational requirements), but one common prerequisite is the Canadian Securities Course (CSC) for securities compliance, which provides a comprehensive overview of the financial services industry for wholesale banking.
As you gain experience in the Compliance Officer role, you may take on additional supervisory and management duties or become a more senior Compliance Officer. With experience and exceptional performance people can move into Director level roles and eventually into the Chief Compliance Officer position.
Alternatively, you may choose to move into more specialized compliance roles focusing on complex areas of the business (e.g. Anti-money laundering, Sarbanes-Oxley, or Security and Safety).
Some Compliance Officers may choose to move back into line operations in more senior positions, such as the District Manager for a number of bank branches.
There are several external factors and environmental trends that can influence the demand and qualifications for this role. Following are some of these factors.
Given the highly regulated environment of the financial services sector, there is great attention paid to the inherent costs associated with non-compliance with regulations. The evolution of, and changes related to, the regulatory environment have significant implications for people in the compliance-based roles. Predicted changes to the profession include:
Ongoing regulatory changes will make it necessary for compliance professionals to be adaptive in staying current with regulatory changes. This requires a commitment to continual learning in order to stay relevant in the industry. Compliance Officers will also need to be cognizant of operating in an environment of constant scrutiny and monitoring.
Demand is strong for compliance positions in the Canadian financial services sector. In light of the recent financial crisis, and the already heightened need for compliance and audit, these roles will only grow in significance. The need for more people to understand compliance and audit processes means high demand for both entry level and more senior positions. These positions reach across the financial services sectors and business lines.
The increased controls and regulatory mandates — as a result of Basel II, Solvency II, Sarbanes-Oxley and/or other local regulations — have driven financial institutions to invest substantial financial and human capital resources in compliance activities and compliance risk management paving the way for new positions to be created and a void to be filled by qualified applicants.