The compliance curmudgeons

The tensions that exist between those who regulate and those who are regulated are as timeless as Shakespeare. So it's hardly surprising that the first annual risk-based compliance survey conducted by Operational Risk magazine and risk consultants Protiviti points to potential conflicts that will arise from the implementation of business continuity, corporate governance, and anti-money laundering regulations.

Indeed, it seems that bank executives are just a bit cynical about compliance – about both the cost and the logic behind some of the initiatives thrust upon them. Meanwhile, regulators seem to be churning out tons of the stuff – rules, laws and guidance.

So just how will the concept of 'risk-based compliance' change all this? It sounds good, but look more closely. A regulator's top priority may not even appear on a firm's radar screen. Money laundering is a good example – until September 11 kicked AML programmes into high gear, for many banks those who are now deemed to be 'high risk' were previously labelled 'high return' customers. So, it seems, although the concept of 'risk-based' regulation sounds enticing, it will take a lot of work both by the industry and supervisors to prove that it isn't just what we're used to, wrapped up in a different package.

Ellen Leander, Editor