eFinancialCareers

The department that keeps everyone on the straight and narrow.

If you want to work in compliance, you’ll need sound judgement and a healthy respect for rules and regulations. Compliance professionals interpret the rules set by the state regulators and ensure banks operate within them. As well as interpreting the complicated and ever-changing external rules that these regulators lay down, the compliance function creates a system of internal rules to apply the regulations. It then communicates those internal rules to the bank’s employees and makes sure they abide by them.

Compliance is more than just ticking the boxes – compliance teams work can cover any areas, including implementing new regulatory requirements and post implementation reviews; conducting compliance health checks; benchmarking compliance systems against industry and peer best practice; developing tools to measure, monitor and report on compliance issues and reducing the risk of regulatory intervention. The compliance function is usually split into teams. These include money laundering specialists, training specialists, monitoring specialists, and advisory and product specialists.

Trends

The clout compliance carries is on the rise globally, although in Australia it’s largely a niche segment within the financial institutions and banks.
The independent government body regulating banks and other financial organisations in Australia is the Australian Securities and Investments Commission (ASIC), which has regulated financial markets, securities, futures and corporations since January 1991.
As well as reporting on unscrupulous financial planners and insider-trading cases, ASIC protects consumers from schemes and scams.
In January this year, the organization unveiled a scheme they revealed as "the most outrageous financial scheme that's too good to be true".

It was a “Ponzi” scheme run by Guiseppe Mercorella and offered 3%-6% return per month. Such schemes are named after Charles Ponzi, who swindled millions after emigrating from Italy to the US in 1903. Ponzi schemes offer high returns to lure investors, but are doomed to collapse, as the only source of income is additional investors – as more people are lured into the scheme, fake "dividends" are paid. The Australian-based scam netted AU$216.9 million from investors, who ultimately lost AU$76 million.

Roles and careers

Jobs in compliance vary, depending on the area in which you work. If you opt for money laundering, you’ll spend your time on the look out for suspicious transactions.
For example, if someone pays cash for a large quantity of bonds, it is likely to merit your attention, particularly if that person has never dealt with the bank before. Money laundering teams check the identity of the parties involved and ensure the money came from a known and reasonable source. When the circumstances seem suspicious, money laundering officers report their doubts to the Australian Crime Commission which investigates tax fraud. The job of compliance training specialists seems a bit tame by comparison. While money-laundering teams are identifying financial fraudsters, training teams preach the compliance message to the bank’s employees. They create and present training courses explaining what the rules and regulations are, and why it is that bankers need to respect them.

Monitoring specialists look out for infringements of rules and regulations that suggest employees are up to no good. Traditionally the realm of junior compliance staff, this role has seen much of its remit taken over by computers. As the head of compliance at one European bank points out: “Our staff send and receive about three billion messages every day. They could never be monitored by humans, but they are monitored by intelligent computer programmes that can spot unusual activities, such as dormant trading accounts that suddenly resurrect themselves.”

If monitoring is the least exciting category of compliance, working as a compliance advisor is the most exciting, and usually pays the most. Compliance advisors interpret the intentions of the regulator and apply them to particular business areas. An increasing number are product specialists who offer advice on particular types of financial product. Product specialists are situated on, or at least near to, the trading floor. They tell traders whether or not a particular trade can go ahead and suggest alternatives that will be satisfactory to the client. Compliance product specialists need to know a lot about trading and the products they’re advising on. Some, but not all, are ex-traders. Compliance-specific graduate training schemes used to be rare, as were entry-level jobs. Some Australian recruitment specialists, such as Hudson Recruitment, along with placing candidates in roles, offer their own graduate programs specialising in compliance.

Pay

Like other areas of the so-called back office, pay for compliance professionals is rising as banks realise their importance, try to hire more of them and find there aren’t enough to go around. According to research from specialist recruitment company Ambition, there is scope for in compliance to earn AU$220K plus as a manager or head of compliance, a tidy sum for a role considered less glamorous than a front office role.

Skills

For roles in regulation and compliance, candidates should ideally have a degree which is finance related, combined with studies in econometrics, statistics, actuarial studies or risk management; or a law related degree such as a major in commercial law or a Bachelor of Laws; or a Business/Commerce degree combined with information systems, logistics or even engineering.

• Kevin Jarvis form Robert Half International says that compliance professionals are often hired from legal backgrounds.
“To be on top of compliance, ideally a candidate should have some legal training,” he says. “Working in compliance does require a thorough understanding of Basel II, and the Sarbanes-Oxley Act – these are important areas now as a lot of Australian companies are affected by these regimes.”

• Matthew Gowan, Senior Manager of Hays Banking, agrees: “Legal skills are highly desirable in compliance. A background studying economics is also useful.“

• Compliance professionals need to be intelligent and methodical, and not afraid to speak their mind. David Kemp, a development and communications director in the legal and compliance department at ABN Amro in London, stresses that they also need strong personalities. “We need people with the confidence to stand up to people in the business and remind them of their duties,” he says. “This can be difficult. For example, when an investigation is being conducted, compliance staff might sit in judgment on people on the next desk.”