Compliance for banks is all about analyzing a mountain of regulatory requirements related to the jurisdiction it operates in. If a bank operates in more than one jurisdiction, chances are, there are several regulatory issues it must take care of. Compliance for banks is critical for spotting, investigating, and resolving any concerns that may lead them toward non-compliance.
A lot goes into improving a financial institution’s compliance culture. It requires thorough documentation of rules and regulations, comprehensive training systems to ensure employees understand the importance of compliance, a centralized system to store compliance-related information that is easily accessible to employees, the constant communication of the changes in laws and regulations, incentives to keep employees motivated, and of course a robust system of reporting ethical concerns. Here’s how banks can make way for a solid compliance culture:
Documenting Policies and Procedures
Each institution has its own unique needs in terms of policies, regulations, training, reporting, and more. Identify the areas of ethics your institution must work on. Document important rules, regulations, policies, and procedures in your employee handbook. Once you have all your compliance-related information in one place, it gets a lot easier to train your employees to stick to your institution’s compliance culture.
Ensuring Employees Know the Rules and Laws
Training and other related ethics literature are essential for educating employees about compliance. But it is accountability that fully completes this education circle. In other words, when employees acknowledge (and sign) that they have understood your company’s banking procedures and policies, they take the responsibility to be accountable for their conduct.
In addition, banking services see a constant flux in their regulatory landscape. This means your procedures and policies will see constant changes as well. Each time these changes occur, it is critical you communicate them with your employees. This way, you can ensure your employees comply with new rules in their everyday jobs.
Train All Employees Thoroughly
Compliance training is hands down the most important building block for a robust culture of compliance. It educates employees about all the relevant policies and procedures. The right training also enables employees to translate this knowledge into action. Through training, employees understand how to make ethical decisions and how to approach ethical dilemmas in within the workplace.
While creating a solid compliance training program is vital to create an ethical culture, it is equally important to ensure employees retain the information that they acquire. In other words, for your compliance training to work wonders, it is critical that you make it as engaging, interactive, and fun as possible.
Try using roleplay, quizzes, gamification, and more to ensure employees participate in the training alongside grasping the essence of it all.
Make Information About Regulations Easily Accessible
Aside from offering solid training, it is important to make information about rules and regulations easily accessible. This enables employees to find, understand, and practice ethical conduct with ease.
Moreover, banking regulations see constant changes. There can be a mountain of information that needs to be conveyed to the employees each time a change (or changes) takes place. To make this information accessible, it is critical for banking services to have a centralized solution to store all the documents securely.
Compliance Starts from the Top
Employees are often expected to be on their best ethical conduct at work. A great way to reinforce a culture of compliance involves bringing the change from the top down. In other words, your institution’s senior leadership, board memberships, and chief executives must become employees’ role models. In addition, the top management must also communicate these values regularly. It is their responsibility to work hand in hand with compliance teams to implement compliance on a regular basis, monitor it in the workplace, and personally address any ethical risks that may emerge.
Communicate New Regulations and Changes Effectively
It is inevitable for banking services to see endless changes in compliance laws and regulations. If the management fails to communicate these changes with employees in a timely manner, chances are, an institution gets exposed to several risks of non-compliance. On the other hand, when employees are aware of these changes, they can ensure they comply with new rules and regulations in their everyday jobs.
Offer Incentives for Ethical Behavior
Incentives are a great way to motivate your workforce to maintain a culture of compliance. When a manager notices an employee “doing the right thing”, they must stop and acknowledge it instead of letting it go unnoticed. Small incentives such as publicly praising an employee for good practice, giving an afternoon off, or other bonuses can be a great way to encourage collective ethical behavior.
Make Way for Efficient Reporting Mechanism
Let’s face it: most employees hesitate to report misconduct due to a fear of retaliation. But what could be the main reason behind it? The answer? A lack of a solid anonymous reporting system. An anonymous reporting system such as an ethics hotline enables employees to report misconduct without having to worry about any negative repercussions (such as losing their job or jeopardizing their careers).
Take Immediate Steps to Stop Misconduct
Aside from offering the right compliance training and building a solid reporting system, it is critical to ensure your institution sets the wheels in motion once a complaint has been received. Immediate action and fast resolution of ethical concerns show employees that your institution takes compliance very seriously. This, in turn, encourages more people to report any ethical concern they witness or experience.
Final Words + Additional Factors to Consider
Aside from the points discussed above, here are a few other important elements to consider when improving your company’s compliance culture:
- Align compliance with your institution’s integral business management functions. Create a solid partnership between both business managers and compliance teams to align the goals of both departments.
- Align compliance with your institution’s risk management function. This can be done by having your compliance teams collaborate with senior business management to ensure no area of regulatory and legal issues goes unexplored.
- Make sure you consult with professional compliance officers before implementing any new security policies. This helps ensure your institution’s procedures and policies are fully in line with what the regulators expect.
From detecting the missing pieces to crafting a solid system of reporting, improving a bank’s compliance culture can be an incredibly complex process. Compliance, in itself, may seem like a daunting topic – especially when there is so much at stake when a situation of non-compliance arises.
Ethico makes it incredibly easier to handle compliance for banks. Get in touch with us today to implement the best compliance practices for a lasting culture of compliance.