As compliance officers, we are often required to answer technical questions raised by the management or business units. Since they would take our answers as advice, we must be very careful and tactful, especially when facing with those "tricky questions".
One of the traps come from those "close-ended questions", where you are required answer only yes or no. This kind of questions force us to give a answer without knowing the full picture. As a key principle of compliance coaching, we must first identify the real problem when handling any enquiry.
Just give you a real example of the compliance coaching dialogue:
Business Head (BH): Is it compliant if we organize a free investment seminar for our current customers? (a close-ended question)
Compliance Officer (CO): It depends on the content and context of this event. Could you give me more details?
BH: We will invite our company's investment experts to talk about the macroeconomy and introduce our newly launched funds? The fund has already been authorized by SFC, so there is no compliance problem. (an improper presupposition)
CO: But have the presentation materials been vetted by Compliance & SFC?
BH: Oh sorry, I don't know this is necessary. (really?) I will submit the powerpoint slides to you. So is it ok now? (another close-ended question)
CO: How are the customers selected? Are they either "professional investors" or "existing clients"? (you know what he is asking about)
BH: All customers are existing clients but they can bring guests who would be our prospective customers.
CO: Then I have a compliance concern about cold-calling if your salespersons approach these guests and invite them for account opening or fund subscription...
Some business people like to fool the compliance officers by asking close-ended questions and giving a very tight deadline for reply. Don't Be Stupid!
In most of the times, business unit's objective of seeking compliance "advice"/ "vetting"/ "endorsement" is to satisfy internal policy of having compliance clearance. But of course, if all the facts are given, they may receive an unfavourable "advice". Therefore, why not take a chance to give limited facts? They will provide extreme limited facts and try their luck. If the compliance officer is not "smart" enough, a favouable "advice" will be obtained. Once non-compliance is identified, say, by internal audit or regulators, they will come up with emails supporting compliance clearnce!!! That's the reality of why business unit pays so much "respect" to Compliance by seeking Compliance's "advice".
ReplyDeleteI think (I have never confirmed my idea with the business people.) the business people do not withhold information intentionally. They simply ask for clearance as a procedural step. CO is expected to give green light or to answer to very senior personnel's questions or to make it happens on your own. They are not seeking CO's advice but taking a green light by coersion.
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