In honor of National Compliance Officers' Day on September 26, let's set the record straight on some old and new compliance myths:
New Myth #1: There are no new regulations; the Compliance Officer’s workload must be pretty light right now. Yep, I know some of us just spit out our drink when we read that. Let’s consider that not everyone has an in-depth understanding of what exactly we do. For those reading this who want to be supportive of their Compliance Officer, just know that, while we haven’t had a ton of new regulations become effective (yes, we still had a few), we have existing regulations to contend with.
While compliance responsibilities may be easing from a supervisory perspective, remember there is also legal risk and reputation risk that the credit union (and compliance team) needs to manage! In addition, with some previous guidance being rescinded by the Consumer Financial Protection Bureau (CFPB), we are also left in an interesting predicament of having to understand that impact. We also have to keep a closer eye on lawsuits and how they are changing previously finalized laws. Did I mention the evolution of fraud sophistication, escalation of cybersecurity threats, and keeping pace with new and more complex products and services (artificial intelligence)?
Old, but still relevant, Myth #2: Compliance Officers always try to limit business! Au contraire, mon frère! We really don’t like to limit business! Those who believe this to be true, I would encourage you to think about when the Compliance Officer is typically brought into the process for a new initiative. When we can be included right at the beginning in the discovery phase of a new product or service, we can iron out all the hiccups to implement a compliant program. When we are brought in right before launch, chances are we are going to need changes and maybe even halt the program in order to review the necessary disclosures and processes to ensure compliance. Trust me, we don’t like doing this and it is way more work for us! Please bring us in when you are just starting discussions for a new product or service; it’s better for all of us!
Old, but still relevant, Myth #3: The Compliance Officer tells us we can’t do something, even when there is no regulation that says we can’t! Have you ever heard of a little something called Unfair, Deceptive, Abusive Acts or Practices? Keep in mind that something might be considered unfair, deceptive, or abusive and may not be a violation of a specific regulation! Compliance Officers have a lot of information (Letters to Credit Unions, Legal Opinions, etc.) to digest coming out of federal agencies like the NCUA, along with state agencies. If your compliance officer tells you that something shouldn’t be done or advertised in a certain way and it’s not because of a specific regulatory requirement, chances are it’s in that subjective area of being perceived as unfair, deceptive, or abusive. I don’t personally like to gamble that much, but if I did, my bet would certainly be with the Compliance Officer.
Old, but still relevant Myth 4: I don’t need to worry about compliance, that’s the Compliance Officer’s job! I’ve said it numerous times, whether about parenting or about compliance, it doesn’t matter, “it takes a village!” Long gone are the days when compliance can be handled by just one person! Technology is evolving rapidly, and our regulations are not keeping pace. We need to work in conjunction with our department heads/experts in order to work together to determine applicability. Everyone in the credit union needs to take ownership of compliance; the job is just too big for one person, and there needs to be accountability! We are just the leader of the circus!
Old, but still relevant, Myth #5: Compliance Officers are boring! Well, that is just not true! Maybe because we make stressful decisions, or maybe because we do the things that people don’t always like to do, but certainly that doesn’t make us boring! In fact, I think folks who do compliance are a rare, interesting breed. If you take the time to get to know us, you will realize that we are pretty interesting and definitely like to have a good time (we need to unwind too)! Maybe you should take your Compliance Officer out for lunch to celebrate National Compliance Officer’s Day! You will see just how charming we can be!
New Myth #6: Compliance is a drain on resources, and my examiner hasn’t mentioned anything wrong. Oh boy, there is a lot to dispel here. There are some pretty hefty fines for non-compliance. If we just look at the Bank Secrecy Act, fines can range from $25,000 per day to millions per violation, with criminal liability for willful misconduct. We can already make an argument that your compliance officer is preventing a drain on resources with just that one law. As for waiting for the examiner to find something, you'd better hope it’s the examiner that finds something before a class action attorney or the Financial Crimes Enforcement Network (FinCEN). The truth is that examiners can’t look at everything when they come in for an exam. Are you really willing to take that risk?
Cheers to all the Compliance Officers out there! We see you and I hope your credit union celebrates you this week!