The 7 Biggest Challenges of Working As A CCO

The Chief Compliance Officer (CCO) is one of the most important members of the management team in an organization. The CCO of any organization has an extremely challenging job at hand.

They are responsible for overseeing and managing compliance issues within their company and have to ensure that the organization complies with regulatory requirements.

And facing the pandemic on top of their own unique challenges means has been nothing short of a trying time for those working in corporate compliance jobs.

We explore how changing business dynamics have led to numerous new challenges for CCOs. Let us first start with a primer on the primary duties of a chief compliance officer.

Major Responsibilities of a CCO

The CCO is responsible for the following essential duties:

• Developing, implementing, and managing the company’s internal compliance program
• Communicating these policies and train employees
• Investigating any incident that violates legal or regulatory requirements
• Coordinating with federal and state regulators
• Planning and implementing the company’s risk-related programs
• Monitoring, measuring, and evaluating the level of compliance across the organization
• Reporting to the board on compliance-related issues ranging from policy development to enforcement and implementation

With a handful of tasks under their purview, it is natural for compliance professionals to encounter some roadblocks. Here are the seven biggest challenges of working as a CCO:

1. Risks Associated With Artificial Intelligence

Technology will play an essential role in compliance in the coming years. As such, professionals and industries need to be prepared to embrace the changing dynamics of compliance.

Technology has led to the automation of repetitive and time-consuming tasks, thus making things easier for compliance officers.

However, CCOs need to recognize the risks associated with over-reliance on computer-based solutions and implement an appropriate balance between technology and human activity.

2. Challenges Of Investigations

Investigating incidents that violate the company policies or legal requirements is one of the responsibilities of the CCO.

However, often the CCO is not in a position to recruit the best possible team to assist them in the investigation, and this puts the security of the entire company at risk.

Given that many organizations are functioning at reduced capacities in the aftermath of the global pandemic, organizing an efficient team to work on financial investigations has become a big challenge for CCOs.

Moreover, compliance investigations are complex and need to be conducted carefully, which makes it imperative that a skilled set of unbiased members be selected for the task.

3. Ambiguity In Seniority

One of the major challenges faced by a CCO is that the job is not well-defined.

In an ideal situation, the CCO works with the CEO, the board of directors, and other employees on compliance-related issues. However, often the CCO doesn’t have the independence or authority to take major decisions.

While the CCO should ideally be regarded as a senior executive of the organization and hold the title of executive vice president or perhaps senior vice president, this is not the case in many companies.

In organizations in which CCOs do not report directly to the board, it becomes difficult for the officer to develop and implement compliance policies and procedures.

4. Volume And Pace Of Regulatory Change

Regulations in the financial sector are changing by the second, and the sheer volume and pace could be overwhelming.

The number of financial regulations applicable across industries is ever-increasing, and it comes as no surprise that often CCOs find it hard to cope with the fast-changing financial environment.

Regulatory change management is a component of compliance. Many different institutions are releasing regulation policies, and in the financial services, the ever-rising volume of regulatory changes is hard to keep up with.

5. Lack Of Acknowledgement As A Business Leader

The job of a CCO is a highly challenging one. They work in tandem with the senior management teams in companies to plan, implement, and monitor compliance procedures and policies.

To be efficient in their role, a CCO is expected to be well-versed in the fields of finance, law, accounting, investigations, and compliance. Also, it is expected that they possess sharp business acumen.

However, despite their expertise, CCOs do not have a well-defined position in companies and are often not accorded the level of seniority their position calls for.

CCOs from the financial or legal departments of the company lack experience in management roles. They might find it challenging to work with senior managers who do not acknowledge their unique skill sets.

6. Money Laundering

Since we are talking of the challenging compliance requirements of an organization, let us first discuss the main roles of a CCO.

What is a chief compliance officer, and what are their main responsibilities? A CCO is often the one who manages financial regulations and anti-money laundering (AML) programs of companies.

They have to take protective measures against financial crimes to the company and inform and train company employees against financial crimes.

Besides detecting and reporting suspicious transactions, they also have to report to the senior management regarding AML compliance policies.

The changing business landscape during COVID-19 has made the job of AML compliance officers even more challenging than before.

7. Transaction Monitoring

Transaction monitoring is one of the key responsibilities of CCOs. Ideally, all companies should be fully aware that reporting in a regulated business is very important.

Transaction reporting enables regulators to avoid fraud, anti-money laundering, insider trading, market abuse, and market manipulation.

Transaction monitoring and reporting could be extremely challenging for CCOs if it is not implemented well in the company. Submitting accurate and timely transaction reports improves the credibility of an organization.

While transaction monitoring is not a new concept, it has gained renewed attention.

Given the multiple benefits of effective transaction monitoring, it is time to streamline the transaction monitoring processes in organizations to ensure the company’s reports are up-to-date and error-free.

In Closing

The year 2020–marked by the unfolding of the COVID-19 pandemic across the world–has brought about unprecedented changes in the ways organizations function.

With changes in the business landscape, the compliance requirements of businesses also change and evolve to reflect the environment they operate in.

In a severely uneven and unreliable environment, CCOs can brave these new compliance challenges with quick thinking, determination, and foresight.