How to Set-up a Compliance Function and Make it a Strategic Partner to an Organisation

Abstract

Over the past few years, we have witnessed a great deal of corporate scandals from financial and non-financial institutions which were caused in part by failures of corporate culture, ethics and non-compliance with laws, rules and regulations. These incidents resulted in massive regulatory censorships including fines, administrative and penal sanctions. Worse still, these incidents resulted in major damage to the reputation of the companies involved. Many of these cases were driven by shareholder and management drive to meet business targets and most of the cases suggest that these organisations suffered from inadequate or even absent basic compliance cultures. Hence, the importance of having a strong compliance culture cannot be discounted if an organisation is to achieve its long term objectives. In this article, I will be discussing the basic requirements for setting up a compliance function in an either established or a start-up organisation. I will outline the basic elements of Compliance Risk and will provide a simple yet effective approach of setting up a Compliance Function anchored on the pillars of compliance (1) culture – doing the right thing; and (2) following applicable laws, rules and regulations – doing things right.