Compliance is a hard job. Plain and simple. In recent years it seems that many of those within the field are asked to accomplish more with less as we see budgets cut and staff numbers slimmed down. Not to mention the increasing complexity of compliance as rules and regulations evolve alongside technology. It’s a tough job and often doesn’t receive the recognition it deserves – but nevertheless, its importance should never be understated.
The SEC has released its 2024 exam priorities, which outline compliance areas that will be of critical focus for firms in the year ahead. While exams, in general, can be stressful for Chief Compliance Officers at regulated firms, there are a few things that most compliance departments can do to ease their worries around SEC compliance, not only for the updated 2024 exam priorities but also for the years ahead.
This year, the SEC has broken down its priorities into firm types, as well as focus areas that should be of increased importance to all compliance professionals across the financial landscape. Alongside the new outlined priorities, the Division of Examinations has stated that it intends to enhance engagement through increased fieldwork and other events that aim to assist transparency.
Enforcement actions are typically another source of anxiety that compliance officers are wary of, especially given the busy year the SEC had in 2023. Cases such as HSBC and Scotia Bank made big headlines when they self-reported their violations and then faced millions in fines. It brought up the question of whether self-reporting actually made any difference.
These priorities also remind compliance officers that they have to remain vigilant, up to date, and on top of all the coming changes in the field. That’s no small task. However, the challenge to meet these expectations provides us with an opportunity for innovation and growth.
DOING MORE WITH LESS
For some, all of this talk about exam priorities sounds great, as it provides clarity. For others, it induces feelings of stress, which shouldn’t come as a surprise because this industry is intense. But it’s important to know that, if something is keeping your CCO up at night, it’s probably keeping other CCOs up at night too. In an environment that is continuously evolving and at times can feel difficult to keep up with, it becomes more important than ever that collaborative efforts remain at the forefront of our work.
This brings us to the idea that compliance shouldn’t be thought of as an add-on. It should be woven into the very threads of your firm. Compliance as an afterthought will not work smoothly and effectively. If compliance isn’t integrated into your firm from end to end, it’s time for a revamp. Compliance should be working with you, not against you.
When issues arise, they should be solved promptly and without delay. Mistakes happen but how you deal with them is telling of how prepared your compliance team is. That’s why being proactive is the best way to protect ourselves and our firms.
THE WAY FORWARD
With the SEC releasing its 2024 exam priorities, it’s important to remember that our goal is to balance regulatory compliance with efficiency and innovation. The exam priorities for 2024 combined with the 2023 enforcement actions provide a road map to proactive compliance officers. While the state of the industry is overwhelmingly geared towards increased regulatory scrutiny, the exam priority list tells us where we should focus our immediate efforts while enforcement actions help make the case for a more integrated compliance program.
It won’t always be an easy road but we know it’s a road that’s well worth the trip. The role of a compliance officer is more critical than ever and through collaboration, we can find new ways to change the industry and move everyone forward with confidence.