By continuing your visit to this site, you accept the use of cookies. These ensure the smooth running of our services. Learn more.


Current compliance laws and regulations strangle the business for honest professionals

When one analyses the laws and regulations relating to compliance that professionals must abide by, either from international sources (FATF, European Union…) or national sources (circulars from the body responsible for the prudential supervision), these are both costly and/or do not reach the expected goal: the result may be a Potemkine Village : apparent laws, regulations, training, compliance function… but a pragmatic effect i.e. a limited effect in practice. Compliance is much more a question of “touch” than a question of knowledge.

Anyway, it is not fair to impose strong requirements when professionals do not condone issues and are willing to tighten up the ship of dysfunctions in their company and their financial centre: when tolerated negligence has unfortunately replaced pragmatism and when professionals including auditors are upset when dysfunctions are stated or condone issues even from public and official sources, this means they do not have the Professional standing they claim they have.

Furthermore, as far as the SOX requirement relating to the institution of whistleblowing is concerned, how can the subsidiaries be reliable in their ethics when every professional in the centre deny or condone even public and official issues? In this perspective, the Luxembourg case in very interesting : a dishonest employee has more opportunities to he hired than an honest one, which can be traced in official sources in this small centre where everyone knows everyone else and what others are doing, which would allow a kind of self-policing in effect and where professionals and administrators are not clear with offences such as forgery, use of forgery, false balance sheets, use of false balance sheets or unauthorised use of corporate property. There are many "red flags" that demonstrate the observation of the GRECO in 2004 that everyone sheltering behind acomplicit silence rather than running the risk of being considered indelicate (Cf. GRECO, Evaluation report on Luxembourg, 14 May 2004).

Such behaviours and thoughts that are not repudiated are not acceptable in a business world where transparency and ethics are more and more required and where means of communication allow the dissemination of news worldwide in a fraction of second. How can such professionals be aware of what money laundering and corruption are if they are not clear enough with basic offences?

Compliance Recs should be probably adapted to financial centres and financial institutions taking into account the ethics and compliance awareness: the more credible is a centre/company the less pressure it should have.

But there should be no tolerance for professionals that have replaced pragmatism by negligence and who deny dysfunctions, which standardize bad management and bad governance with all potential risks. By excluding those who do not condone even public or official issues, professionals demonstrate that their ethical and compliance framework turn out to be charade, which weaken the credibility of financial centers and financial institutions worldwide.

12:30 Posted in General | Permalink | Comments (0)

The comments are closed.