TUESDAY, 25 JUL 2017

 

CONNECT

Facebook Linked In Twitter
MTN_07/07-10/04_728x90px
GloriaJeans_266x90px
IMH LTD

Lakkotrypis: Cyprus' Best Answer to Turkish Provocations is to Continue with Energy Plans

Anastasiades to Receive UN Envoy in Cyprus

IMH LTD
MTN_07/07-10/04_468x60px

PEOPLE

Daniel Wager: Corporate Governance and Strong Compliance Prerequisite for Success

Daniel Wager: Corporate Governance and Strong Compliance Prerequisite for Success

Daniel Wager, Vice President, Financial Crime and Compliance, Global Market Strategy at LexisNexis Risk Solutions, spoke to Gold about the risks and importance of corporate governance and compliance ahead of the “Corporate Governance Conference”, presented by Infocredit Group and powered by ICSA. 

 

Gold: Failing to meet guidelines for compliance can result in serious consequences for businesses. What are the main risks of non-compliance?

Daniel Wager: Non-compliance threatens a business in three main risk categories:  regulatory, financial and reputational. Compliance failures are usually detected through regulatory examinations, through internal or external audits or through enforcement actions. Typically, weaknesses found by regulators and those exposed through enforcement actions bring the greatest costs. These types of actions generate adverse media, bring large fines and penalties, cause businesses to incur significant legal expenses, and require expensive ‘look backs’ or remediation efforts. Reputational damage resulting from adverse media is hard to quantify, but may trigger a lack of investor confidence, erosion of brand, and loss of business opportunities. Matters exposed in internal and external audits are important to address promptly, as those issues that persist will often find their way to regulatory or enforcement authorities. To respond to compliance failures, companies are often required to divert funds and human resources to corrective actions, and away from revenue-generating functions. It also is worth noting that increasingly, corporations that are minimally regulated (non-banks) are becoming the emphasis of enforcement actions, focusing on bribery and corruption, facilitation of money laundering and sanctions violations.

 

Gold: How do these risks put the sustainability of a business in danger?

DW: Compliance controls and processes put in place in response to compliance failures are almost always more costly than efforts undertaken preemptively. This reality exists because reactionary measures are usually hurried and subjected to tremendous scrutiny from authorities. They are often personnel intensive and solutions are often purchased at a premium. Rapid requirements for implementation mean that businesses need to engage consultants to supplement professional staff.  Additionally, processes developed or implemented in a hurry often generate significant ‘noise’ in the form of false positives, diverting resources to matters that pose no true risk.  All of these implications drive up cost, diminish client experience and devour operating capital. A business operating with this model is not sustainable. When coupled with the aforementioned risks around brand erosion, loss of investor confidence, and loss of business opportunity, it becomes clear that businesses that wait for enforcement to develop compliance governance may be unable to survive.

 

Gold: As the Vice President of LexisNexis Risk Solutions, you focus on Financial Crime Compliance global market strategy. Given the many differences in business practices around the world, is it really possible to enforce a single global strategy?

DW: I think that while a single strategy for compliance is difficult to achieve, there are themes that unify compliance regimes and the goals of most businesses globally. Two of these are financial inclusion and financial transparency, and these are different sides of the same coin. Financial inclusion involves the concept that licit or good actors should be availed of the opportunity to participate in global financial markets. This applies to countries as well as individuals, in that entire countries and the entities residing therein can be painted with a label of suspicion due to the activities of a few illicit financiers.  Companies that seek to grow globally need to be able to use tools that help them distinguish between the bad and the good, so that the latter can transact at minimal risk to the company.  Without these tools the limited history or ‘presence’ of a new company is too often confused with the way an illicit shell company appears, and the new company suffers.  Even more complex is the need to have ways to distinguish between the ‘shell companies’ set up for legitimate reasons of privacy or wealth protection, and the smaller number created to engage in money laundering, corrupt transactions or terrorism financing.

A closely related theme across most jurisdictions is the need for financial transparency. This involves companies having the tools to understand the purpose of transactions, the risks presented by participants in transactions, and the compliance risk posed by their employees, suppliers and partners. Financial transparency permits companies to reduce the likelihood of unknowingly engaging in transactions that create risk, such as purchasing clothing from a manufacturer accused of using child labor, or a fund receiving investment monies that were stolen from elderly victims. And financial transparency enables businesses to balance carefully privacy and transparency to ensure access to markets and reduce friction for licit actors.  

 

Gold: Does good corporate governance and strict compliance guarantee business success?

DW: In today’s compliance environment, I would say that corporate governance and strong compliance are a prerequisite for success, but not guarantees of success.  Few businesses will succeed in the long term if they flout global regulations related to sanctions compliance, money laundering, and corruption.  It also is important to restate that companies that develop appropriate compliance controls on their own terms will likely be more successful than those that develop them in response to enforcement.

 

Gold: The Corporate Governance Conference, presented by Infocredit Group and powered by ICSA, takes place in Cyprus on May 5. How important do you consider it is for professionals from various sectors to attend?  What are they going to learn?

DW: This event plays an important role in bringing people together so that they can learn from each other and from experts in the field. Of particular importance is the representation from diverse sectors, as risk appropriate compliance structures vary from industry to industry, and innovation often results when diverse groups are brought together. Compliance remains a field where there is significant room for new insights and innovation.

MORE ON PEOPLE

Hadassah’s Director General Receives Honorary PhD from Cyprus Medical School

For sharing his knowledge and experience with senior officials in the Cyprus medical ...

Deloitte Appoints Yiannis Leonidou as New Partner

Deloitte has announced the admission of Yiannis Leonidou into partnership from 1st June, ...

Cypriot Sacrifices Not In Vain

The Government’s difficult but essential reforms in the financial and public ...

FROM AROUND GOLDNEWS

   

Cyprus and Turkey among Cheapest Holiday Destinations in Europe

The Post Office Family Holiday Report is based on a ‘beach barometer’ – a look at 12 different seaside extras that families are likely ...
   

Paphos Experience the Best Summer Season

Hotels in Paphos say they are experiencing the busiest tourist season ever, and for the first six months of the year, visitor numbers have broken all previous ...
   

New Law for Payment of Tax Arrears by Instalments Comes Into Effect

The Process of Adjustment of Tax Arrears Law 2017 establishes a procedure for settling tax arrears by monthly instalments. It covers  all nationally ...
   

Leptos Adonis Beach Villas in Paphos

“Adonis Beach Villas”, is an exclusive modern and luxury beachfront development, by Leptos Estates. It is located just a short drive from Paphos ...
   

Anastasiades to Receive UN Envoy in Cyprus

UN Secretary General’s Special Advisor on Cyprus Espen Barth Eide will be received today, June 24, by Cyprus President Nicos Anastasiades, the first ...
   

Anastasiades Announces New €70M Projects for Larnaca

President Anastasiades has announced a series of new projects for the Larnaca District with the estimated value amounting to 70.5 million euro. The ...
   

Lakkotrypis: Cyprus' Best Answer to Turkish Provocations is to Continue with Energy Plans

The best answer that the Republic of Cyprus can provide for Turkey’s provocations is to continue and complete its energy plans, stated Energy Minister ...
   

Cyprus MPs to Attend World Hellenic Interparliamentary Union Meeting in Athens

Members of the House of Representatives have departed for Athens to take part in the 11th General Assembly of the World Hellenic Interparliamentary Union ...
 

YOUR COMMENTS

HEADLINES

MOST POPULAR

PwC_10/07-30/07_300x250px
Primetel_26/04-28/08_300x250px

IMH LTD