How technology can lighten the load for compliance officers

By Sanday Chongo Kabange, The Red Flag Group®

The role of compliance officers is changing – from being auditors to business advisors. More than ever before, compliance officers are being asked to partner with channel sales, procurement and other departments to help them choose the right business partners, guide them on expanding into new territories, and advise them on making the best decisions. As a result, compliance officers are managing larger, more complex workloads and must support key strategic business objectives.

In turn, compliance officers should embrace technology solutions to assist them in managing their compliance programmes more effectively and provide value to the business. To date, compliance as an industry has been slow to adopt technology due to a lack of understanding of how technologies can be used to support business needs and not properly embedding technology into organisational processes. For instance, compliance officers managing a global programme should implement a technology solution that allows for multi-language use based on the organisation’s countries of operation, and third parties. Compliance officers implementing an onboarding technology must ensure the solution is embedded to the business – meaning, that use of the technology is aligned with the overall third party selection process, and key stakeholders understand why compliance screening must occur before a party can be engaged.

Compliance officers seeking to conduct due diligence or background checks must understand which technologies can help them most. For example, some may think that database screening is useful for beneficial ownership checks. In reality, database screening is only suited for screening a party and any known owners. For beneficial ownership checking, a form of enhanced due diligence may be more appropriate.

How can technology help?

As advisors to the business, compliance officers need to be aware or at least understand how technology can lighten their load and support their efforts. Here are some ways technology can add value to compliance and the organisation:  

  • increases efficiency – Technology allows compliance and the business to issue questionnaires to third parties digitally, and allows for tracking, auditing, remediation and due diligence through a single system.
  •  reduces exposure to compliance and integrity risk - Technology helps to track and monitor the conduct and activities of partners. Any suspicious issues can easily be flagged before impact. For organisations using ongoing monitoring technology, they can immediately receive automated alerts as soon as a potential red flag is raised.
  • improves performance - Technology helps to improve performance by speeding up processes which could take longer when done manually – like third party onboarding, database screening and ongoing monitoring of compliance challenged entities and individuals.
  • enhances flexibility - Some organisations may have markedly different requirements to onboard different types of third parties. The right technology platform can utilise conditional workflows to ensure each party undergoes the right process and checks based on its role and risk profile.  
  • helps to cut costs - Technology helps to cut costs by reducing onboarding time of third parties, and also helps compliance identify issues before they arise or negatively impact the organisation.

What compliance officers need to be aware of in order to stay at the forefront of the business

Once it is decided that certain technology can help to ease the load on the compliance function and help to manage a compliance programme, the next step is to build a business case to sell to the C-suite, business and procurement.  Some things to consider:

  1. conduct a technology needs assessment by identifying all the existing technology and data you have currently in all your systems. Then highlight deficiencies that can be fulfilled by a new technology solution.
  2. build a business case to take to the board to secure funding. Remember that C-suite executives want to see how a new piece of technology helps the company financially. Consider leveraging recent enforcement actions to show the board what can happen if nothing is done.
  3. identify any process changes that will need to be made and work on an implementation plan, plus any communication and training that will be needed to inform all affected stakeholders.
  4. evaluate and select a vendor.  Effective compliance and ethics programmes extend throughout the entire organisation, so you will want to be sure to engage other departments in the selection process. Execute your plan as a collective project across your organisation to foster collaboration and help break down any silos that you may have in your organisation.

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Key forces forging the future in technology and compliance

The following forces have been identified as playing a key role in forging the future of technology in compliance.

  • Blockchain - Blockchain can help the compliance function monitor transactions, validate data on partners, and support identity verification. It can also help to secure sensitive or highly confidential data through security keys requiring multiple authentication (cryptography). 
  • Data integration - Data integration can help compliance officers access data located in different repositories and locations through one centralised portal. For instance, customer data, third party corporate details, questionnaire responses, employee data, business intelligence and due diligence reports stored in different platforms and location can be accessed through an integrated unified platform.
  • Predictive analytics - Predictive analytics can help compliance functions identify potentially risky partners, suppliers, distributors, channel partners and employees. This is done by analysing historical and current data to identify possible repeat offenders. A partner that has a history of engaging in illicit conduct is highly likely to engage in similar practices. Thus, predictive analytics can help to flag such issues before impact.  
  • Automation - Automation can help to limit human involvement with certain processes. For example, compliance functions can automate their due diligence ordering process or set up a red flag alert signaling system that triggers automatic compliance screening or due diligence requests when an issue is flagged. Additionally, automation can help send out reminders for third party contract renewals or repeat due diligence after a preset time. Humans may not remember but the compliance function can automate this process.
  • Artificial intelligence - Artificial intelligence can help to record, track and manage whistleblower reports with very limited human engagement. Whistleblowers are unlikely to report incidents of misconduct if the reporting platform requires significant human involvement. However, they are more likely to report through anonymous platforms guided by artificial intelligence.

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Technology enhances a compliance officer’s ability to manage their programme

While technology will never replace the human factor in the compliance function, it has made the adoption of compliance across the organisation smarter, more productive and potentially much faster. Technology optimises workflows, cuts down costs, helps predict potential risks, strengthens data security and guides decision-making. While it may seem like a challenge to generate buy-in across the organisation and secure funding, compliance officers must focus on showcasing the value of technology to all key stakeholders in the organisation and collaborating with these groups to implement and align technology with key business processes.

 

You may find these interesting:

Using technology to manage your compliance programme

Preventing a toxic work environment through whistleblowing

Why a holistic approach to compliance pays dividends

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