What Is a Compliance Officer?
A compliance officer is an employee of a company that ensures the firm is in compliance with its outside regulatory and legal requirements as well as internal policies and bylaws. The chief compliance officer is usually the head of a firm's compliance department.
Compliance officers have a duty to their employer to work with management and staff to identify and manageregulatory risk. Their objective is to ensure that an organization has internal controls that adequately measure and manage the risks it faces. Compliance officers provide an in-house service that effectively supports business areas in their duty to comply with relevant laws and regulations and internal procedures. The compliance officer is usually the company’s general counsel, but not always.
Key Takeaways
- A compliance officer is an individual who ensures that a company complies with its outside regulatory and legal requirements as well as internal policies and bylaws.
- Compliance officers have a duty to their employer to work with management and staff to identify and manage regulatory risk.
- In the event of a regulatory breach, it is important for the compliance officer to have appropriate disciplinary measures in place to avoid a future recurrence.
How Compliance Officers Work
A compliance officer is an employee of a company who helps that company maintain policies and procedures to remain within an industry's regulatory framework. The duties of a compliance officer may include reviewing and setting standards for outside communications by requiring disclaimers in emails or examining facilities to ensure they are accessible and safe. Compliance officers may also design or update internal policies to mitigate the risk of the company breaking laws and regulations and lead internal audits of procedures.
A compliance officer must have a thorough knowledge of the company and an awareness of where possible regulatory breaches may occur. It is essential that the compliance officer effectively communicatethe company’s key ethical principles and compliance regulations. Compliance officers organize regular training sessions for employees to communicate key regulatory changes and updates. This is particularly important in a heightened regulatory environment where change is constant. The compliance officer must work with business units and management to ensure appropriate contingency plans are in place that set guidelines on how to respond to a possible compliance breach.
In the event of a regulatory breach, it is important for the compliance officer to have appropriate disciplinary measures in place to avoid a future recurrence. It is the compliance officer’s duty to ensure continual monitoring and review of compliance procedures to help identify possible areas where improvements could be made.
Compliance officers are expected to provide an objective view of company policies. Influence by other employees, including management and executives, to overlook infractions may result in significant fines or sanctions that may lead to financial loss or even business closure. Larger companies typically have a chief compliance officer (CCO) to direct compliance-related activities.
Compliance officers play an active role in managing a firm's risk and reducing financial crime.
Becoming a Compliance Officer
A compliance officer requires a unique skill set to ensure a company’s operations fully comply with regulations and procedures. It is critical that a compliance officer possesshigh ethical standards and honesty as this individual is responsible for ensuring a company adheres to required regulations.
Compliance officers continually reviewthe work of others, and so it is essential they have polished people skills and work well with colleagues. Compliance officers need to be reliable, showing commitment and unity in relation to a company’s regulations and procedures, and it is crucial that they demonstrate this to colleagues, leading by example. Compliance officers must also have strong attention to detail. They need the ability to notice actions that may result in liability.
A position as a compliance officer or manager is not typically deemed as entry-level. Bachelor's degrees are normally a minimum requirement, and some employers may look for advanced degrees, like a law degree or amaster's degree in business administration (MBA), especially to qualify for a higher-level position.
Compliance officers in other sectors have the opportunity to complete the Certified Compliance and Ethics Professional Program (CCEP) through the Society of Corporate Compliance and Ethics (SCCE). The CCEP requires participation in an intensive prerequisite course along with the successful passing of an exam. Similar designation and certification courses are available through the Ethics and Compliance Officer Association (ECOA).
According to BLS's May 2020 statistics, annual salaries for compliance professions range from $40,160 to $115,220, and hourly wages from $19.31 to $55.39. A lower-income earner in a compliance officer position is more likely to have minimal past work experience or hold a degree not directly related to the industry in which they work.
A worker with a higher income often has substantial tenure in his position or has earned advanced degrees in business, accounting, law or finance. Of course, those who work at a large institution are more likely to have access tofringe benefitsthat increase the total compensation package, with chief compliance officers possessing those on a par with other C-Suite executives.
