Digital CSR (Video): Compliance programs as a way to foster good corporate governance in the financial sector

A new video lecture of the series Digital CSR is now available. It was a privilege to host a special guest lecture within my Corporate Governance module at Coventry University Law School, which was delivered by Gabriella Margherito and Michael Knight-Robson that are two recognized experts in anti-financial crime compliance in the banking sector. The lecture, which was entitled “Compliance programs as a way to foster good corporate governance in the financial sector,” focused on the crucial role that compliance departments play in the complex governance structure of financial institutions examining the strengths and weaknesses of the anti-financial crime compliance system as it is currently structured and implemented.

The first video (see below) includes the lecture of Gabriella Margherito, who is an ACAMS and ICA certified SME Advisor on AML, Quality Assurance, CDD/KYC. She is expert in financial environment control as it relates to the first and second line of defenses of corporate and investment banking. For several years she worked at the Bank of America Merrill Lynch leading the bank’s AML Policy Implementation and Governance Oversight.

In her lecture, Gabriella illustrates how the three lines of defense of anti-money laundering (AML) compliance are commonly organized in the banking sector and what are the main responsibilities of the officers involved in the 1st and 2nd lines of defense. Then she explains how the current asymmetric distribution of the client’s data and knowledge may adversely affect the effectiveness of the entire AML compliance program. In analyzing what are the major causes of failure, she illustrates how a simple mistake in AML risk identification may be followed by a protracted series of potentially serious errors. In particular, during the lecture Gabriella identifies the following relevant issues proposing possible solutions: The disconnection of data sharing between the 1st and 2nd lines of defense; the fact that the employees involved in the 1st line of defense lack expertise on red flags and clients types; and that monitoring and testing activities carried out by the 2nd line of defense as well as assurance activities carried out by 3rd line of defense address potential mistakes when it is too late.

The second video (see below) includes the lecture of Michael Knight-Robson, who is a Senior Manager in BDO’s Financial Services Advisory and leads the Financial Crime Advisory team. Micheal has worked as a financial crime specialist for over eight years. Over the course of his career he has also supported a Corporate Compliance Monitor in overseeing a bank’s implementation of a US Department of Justice Deferred Prosecution Agreement.

In his lecture, Micheal illustrates the key components of an anti-financial crime compliance framework and focuses on the four main corporate governance elements involved: accountability, culture, the tone from the top, and risk management. He also covers the role of the UK Corporate Governance Code and highlights the corporate governance failures identified over the course of the latest skilled person reviews. He also explains the basic structures for escalation of risk and information management.

You can find these video lectures also at the following locations:

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