{"id":1574,"date":"2021-06-25T04:12:50","date_gmt":"2021-06-25T04:12:50","guid":{"rendered":"https:\/\/insight.thomsonreuters.com\/sea\/business\/?p=1574"},"modified":"2023-05-14T23:26:01","modified_gmt":"2023-05-14T23:26:01","slug":"compliance-perspectives-leadership-insights-from-senior-compliance-professionals","status":"publish","type":"post","link":"https:\/\/insight.thomsonreuters.com\/sea\/business\/posts\/compliance-perspectives-leadership-insights-from-senior-compliance-professionals","title":{"rendered":"Compliance Perspectives: Leadership insights from senior compliance professionals"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Jamil Ahmed: How financial compliance teams will evolve in 2021<\/h2>\n\n\n\n<h4 class=\"wp-block-heading\">HSBC Singapore\u2019s chief compliance officer, Jamil Ahmed, discusses the skills and mindsets that compliance officers will need to develop as banks explore virtual assets-related products and services in the near future.<\/h4>\n\n\n\n<p>Tech-savvy compliance professionals will be in high demand in the coming years as banks seek to develop virtual assets-related products and services and enhance anti-financial crime processes and controls to address these risks. That\u2019s according to Jamil Ahmed, chief compliance officer at HSBC Singapore, who told Thomson Reuters in a recent interview that he expects \u201cgreater interest\u201d from institutional investors in cryptocurrency and cryptocurrency-type products as a \u201cviable asset class\u201d in the second half of 2021.<\/p>\n\n\n\n<p>Ahmed, a member of Singapore\u2019s AML\/CFT Industry Partnership and Anti-Scam Taskforce, also remarked that financial institutions will increasingly look to leverage blockchain or distributed ledger technology (DLT), which with their properties of achieving consensus across the network and immutability can reduce fraud and manipulation. DLT is a decentralised database of records managed by several participants.<\/p>\n\n\n\n<p>A greater banking focus on products involving virtual assets or DLT will increase demand for \u201cdata literate tech-savvy\u201d compliance officers who understand not only how to manage their potential risks but also how anti-money laundering and counter-terrorism financing standards can apply to them.<\/p>\n\n\n\n<p>\u201cI see virtual assets and DLT being an increasing focus or feature of banking services and products going forward, and the ability to be familiar with and understand what risks those technologies pose is something that compliance teams are going to have to get used to,\u201d commented Ahmed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Data-savvy compliance officers to use regulatory technology to manage risks<\/h2>\n\n\n\n<p>Regulatory technology (RegTech) is expected to play an increasingly important role in supporting in-house risk and compliance teams as they grapple with huge volumes of internal and external compliance data. Numerous financial institutions will be looking to roll out or further develop tools that leverage artificial intelligence (AI) and data analytics to support processes which are data-rich but can be manually intensive and prone to high volumes of false positives. These include core risk management processes such as transaction monitoring, trade surveillance and risk screening processes, according to Ahmed.<\/p>\n\n\n\n<p>The threat of AI displacing roles across banking has been discussed for several years and the deployment of increasingly sophisticated tools in compliance risk management processes may give rise to concerns about the marginalization of compliance professionals across the banking industry. However, Ahmed is of the view that RegTech can strengthen compliance teams, rather than replace them, by providing rapid and reliable analysis of high volumes of data to augment decision making or to help identify potential risks or trends that merit further investigation.<\/p>\n\n\n\n<p>\u201cI think we are a long way away from having AI replicate and adjudicate things in a similar cognitive fashion that a human would do across the broad spectrum of compliance advice provided today,\u201d he said.<\/p>\n\n\n\n<p>He argued that technological advances will instead increase demand for data-savvy compliance officers with strong critical thinking skills. Compliance professionals who understand the principles of data analytics and who are able to engage with data scientists that develop risk monitoring tools will be \u201cvery, very useful\u201d, he said.<\/p>\n\n\n\n<p>\u201cBeing comfortable with these tools and algorithms, how they work conceptually and how they can assist decision making in compliance risk management is going to be really important.\u201d<\/p>\n\n\n\n<p>Having a strong understanding of core banking products and processes and being able to \u201cthink on your feet\u201d when discussing new business propositions, will also be increasingly important, he said. This can enable compliance officers to ask \u201cvery insightful questions\u201d that can help them to determine potential risks and raise red flags as needed at the appropriate stage in the product development lifecycle.<\/p>\n\n\n\n<p>\u201cHaving the right mindset when it comes to being able to identify risks and being able to then come up with sensible decisions around those risks is really key,\u201d commented Ahmed.<\/p>\n\n\n\n<p>That curious, inquisitive and open mindset will further benefit compliance professionals as they engage with industry developments and evaluate changes in financial crime typologies, legislation and regulatory requirements.<\/p>\n\n\n\n<p>\u201cThis is not a role where you can be insular and forget what is happening in the wider industry or in the world; financial crime is global problem,\u201d said Ahmed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Experiences of balancing business growth with risk appetite<\/h2>\n\n\n\n<p>As chief compliance officer for the Singapore division of a global bank that offers a wide range of products and services to individual and corporate clients, Ahmed\u2019s role carries a lot of responsibility. It will soon also include sharpened accountability for leading a core management function in a bank, in line with Singapore\u2019s new individual accountability and conduct regime that comes into effect on 10 September 2021.<\/p>\n\n\n\n<p>An important aspect of his role is striking the right balance between business growth and risk appetite. \u201cIf businesses are too conservative in their outlook relative to competitors, it may impact the frontline in terms of their opportunity to grow the top line, but if we\u2019re too aggressive on risk management, that can create the potential for further challenges in terms of regulatory compliance issues that may arise in future,\u201d he said.<\/p>\n\n\n\n<p>For Ahmed, achieving that balance requires some reflection, good judgement and the use of technical skills to achieve the best output or decision. It also means articulating to businesses the risks posed by a particular product proposition that they wish to pursue.<\/p>\n\n\n\n<p>\u201cThe key thing is how views are aligned between the compliance function and the business so that both collectively arrive at a common understanding and appreciation of the risk,\u201d he reflected. \u201cIf the residual risk is beyond comfort levels from a compliance standpoint, a common consideration is whether the risk can be reduced through the implementation of additional controls or through any other risk mitigating actions to bring it within appetite.\u201d<\/p>\n\n\n\n<p>Compliance teams are often able to manage the risks \u201ceffectively\u201d by clearly articulating in conversations with business leaders their position and the risks posed by the product proposition. A debate typically ensues on how compliance and business representatives can collectively bring the risk factor of the product proposition down within the risk appetite and implement enhanced controls as needed.<\/p>\n\n\n\n<p>\u201cIn many cases you can have that open conversation and dialogue with the business and come up with additional controls and plans to reduce the risk level, but there may be certain instances where we have to advise against a certain proposition,\u201d reflected Ahmed.<\/p>\n\n\n\n<p>In situations where an agreement between compliance and business heads cannot be reached, he said, banks often have internal processes for managing differences of opinion between the first and second line defence on a particular proposition.<\/p>\n\n\n\n<p>As the responsibility for financial crime compliance rests squarely on Ahmed\u2019s shoulders, it is naturally a concern that weighs heavily on his mind. \u201cWhat generally keeps me up at night is the constant need to ensure that processes and controls are robust and evolve to adapt to the changing landscape of financial crime and regulatory compliance issues,\u201d he said. \u201cTherefore, I continue to focus on how we can closely monitor the risks within the business in those areas.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Challenges of managing compliance risks under \u2018hybrid\u2019 working arrangements<\/h2>\n\n\n\n<p>Ahmed heads a 90-member compliance team in Singapore whose activities include advising the business on financial crime risks, regulatory compliance issues, reviewing suspicious transaction alerts and conducting financial crime investigations.<\/p>\n\n\n\n<p>After the Covid-19 pandemic forced senior and junior staff alike to work from home for extended periods of time, the risk of data leakage and internal fraud increased. However, Ahmed found that those risks were largely managed by reinforcing and enhancing existing processes and controls, with some enhancements. \u201cWhile the inherent risk has gone up, we haven\u2019t necessarily seen that translate into major events or major disruption-type issues across the industry,\u201d he said.<\/p>\n\n\n\n<p>Guidance issued by the Monetary Authority of Singapore (MAS) in January on how financial institutions should address their cyber risks has given Ahmed some comfort that his firm\u2019s processes and controls for technology risk management are aligned with best practice.<\/p>\n\n\n\n<p>As his compliance team gradually settles into the new normal, Ahmed intends to formalise a hybrid approach to working arrangements, with staff working both from home and the office. He does not see the compliance team shifting to a 100% working from home model.<\/p>\n\n\n\n<p>\u201cGiven that so much of what we do results from collaboration and relationships from both within the department and amongst businesses, the best way that I think to establish and strengthen those bonds is really through face-to-face interaction,\u201d he said.<\/p>\n\n\n\n<p>Those workplace relationships will be particularly important for new joiners, who will need careful management to ensure they fully integrate into the organisational culture while regularly working from home.<\/p>\n\n\n\n<p>\u201cThe aspect that I\u2019m mostly focused on is how we can ensure that people are brought into the culture and are comfortable with raising their hand for any sort of question or raising any concerns,\u201d said Ahmed. \u201cThat is something that takes some courage, confidence and relationships.\u201d<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Interviewee&#8217;s profile<\/h4>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"150\" height=\"150\" src=\"https:\/\/insight.thomsonreuters.com\/sea\/business\/wp-content\/blogs.dir\/4\/files\/sites\/24\/2021\/06\/jamil-ahmed.png\" alt=\"\" class=\"wp-image-1575\" \/><\/figure>\n\n\n\n<p>Jamil Ahmed is Chief Compliance Officer at HSBC Singapore. He is responsible for leading a diverse team of over 100 compliance professionals covering Financial Crime (AML, Sanctions, Fraud Risk and Investigations), Regulatory Compliance and Conduct.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Jamil Ahmed: How financial compliance teams will evolve in 2021 HSBC Singapore\u2019s chief compliance officer, Jamil Ahmed, discusses the skills and mindsets that compliance officers will need to develop 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