HOUSE, Issue 39

Welcome the 39th edition of House as we continue to see less hiring at an MD level in financial services, while middle management (AVP/VP) recruitment remains very buoyant. The big move in financial services was the resignation of Philipe Vollot from Deutsche Bank to join Danske Bank in Copenhagen as their new Head of Compliance. We have also had the recent news that John Cusack will be stepping down as Global Head of Financial Crime at Standard Chartered from January 2019. His role will be shared between his two existing deputies, David Howes (Singapore) and Patricia Sullivan (New York). At Wells Fargo in Hong Kong, Leeann Morentz takes on James Sayko’s financial crime risk management leadership role as James moves back to the states with the bank.

The corporate sector has continued to hire more people globally, most notably Scott Schools ending up at Uber! The extent to which compliance and regulation has permeated the corporate sector has really ramped up. It is one of our themes this month as we examine what the corporate compliance officer does, how it differs to their banking peers and if there is any movement between the sectors. We also look at Reg-tech this month, are financial services firms investing in it yet? And, are we seeing the rise of the technology compliance officer?

Corporate Compliance - What do they do? and where do we find them?

We completed three searches in the corporate compliance space last year and many of our financial services compliance contacts have asked us, “what do they do? Where is the market abuse? Insider trading? Conflicts?”

They are asking us not because they doubt the need for compliance in this sector, but rather because they’re interested if the move across can be made.

From Goldman to Walmart? From Prudential to Uber? Can the move be made? The short answer: not yet...

The majority of the moves we are seeing into corporates are coming from the legal sector. Often a corporate hires their first compliance officer in a time of distress and it’s often someone with a litigation or dispute resolution background. A prime example is Scott Schools, an experienced litigator moving from the Department of Justice in the US. Jay Jorgensen, the Global Chief Compliance Officer for Walmart, was previously a partner in the litigation team at Sidley Austin LLP.

The key skills clients looked for in the searches we conducted were:

- Compliance Framework - the ability to map rules to business units
- Ethics, the ability to create an ethics programme, implement it and gain buy in from the business
- Excellent knowledge of FCPA, UK Anti Bribery Act, GDPR and relevant global regulation.

The initial outlook appears bleak for those trying to transfer from the financial services sector, but many parallels can be made with the advent of compliance departments at financial services firms c2001. Then too, the first compliance officers came from a regulatory and legal background, often to deal with litigation. However, as compliance departments evolved and rapidly grew we saw a real rise in compliance officers coming from a variety of backgrounds.

As a result, while we don’t anticipate global compliance teams numbering in the thousands, we will see a more diverse work force and the growth of Fortune 500 and FTSE 100 firms compliance functions into the hundreds.

RegTech, RegTech, RegTech - The rise of the Chief Compliance Technology Officer...

The hedge funds Point 72 and Bridgewater have been quite vocal in their intentions to automate compliance and introduce AI. The large investment banks have all been talking about making big changes in their compliance departments, but have we actually seen them make this change yet? Citigroup have invested heavily in outsourcing compliance, it is known they have the goal of offshoring all non-revenue producing personnel.

As costs are cut to compliance departments and we enter the era of BAU, what changes can be made by technology and who are making them? A simple google search of RegTech and Goldman Sachs, JP Morgan, UBS and Credit Suisse produced few results. What is the technology that compliance and financial crime compliance departments are investing in?

It is a difficult task to single out any specific solution, instead we should consider key processes that RegTech can address. Data aggregation, record keeping, analytics, document management and reporting are a few key areas in which RegTech could reap significant savings.

From a hiring standpoint, what we have seen are banks beginning to directly address the potential benefits of RegTech through the hiring of ‘Compliance Technology Officers’... One APAC Chief Compliance Officer we spoke to recently described an internal move from technology as the ‘best hire they ever made’. There is still a lot of movement in this space, but we predict the role of the Compliance Technology Officer to take on more and more importance in the years to come and it’s imperative that Chief Compliance Officers upgrade.