A Christmas Carol Perspective

In contemplating the duties and obligations of a compliance officer, I am quickly reminded of A Christmas Carol by Charles Dickens and, in particular, the three spirits that visit Ebenezer Scrooge: the ghosts of Christmas past, present and yet to come. The reason is simple: Compliance officers are faced by the professional challenges of the past, that is, operational activities that have already happened; matters presented to them for current assessment; and those requirements “yet to come.”

Past

Consequently, initially compliance officers need to continually be gazing in a rear view mirror. They must ask themselves, what is important to monitor and stay abreast of? Various subjects fall into this realm.

For example, compliance officers need to continually be reviewing not only laws and implementing regulations that touch their immediate duties, but also be sensitive to regulatory agency pronouncements through opinion and policy statements that amplify laws and rules. Indeed, it is the ongoing educational process that broadens and deepens a compliance officer’s ability to assist in guiding the institution down the path of adherence to the rules that govern operational programs.

Another area in the “past” that’s critical to compliance interest is the operational environment that supports member services. All parts of the operation that’s running for members day to day must be continually reviewed to ensure they comport with the regulatory policies that govern them.

And, legal observance is from two perspectives. Compliance officers must ascertain first, does the program conform to current regulation and, second, have there been aspects of the program that do not conform to regulation because a particular aspect of control was simply overlooked in instituting the program?

Present

There will always be compliance concerns presented for consideration during the course of the daily ebb and flow of credit union activities.  “Can we do this?” or “What if we …?” are the sorts of questions that arise. These issues may relate to the implementation of a program, how a particular action impacts a given member, or the propriety of “tweaking” a program to implement a change.

Certainly, the “present” embraces the myriad questions relating to marketing. And, marketing avenues/media have vastly expanded so that not only is the substantive content of a message important, but equally the means, avenue and presentation of the content.

Future

And, finally, compliance “yet to come” offers an array of concerns for the compliance officer. Those charged with keeping the credit union on the straight and narrow have to continually scan the horizon for new legal obligations being considered and proposed.

Critically, this obligation extends far beyond just monitoring the Federal Register on a daily basis. It extends to state-level rule-making, understanding what areas of interest other regulatory agencies are scrutinizing, and most certainly being sensitive to media reports of newsworthy events that in one way or another may come to impact a credit union’s operations.

An example is this year’s Congressional interest in retail data breaches and the potential legislation, both federal and state, that may well result from this focus.

Another facet of compliance yet to come is related to future institutional regulatory examinations. A compliance officer must be in tune with the prospects, the timing and extent, of an examination by the National Credit Union Administration, a state regulator or the Consumer Financial Protection Bureau.

Recognizably, these evaluations do not involve a hide the ball assessment. Exhaustive statements of inspection standards exist, combined with checklists and the experiences of other credit unions. A compliance officer should not allow the CU to be blind-sided. Instead, compliance officers should be reviewing procedures and practices in comparison to stated regulatory standards to ensure the institution conforms with current regulatory requirements.

Finally, compliance officers must be attentive to the possible future direction of the CU, including proposed new services and products for the membership, and acquire the knowledge necessary to support it. Certainly, compliance concerns that have not been considered in the initial conceptualization of a program need to be addressed up front. Raising such matters later may well create obstacles that are either difficult or impossible to surmount.

But it isn’t enough simply to point out the regulatory obstacles at various points in a project’s development. Too often, compliance officers present obstacles without offering solutions to overcome them. Today’s compliance officers must help move the business forward by helping formulate and develop the solutions to “get the project to ‘yes.’”

Just like the spirits that visited Ebenezer Scrooge pointed to the past, present and future, so too do the professional responsibilities of a compliance officer. The responsibility of the position demands that the professional occupying it be attuned to all points of the surrounding environment and advise the CU well on how best to provide services to its members.

CUES member Stephen A.J. Eisenberg was EVP/general counsel for $17 billion Pentagon Federal Credit Union,  Alexandria, Va.