Compliance Officers Who Do Not Report Wrongdoing Can Expect Enforcement Action 4 June 2015 Compliance officers who fail to report wrongdoing at their firms to the Financial Conduct Authority (FCA) should expect to face enforcement action, according to a former senior regulator. Paul Sharma, managing director at Alvarez and Marsal, a professional services firm, said the tough regulatory environment, which has seen record fines handed to firms and individuals, meant compliance officers needed to have an honest dialogue with regulators. Sharma, who has held senior positions at the Financial Services Authority and Bank of England, said the core of the compliance officer's role led directly to the regulator. "One's responsibility cannot simply be discharged by informing senior management [about problems] and then being overruled. "We will see enforcement actions against compliance officers for not 'fessing up early enough and their challenges being overruled," he told ACAMS's annual European conference on May 29. HOLDING THE LINE Compliance officers needed to form views on important issues at their firms and make sure their opinions were not overruled, he said. Sharma expected a slew of FCA enforcement cases in many different areas now its resources had been largely released from its benchmark-rigging investigations. He predicted a more rapid turnaround from investigation to enforcement and said the regulator tended to indicate where its priorities lay. "You cannot criticise the FCA for failing to flag in advance the areas it is concentrating on," he said. Thematic reviews were significant in this respect, Sharma said. Firms that failed to take account of these warnings would find little sympathy. The regulator got annoyed when firms fail to remedy problems raised on previous visits and firms needed to examine the reviews as well as the key priorities in the FCA business plan and focus on possible areas of impact. The FCA only had finite enforcement resources and a firm's handling of a problem could influence whether an issue was taken further by the regulator. Sharma suggested firms might be able to avoid enforcement if they adopted the right attitudes. "Convince them that you really take seriously the matter they are raising and put resources into it," he said. SEA CHANGE Zia Ullah, a partner at Eversheds, said there had been a sea change in enforcement in recent years and that the FCA was much more willing to take forward investigations at an earlier stage. Despite a lack of enforcement action, anti-money laundering had not been given a "pass" because of the FCA's benchmark-rigging investigations. AML was under constant review by the FCA and much activity had occurred 'behind closed doors'.