Search
  • cgunias5

Compliance Committee: What is it and why do you need one?



What is a Compliance Committee?

Like most corporate committees, the Compliance Committee is an extension of the Board of Directors. The Board conveys a portion of its authority to the Compliance Committee to act in their stead and serve as representatives in assisting and supporting the Chief Compliance Officer in managing the Compliance Program. Typical responsibilities for the Compliance Committee include reviewing transaction monitoring rule changes, edits to BSA/AML Program documents, approving policies and procedures, reviewing the annual risk assessment, and assisting in selecting and engaging Independent Auditors.


At its most basic function, the Compliance Committee is a tool and resource for your BSA/AML and regulatory compliance programs. It comprises experienced personnel (see below) who support the Chief Compliance Officer by providing guidance and acting as a sounding board for new ideas or program changes. But most importantly, it is an extra layer of protection for your Company and your Chief Compliance Officer.


Who Should be a Voting Member of the Compliance Committee?

Ideally, the Compliance Committee should consist of at least 3 to 5 voting members that bring unique compliance considerations and experience to the conversation. Each member should have several years of experience in their field of expertise.


The chairman of the Compliance Committee will usually be the Chief Compliance Officer or someone appointed by the Board, such as a Board member. The other voting members will consist of senior-level compliance experts (internal staff or an external party such as a trusted consultant). They could even include department heads of functions that interact closely with compliance, such as Customer Service, Information Security, Marketing, and Operations.


As your compliance program grows, you may want to identify individuals that bring well-rounded compliance views to be non-voting members of the Compliance Committee. Examples would be team managers, members of the Financial Intelligence Unit, or senior members of the Onboarding team. Identifying up-and-coming staff and inviting them to join as non-voting members provide two critical benefits; 1) It shows the employee that the company is taking an interest in their overall development, thus encouraging them to work harder for the company, and 2) it allows the committee to grow when needed, by promoting non-voting members into full voting members and retaining the experience and knowledge of the committee’s history and past actions.



Document, Document, Document!

The Compliance Committee should meet at least quarterly and as needed for emergency situations. These are official meetings and must be documented via meeting minutes from the time a quorum is declared to the time the meeting is adjourned. All discussions and decisions of the committee must be recorded in the minutes, especially when the committee approves a policy or procedure. A best practice is to assign a non-voting member (or a junior voting member) to act as the “Scribe” for the meeting and be responsible for recording the meeting minutes.


Remember that the meeting minutes must be provided to the Board since the committee is essentially an extension of the Board, and regulators could also request the minutes. So, it’s essential to document the minutes properly. Minutes are usually taken to demonstrate the intent, crucial points of discussion, and actions taken by the committee, not as a verbatim transcription.

This Seems Like Overkill.

While this seems like a lot of effort for something that is not technically required, it is a helpful way to ensure that decisions regarding the Compliance Program are sound and genuinely the best for the company. This helps the company stay compliant and provides an extra layer of protection for the Chief Compliance Officer. How, might you ask? Because when a Chief Compliance Officer utilizes a Compliance Committee made up of experienced compliance experts and business leaders from across the company, the Chief Compliance Officer is no longer acting in a bubble and being a “power onto themselves.” They are acting via a “committee” and seeking the guidance of other professionals. This makes a significant difference if an adverse action impacts the Company, as one person acting in a bubble and making a wrong decision without oversight from others; these bad decisions can quickly create negative situations that can impact the company or create negative social media. A committee of several professionals will usually identify risky or bad actions before they can escalate to negatively impact the company. As the old saying goes, two (or more) heads are better than one.


The Bottom Line

A Compliance Committee is a great benefit to helping your Compliance Program stay compliant with its legal obligations. It shows regulators and banking partners that your Compliance Program is maturing and that the company is investing in a culture of compliance. Heritage Risk & AML Services has experience setting up and running Compliance Committees.

If you want to know more about how a compliance committee could benefit your compliance program, contact us today to discuss your options! We also serve as trusted advisors/external SMEs for companies that want a voting or non-voting compliance professional to service on their own committees and as the “compliance expert” for the Board of Directors.


Heritage Risk & AML Services has over 20 years of experience in BSA/AML Compliance. Heritage Risk & AML Services will set up a time with you to answer questions specific to your business model; send your inquiries to chris.gunias@heritageaml.com, or set up a meeting invite through Calendly https://calendly.com/gunias-heritageaml.

13 views0 comments