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Banking troubles show compliance woes

Rachel Wheeler Archive
Governance and compliance efforts within international financial institutions are vital to their continued success. Keeping accountable, making sure data quality is high and holding employees to high ethical standards are all tied together. When efforts fail, according to compliance expert and Reuters contributor Susannah Hammond, there are lessons for others in the field.

According to Hammond, a recent Senate Permanent Sub-Committee on Investigations report on operations at HSBC exposed several problems which could resonate throughout the industry. One of the problems at that institution was unchecked complexity. Hammond reported that the company expanded with little care for compliance programs, even acquiring a Mexican bank with none at all.

Hammond stated that one of HSBC's main failings was its refusal to promote compliance through its corporate culture, preferring to yield to customer wishes rather than be vigilant in its own self-observations. She described keeping compliant as a "core competency," no matter the size of the bank.

Bank failures and poor internal controls have gone together recently. The Harvard Business Review stated that Barclays, currently mired in the Libor scandal, had severe internal struggles with data quality in addition to the ethical violations that have been widely reported and condemned.