MBR JULY ALL

Malta Business Review
RISK MANAGEMENT
RISK MANAGEMENT
Malta Business Review
structure
for Success
by George Carol
CC: The tsunami of regulations that will
continue to emerge from EU will make this
difficult for the compliance department
to follow and ensure that they are being
properly complied with. Increased head
count in compliance will still not solve the
problem. Also the talent in compliance
combining regulatory knowledge and
practical implementation are rare. This will
push the need for further development of
compliance monitoring systems with artificial
intelligence solutions. In the future the role of
the compliance officer will be in the software
development and integration of powerful IT
systems. We will see a time when compliance
will totally incorporate the digital evolution.
MBR: What does FINTECH stand for and
represent?
CC: FINTECH is the future of financial services
whereby the operational processes and also
controls are automated, partially or fully,
through the use of technology. The pace of
technology and its use is accelerating at a
very fast rate. Use of artificial intelligence
and robotics will become more a reality of
financial services.
MBR: The terminology and definition of
compliance is extensive. Can you briefly
describe BLOCKCHAIN, the regulators pace
of evolvement, and the importance part of
preservation of reputation?
CC: Blockchain is the technology on
which cryptocurrency has been built. This
technology has the power to leave a trace of
each process or asset as it moves hands. This
will achieve a higher level of transparency but
this technology has the power to facilitate
transactions on a peer-to-peer level without
the need of intermediaries such as banks. No
wonder this technology is considered as the
disruptive technology of the future.
From what I have read, heard and
experienced, the regulators seem to be
sceptical about the use of this technology or
cryptocurrency. In part, this may be due to the
lack of understanding of how this technology
really works. Also the regulators were too busy
understanding and implementing all these
regulations coming out of the EU. However,
I still believe that appreciation of Blockchain
and digitisation can also be the future tools
of how regulators can monitor the industry
more efficiently and effectively.
Still it is important to keep in mind that Bitcoin
has been linked with money launderers, drug
traffickers and paedophiles. Yet, Blockchain
cannot be avoided as it will be part of our
lives. By properly regulating it, the technology
is intended to be used for good and legitimate
scopes. Such will preserve a country’s
reputation – at least in part. MBR
All rights reserved / Copyright 2017
Non-profit organisations are not immune to reputational damage.
Recently we saw FIFA a major institution in football hindered by its
corrupt members and bad governance. Community interest institutions
or companies need to be transparent, have codes in place and effective
controls. This has made compliance not a function for commercial
entities but also for non-profit organisations as part of the presentation
of the reputation and to keep the purpose of the organisation alive.
Claire Camilleri personally considers compliance and good corporate
governance as a mission and a passion at the same time. In this interview
Claire Camilleri Gauci, Director at Aid Compliance, tells us just why
keeping updated with regulations, networking staying close to reality
are essential for effective compliance.
MBR: What can you tell us about the
development of compliance and in what
way compliance plays a major role in the
control structure of an organisation?
CC: Post financial crisis we have experienced
a stream of directives and regulations from
European Union and an increased role of
EBA, ESMA and EIOPA, which have moved
compliance from an operational role to a
strategic function both physically and in spirit.
Having said so, compliance has become an
important part of the corporate governance
mechanism but it is not the only component.
Business to thrive need the right combination
of strategy, internal control, positivity and
enthusiasm.
MBR: How have things changed on the
regulatory compliance, legal affairs and risk
management fronts over the two decades
you have been in compliance and at Aid
Compliance?
CC: Over 20 years I have seen the start of a
single regulatory body in Malta and the final
transposition stage of all EU regulations prior
to Malta joining the European Union. At that
time compliance was limited in scope.
Nobody anticipated the devastating impact of
the global financial crisis, the fall of Lehman
Brothers or the Madoff scandal. Inevitably
such events pressured legislators and
regulators to introduce more regulations.
Hefty fines by the regulators and reputational
damage caused by ‘name and shame’ have
underlined the risk of non-compliance as a
financial burden that has to be avoided for
the prosperity of the firm. All these elements
have pushed the Compliance Office from
back office or ‘behind the desk’ stereotype
to the person that is part of the life of the
executive meeting.
this technology has the power to
facilitate transactions on a peerto-peer
level without the need of
an intermediary such as banks
MBR: How does this form part of the internal
governance, especially where compliance is
a risk area?
CC: Compliance and legal risks should be seen
as part of the risk management framework.
When these areas are seen as a risk, one is
able to effectively and efficiently determine
which regulations effect the company, the
financial impact of regulations as a result
of non-compliance, and how these are
effectively mitigated. If compliance is well
managed it is the first line which can define
and reinforce governance.
MBR: What is the underlying rationale of
the compliance function?
CC: It is important to recognise that the
compliance function deals with people. The
Compliance Officer and the Department
should advise, educate and inspire the
culture and which reflects in fair, honest and
professional dealings with the clients and
rest of the society including regulators. Being
practical is also critical to ensure the business
remains in perspective.
MBR: Which industries or sectors is
compliance gaining importance?
CC: Compliance is gaining importance across
various sectors not only financial services,
listed companies and pharmaceuticals which
are the classic examples. The Gaming sector
is one example where it has seriously evolved
Claire Camilleri Gauci, Director at Aid Compliance
in terms of the need of compliance. This
was pressured by anti-money laundering
regulations, general data protection
requirements and responsible gaming, just
to mention a few. However, we are seeing
compliance in other sectors such as sports, or
in areas such as environmental compliance.
At the end of the day, increased regulations
have impacted every industry not as a result
of the pressure exerted by policy makers or
regulators but also by the public outcry for
social responsibility.
MBR: Can you tell us which areas or
industries are maturing in terms of
compliance?
CC: Gaming is a sector which has matured not
only in terms of compliance. We are seeing
a steady increase in the engagement of
professional and experienced non-executive
directors who are able to bring the ‘control
mindset’ on the board table. Also, internal
audit is increasing in demand in case of large
scale companies.
MBR: How do you define the AID brand, its
achievements, and its future?
If compliance is well managed it
is the first line which can define
and reinforce governance
CC: AID Compliance has been developed
to bring high-end professional compliance
and internal audit in a practical manner. The
team is composed of highly professional
individuals with years of practical experience
and different backgrounds. Innovation and
business sensitivity has distinguished AID
from others. Since its inception in 2014 the
Company has become a renowned named
in financial services and we are gaining
momentum in gaming and cyber security
audits. We are also developing other areas in
compliance such as sport.
MBR: How does technology influence and
impacts compliance?
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