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Who Should Be Your Compliance Officer?

By Blair Rugh 16 May 2018

On several occasions I have had a community bank president tell me that for some reason the bank's compliance officer was leaving and ask my opinion about who should be hired to fill the position. My response is always the same, "Pick a person in your bank that is a real up and comer. Your best and brightest. The person you intend to send to a banker's school. The person that you think may someday fill your shoes." That is the person I would pick if I were a community bank president.


The job of a compliance officer is fairly unique in that it is one of the few positions in a financial institution that gets to see every aspect of banking. A compliance officer has to understand the ins and outs of deposit operations. He or she has to understand retail lending, mortgage lending and commercial lending, to a degree. He or she will work with your marketing folks and your internal accountants, and if you are selling nondeposit products, those folks as well. He or she is also going to have to develop an understanding of the workings and capabilities of your automation systems. In other words, the compliance officer position is the best job in the institution to teach someone the entire gamut of the business of banking.


It is my observation that most CEOs come out of the commercial lending department. That is a world unto itself, but it has nothing to do with the other functions of a financial institution. Many CEOs have to learn the business of banking after they become the CEO. I am not saying that being the compliance officer is going to teach anyone all that he or she needs to know to run any department of a financial institution, but a few years in the job will teach the basics of what each department is about.


Also, be sure to let the person that you select know what you're thinking and what you are grooming him or her for. Let the person selected, as well as the other people in the institution, know that the compliance officer is a valued position. Also, let him or her know that if he or she does the job well, moving on to a higher position is highly possible.


If you follow this strategy, the person you select may have little or no compliance experience. Early on, send the person to a couple of compliance seminars so that he or she can gain an understanding of what compliance is all about. If you do not subscribe to a compliance service, select one that the compliance officer can call on when there is a question that he or she cannot find the answer to. Obviously, I think that the Temenos Compliance Advisory service is the best, but then I am prejudiced. At least once a quarter have the compliance person make a presentation to the Board of Directors so that he or she can get the visibility that you want him or her to have.


Then, when the person has developed the knowledge that you wanted to be gained, don't take the easy path and leave him or her in the job. Move that person to a higher position. Move your next best and brightest in and start the process over again.

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