MACO is to become the recognised standard-setting body for the accreditation, certification and qualification of knowledge, skills and competences of Compliance Officers serving in the Maltese financial services sector. It will also act as a single professional industry voice on matters
related to compliance in Malta.

MACO Values are as follow:

Awareness

Issue papers of interest from time to time such as for example on the Role of Compliance Officers in FinServ in Malta

Communication

Upkeep of online forum for members. Open platform for third party training activities.

Education

Update circular to members. Training events (for members and non-members) in collaboration with sponsors.

Presence

Issue of position papers/reactions to proposed legislation/regulation. Social events.

Recognition

MoU with MFSA and MITC. Networking with sister Organisations and Associations. Sponsorship
 

Membership of MACO will provide you with a wide range of tools and resources to help you achieve your professional goals.


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The mission of MACO is to create professional education and knowledge standards for Compliance Officers serving in the Maltese financial services sector, enrich the professional culture and enhance both Maltese and international relations and alliances.

MACO Mission Statement

Insight News

April 18, 2019

Compliance culture – What is the challenge?

Culture is arguably the most beneficial asset a business can have: it can impact on performance, reputation, profit and growth in equal measure. So much has been written about culture in recent years that we are in a position now where most businesses and business leaders understand its value. Compliance culture, especially in financial services, is a really important element that can impact on the wider cultural challenges that a firm could face.   There have been plenty of examples of how certain practices reflect a poor compliance culture that can negatively impact on a business. Back in 2012, the former UK regulator the FSA censured Bank of Scotland over serious deficiencies in its systems and controls, emanating from a corporate culture that ‘strongly focused on revenue rather than risk adjusted returns’ . The bank even adjusted targets incentivising employees to regard ‘risk management as a constraint on the business rather than integral to it’. Despite the fact that many regulators have made culture a key priority in their respective business plans for the industry, the intervening years have not eradicated poor compliance culture practices at prominent banking organisations.   A more recent example in the investment banking arm at Deutsche Bank shows a governance system which effectively creates internal competition. The various departments in the investment banking division have developed their own systems and processes that have resulted in a siloed way of working.   Each silo will lobby the sales team asking them to persuade the bank’s customers to trade its own products rather than those of its rivals. It is incredible to think that departments that operate within the same organisation would view one another as rivals, but this is exactly what is happening.   It is apparent, though, that Deutsche is well aware that its compliance culture needs to improve, and is making changes accordingly. Deutsche is also not alone here: many other organisations are suffering similar tests. Let us not forget the Forex manipulation case from a few years ago that involved several global players including Barclays, Citigroup, JP Morgan, UBS and The Royal Bank of Scotland, all of whom continue to face cultural challenges.   In fact, a lot of the fallout from the 2008 financial crisis, including Forex, has been the driving factor behind this focus on conduct and culture. Since the financial crisis, US banks have paid more than $200 billion in fines and settlements that specifically relate to questionable behaviour by financial institutions.   It is great that organisations are finally recognising the important role a positive compliance culture can have on its business. What remains now is for organisations to implement changes to encourage a positive culture to grow. Understanding that there is no quick-fix is important – widespread change within a single organisation can take time. What we are talking about here, though, is establishing widespread change across an entire industry, or even multiple industries (think VW emissions scandal ).   The appetite is most definitely there, it is just that the pathway is perhaps a little unclear – so here are a few factors to take into account. Understand what the regulator's expectations are and keep pace with regulatory changes. Ensuring the regulatory function is properly resourced is crucial in this regard. Tone from the top is a term that has been around for a few years now, and it is as relevant now as is it ever was. If senior management set the correct tone of behaviour a positive tone will filter down to employees, demonstrating what is expected in terms of conduct on a daily basis. Employees must be properly trained on a firm’s internal policies and external regulations , and this understanding should be reviewed periodically to embed the learning. Adopting a mix of training techniques, including e-Learning, case studies and webinars, can ensure all employees have an opportunity to adopt a learning style that best suits individual needs. Reward employees for reflecting the firm’s culture in a positive way. It is a fact that employees will be more motivated to behave in a certain way if there is the potential for personal and professional gain. Promote an environment where employees feel comfortable reporting incidents. It is all about promoting transparency throughout the firm, making the employees feel as if they are all part of one team.   These are just a few ideas and they will vary from one business to the next in terms of how influential each one may be. Their impact in helping to develop a compliance culture is, however, unmistakable. You might also like: 10 ways to instil a culture of compliance How important is company culture? The fundamentals of integrity This article forms part of the   #BigCompConvo   - Join us as we explore and debate the latest challenges and issues facing you and regulatory and financial crime compliance professionals all over the world. If you’d like to contribute an article as part of the   Big Compliance Conversation   get in touch with us at contributions@int-comp.org
April 12, 2019

Anti-corruption compliance programmes have never been more important

Danger in distraction: Anti-corruption compliance programmes have never been more important   Take a moment to look beyond the turbulence of current affairs and traverse the terrain of a global anti-corruption trends monitor. What you will see, from a vantage point set back from the day’s headlines, may surprise you. Despite daily disappointments and significant setbacks in a seeming sea of chaos, the tide continues to turn against corruption.   Let’s look back over the past 12 months.   On the streets and in the ballot boxes, anti-government protest against political corruption had profound consequences. History has taught us to be sceptical of the motives and likely delivery on anti-corruption promises by politicians on the campaign trail, but the power of public opinion is being noted by ruling parties around the world.   In less than a year, we’ve seen citizens taking to the streets to protest corruption in Dominican Republic, Mongolia, Montenegro, Peru, Romania, Russia, Tahiti and Ukraine. In the first three months of 2019 we’ve seen the presidential inauguration of Jair Balsonaro in Brazil, the election of Nayib Bukele in El Salvador (‘There’s enough money when no-one steals’) and of Zuzana Caputova in Slovakia (‘Let’s fight evil together’). Despite diverse political persuasions, these are leaders with one thing in common: a strong anti-corruption stance.    And what of those former statesmen and women replaced by a new wave of leaders? Many are already serving as cautionary tales - if not time in jail. If we included ministers and senior government officials on our list, we’d have a veritable alphabet of countries whose recently replaced political figures are the subject of current judicial scrutiny. Restricting the list to former heads of state in trouble, this past year takes us on a tour of Argentina, Bangladesh, Brazil, Croatia, Colombia, El Salvador, Egypt, France, Guatemala, Kyrgyzstan, Malaysia, Maldives, Mongolia, Pakistan, Peru, Romania, South Korea and South Africa.   Lessons are being learned. Columbia, Greece, Italy, Myanmar, Rwanda, Sri Lanka, Solomon Island and Tunisia are just a few countries where more stringent laws and new programmes have been drafted and devised to net corrupt officials.   You may not agree with all his methods, but you should credit Chairman Xi with his unrelenting commitment to rooting out government corruption in China.  Beijing’s Qincheng maximum security is overcrowded with disgraced Communist Party officials who have been convicted of bribery and dereliction of duty. His stated determination? To avoid the fate of ruling parties elsewhere, whose seemingly unassailable majorities collapsed due to a catastrophic loss of public support arising from government corruption.   Russia may be perceived to be among the world’s most corrupt countries, but 1 303 state officials were fired for suspected violation of corruption rules and loss of trust in 2018.   The kids may not be alright. The offspring of former presidents currently also serving as cautionary tales include sons (Angola, Argentina, Egypt, Equatorial Guinea, Liberia, Mozambique, South Africa, Thailand) and daughters (Angola, Peru, Uzbekistan). In different ways each are finding the spoils of their inherited influence less enjoyable with their privileged protection removed. Spouses and siblings? They would require their own list altogether.   Climate change, at global and organisational levels, took centre stage . Yes, some governments dialled back on sustainability and human rights issues, easing regulatory compliance pressure on corporations. But the governance mantles they shed are being taken up by other influential players.   Second and third tiers of government used their mandates to impose compensatory regulations within their jurisdictions. Corporations themselves came out as active proponents of principles and practices we previously assumed they were complying with but not committed to.     Powerful sovereign wealth and large pension funds continued to shift large sums towards investments in ethically-run corporations and sectors less associated with social and environmental harm.   As ‘us and them’ polarisation seemed to reach a peak, high-profile sexual harassment claims raised awareness of gender-based abuse of power and discrimination. This prompted a focus on creating ‘speak up’ cultures in the workplace – encouraging those who would otherwise remain silent to report all forms of unethical conduct.   Hollow victories were exposed. The glare of the anti-corruption spotlight on mega sporting events persists post-Rio. Our attention has been drawn to irregular bidding affecting the choices of host city, if not also stadium construction, from Japan to Qatar.   More heroes became zeroes. Adding to the fury of sports fans, who may have resigned themselves to corruption in athletics, cycling, cricket and soccer, were revelations suggesting that victories we shared with top sporting achievers in codes like tennis and badminton were similarly tainted.   We’ve finally been able to put a face to the name ‘failed state’. Venezuela. While some may use this national tragedy to argue for or against a particular economic system, we must not forget the role played by high-level corruption that was essentially unmasked by the sharp drop in the oil price in 2014.   There’s no taking the foot off the corporate anti-corruption compliance pedal. The past year has seen significant reputation damage and stinging regulatory enforcement actions against corporations who call Australia, Canada, Denmark, France, Germany, Sweden, Switzerland and the United States home - all countries that fare well on the Corruption Perceptions Index.   Despite early anticipation that the current administration would ease its foreign bribery enforcement actions, the US Foreign Corrupt Practices Act (FCPA) continued to exert a profound influence on corporate compliance practices around the globe. Consider just two facts: Nine of the current top ten FCPA enforcement actions of all time now feature foreign corporations, with settlements costing them between $412 million and $1.78 billion. These penalties include ill-gained profit ‘disgorgement’ that can accompany a highly-prized ‘declination’ to prosecute.   A record $2.89 billion was paid in FCPA-related Department of Justice (DOJ) and Securities Exchange Commission (SEC) enforcement actions by 16 companies in 2018. Most of these were not US corporations. The enforcement of its anti-foreign bribery legislation does not need to be inconsistent with an ‘America First’ philosophy when the penalties are being paid by corporations in France, Japan, Canada, Israel, Brazil and Switzerland.   In the UK, 2018 saw the first successful prosecution of a company for failing to prevent bribery in terms of The Bribery Act, highlighting the importance of having meaningful and onerous ‘adequate procedures’ in place to prevent bribery.    Whistleblowing legislation proliferated and an ever-increasing number of insiders from companies in foreign lands reported unethical conduct by their employers to the US SEC whistleblowing programme. Namibia, Rwanda, Kosovo and Australia are just four countries that enhanced whistleblower rights, which will also be the subject of EU-wide protection in the near future.   The big print? Anti-corruption enforcement agencies sent a clear message to the corporate world that there is no resolution without remediation. Moreover, the harshness or leniency of the penalties will vary proportionately to the measures taken to co-operate and comply. That is, fully co-operating with investigations, starting with voluntary disclosure of course, and putting in place comprehensive ethics and compliance programmes to deter the likelihood of repeat offence.   If you doubt the impact of anti-corruption enforcement, give a thought to some of the sectors feeling the pinch as conspicuous consumption becomes a synonym for unexplainable wealth: estate agents who made a living selling now-devaluing prime property in London and New York to anonymous shell companies, private jet suppliers to Saudi Arabia and luxury watch manufacturers in Europe, to name a few.   There’s no hiding behind the corporate veil. CEOs and company presidents who have already vacated their offices this year due to governance failings include Nissan’s Carlos Ghosn, Swedbank’s Birgitte Bonneson and Wells Fargo’s Tim Sloan.   Luckier are those in one of the world’s fastest growing professions – compliance. Reports out of Copenhagen are that Danske Bank alone is increasing its number of compliance and anti money laundering officers by 600. Packages being offered to compliance specialists are rising steadily there and elsewhere.   The anti-corruption field is notable for the high esteem in which its civil society organisations are held. In 2018, as Transparency International turned 25 it further strengthened its influential position. This included being a go-to for corporate compliance experts seeking guidance on corruption risk assessment from its outstanding research reports and guidelines.   What is without doubt is that an effective ethics and compliance programme is being entrenched as the best line of defence against the unwelcome attention of enforcement agencies and loss of business reputation. And so it is that we see the turn of the tide; that point when organisations decide to embed pre-emptive anti-corruption practices that will in turn have a positive impact on every level of society.   Learn more about the Specialist Certificate in Anti-Corruption Penny Milner-Smyth is the principal author of the ICA Specialist Certificate in Anti-Corruption     You may also like: When it comes to CDD - what challenges do AML professionals in financial institutions face? Skills and Attributes of a Compliance Officer What are the 6 benefits of studying for an ICA qualification?   This article forms part of the   #BigCompConvo   - Join us as we explore and debate the latest challenges and issues facing you and regulatory and financial crime compliance professionals all over the world. If you’d like to contribute an article as part of the   Big Compliance Conversation   get in touch with us at contributions@int-comp.org
April 12, 2019

Standard Chartered $1.1 billion enforcement action: what lessons can we learn?

On Tuesday 9th April 2019, it was announced that Standard Chartered has agreed to pay more than $1 billion to US regulators and the UK’s Financial Conduct Authority (FCA). This is due to the resolution of a long-running investigation into allegations that the bank repeatedly violated US sanctions on Iran and failed to establish effective anti money laundering (AML) controls. This activity actually took place between 2007 and 2014, after the activity for which Standard Chartered was fined $300 million in 2012. They agreed to pay $947 million to the US authorities, including the US Department of Justice, for processing transactions in violation of Iranian sanctions; additionally, the FCA has handed down its second largest fine of £102 million to the bank for failures in AML controls. Standard Chartered said on its website that they ‘accept full responsibility for the violations and control deficiencies’. What can we learn from this? It has been reported that Standard Chartered has been involved in substantial remediation since mid-2013 and has been working hard to improve its sanctions compliance programme and AML controls. Therefore, the assumption is that they are aware of their mistakes and what must be done to ensure that they don’t happen again. However, what are the lessons that the rest of us can learn from this case? 1. The majority of the transactions that violated Iranian sanctions were conducted by two former employees of Standard Chartered. Despite the fact that the bank enacted a policy in August 2007 suspending new Iranian business, these two employees still wilfully conspired with customers of Standard Chartered Dubai to help them conduct USD transactions with Iranian entities using deceptive means. They also helped Iranian nationals located in Dubai open commercial bank accounts, with the knowledge that in some instances the commercial entities were fronts for Iranian businesses.   In addition, compliance employees in the United Arab Emirates were aware of the sanctions risks but did not take adequate steps to identify the location of customers at the time that the payment instructions were submitted.   Lesson: Ensure that all members of staff have had appropriate, relevant and effective training so that they are not only aware of the risks, but the consequences too. In addition, senior managers should fully understand their regulatory responsibilities regarding financial crime and embed a culture of compliance i.e. implement a ‘tone from the top’. A good culture cannot be underestimated – it can ensure that employees do the right thing, not just because they have to, but because they want to.   2. The FCA claimed that there were ‘serious and sustained’ deficiencies in the bank’s AML controls regarding customer due diligence and ongoing monitoring. These failings exposed Standard Chartered to the risk of breaching sanctions, and in all likelihood enabled the behaviour for which the bank has been fined for by the US.   Standard Chartered admitted to processing around 9500 USD transactions for the benefit of Iranian individuals and entities, which totalled approximately $240 million. Over half of these transactions were a consequence of shortcomings in their compliance framework which allowed customers to request USD transactions from within sanctioned countries, in this case, Iran.   Lesson: Make sure that there is an effective and robust financial crime compliance framework in place and confirm that there is senior management commitment to, and engagement with, this policy.   3. Although the $1.1 billion fee is eye-watering, Standard Chartered actually anticipated such an outcome, announcing in February that it was setting $900 million aside to cover the However, this does now mean that this final settlement will force the bank to take a further $190 million hit in its first-quarter results.   In addition, their Deferred Prosecution Agreement (DPA) – which was actually due to expire on Wednesday – has also been extended by two years.   Lesson: As Assistant Attorney General Brian A. Benczkowski stated : ‘If you circumvent U.S. sanctions against rogue states like Iran—or assist those who do—you will pay a steep price’.   4. The FCA reported that it found substantial deficiencies in Standard Chartered’s: internal assessment of the competency of its AML controls approach to identifying and mitigating material money laundering risks escalation of money laundering risks   Lesson: Ensure that your oversight of your financial crime controls is extensive, constant and calculated. Understanding the financial crime threat that your firm faces, and your own responsibilities, remain critically important.   The ICA International Diploma in Financial Crime Prevention is an advanced level course that  will give you the knowledge to develop best practice initiatives and prepare you to face present and future challenges whilst reducing risk.   Further reading:  How many languages does a financial crime professional need to speak? 6 tips to help you on your study journey [Infographic] Skills and Attributes of an Anti Money Laundering Professional   This article forms part of the   #BigCompConvo   - Join us as we explore and debate the latest challenges and issues facing you and regulatory and financial crime compliance professionals all over the world. If you’d like to contribute an article as part of the   Big Compliance Conversation   get in touch with us at contributions@int-comp.org

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