When compliance is a competitive advantage

In order to get insights about corporate compliance in today's dynamic and ever-evolving business environment, where the line separating right from wrong is blurry to many, Zeba Tasnia Noshin interviewed Mohammed Saef UL Arifeen, a seasoned compliance professional with over 12 years of leadership experience in major financial industries of banking, capital market, and money market.

While Mr. Arifeen's forte lies in compliance, risk management, and internal audit, he has equally been delivering in organisation development, regulatory training, policy buildup, and business development in many multinational and renowned conglomerates. He currently heads the Internal Control and Compliance (ICC) department at Riverstone Capital Limited, a leading investment institution in Bangladesh.

Question (Q): You obtained a number of certificates on compliance and anti-money laundering. Can you discuss some significant takeaways from them?

Answer (A): Compliance certifications are all about gaining the required skill for handling today's risk dynamics. No matter how many certificates you have, the catch is how well you can apply your skills while handling any context. Although most of the certifications nowadays are typically testing only theoretical knowledge, there are also a couple of exceptional and useful ones available, e.g., 'Certified Anti-Money Laundering Investigator' (CAMI) from PonSun AML Academy where you learn how to handle complex situations through hands-on training followed by pedagogic aptitude tests. Similarly, the International Compliance Association (ICA) has many useful certifications for general compliance. I am fortunate to have attended some robust international training and workshops. These certifications increase the expertise within your job dimension.

Q: What important factors do you think should be part of an effective compliance policy in any company?

A: A comprehensive compliance policy refers to three primary areas. Those are: i) documented strategy and procedure to safeguard the company's revenue target through fighting compliance risks, i.e., money laundering, terrorist financing, bribery, corruption, tax evasion etc.; ii) sufficient documentation of compliance risk evaluation, assessment, appetite declaration and regular monitoring; iii) ensuring a pertinent compliance culture within the organisation through adequate training, communication and capacity building.

Q: Organisations are giving more importance to internal control and compliance these days. What, according to you, led to this change?

A: Well, if you think of an organisation as a human body then internal control and compliance (ICC) refers to the human brain, where all associated risks are assessed, and their subsequent choices or decisions are made to guide that body or organisation to a right direction. Thus, ICC has always played a pivotal role in any organisation. Post 9/11 in the USA, the compliance industry had changed dramatically across the world when we came to learn that to cope with new generation risk dynamics, sufficient investment in ICC is a necessity. Without that, our revenue, growth and sustainability will be under constant threat.

Q: What is the major challenge that you face as a head of compliance in your organisation? How to develop an effective and transparent compliance function?

A: Communication. Among many, communicating simultaneously with several layers of staff, external bodies, regulators and other stakeholders is challenging, especially in countries like Bangladesh where the compliance culture is still in its puberty. Although compliance, and ICC as a whole, works as a 'business enabler' and certainly not as 'policemen', the stakeholders and the ICC people themselves need to grow up with proper ICC knowledge and professionalism as per the international standards of ICC. Without developing an apt compliance culture, no compliance practices will be sustainable in the end no matter how effective and transparent they seem to be at present. However, I am optimistic that things are changing nowadays. Every incident or loss helps us learn something, as Rana Plaza did, Farmers Bank Limited did. To be proactive or reactive - that is the question.

Q: How is Bangladesh doing in terms of combating against money laundering and terrorist financing?

A: In line with international efforts, Bangladesh has taken many initiatives to prevent money laundering and combat terrorist financing and proliferation of weapons of mass destruction. Bangladesh is a founding member of APG (Asia-Pacific Group on money laundering) and first in the South Asian region to promulgate Money Laundering Prevention Act in line with recommendations from FATF in 2002. The Money Laundering Prevention Ordinance replaced the Money Laundering Prevention Act in 2008, and the Anti-Terrorism Ordinance was enacted the same year. The parliament later passed these two as Money Laundering Prevention Act and Anti-Terrorism Act in 2009, after which Bangladesh issued Money Laundering Prevention Rules and formulated Anti-Terrorism Rules in 2013.

Bangladesh Financial Intelligence Unit (BFIU) is responsible for exchanging information related to money laundering and terrorist financing with its foreign counterparts. The intelligence unit had also achieved membership of Egmont Group in 2013. The purpose of the group is to provide a forum for financial intelligence units of government organisations of different countries to improve support for each other. Bangladesh had its first mutual evaluation by a joint team from the World Bank and IMF in 2002, and adoption by Asia-Pacific Group in 2003 followed by a second mutual evaluation in 2008.

The banking sector of Bangladesh has come of age, and when it comes to adopting international best practices, this sector has always been a pioneer. The banking sector is now in the process of implementing Basel III standards--the minimum requirements which apply to internationally active banks.

Automation is one vital tool for combating money laundering and terrorist financing and recent progress in our banking sector is noteworthy. The significant achievements in automation include an automated Credit Information Bureau, the introduction of LC monitoring system, and modernisation of payment systems. What is important now is to identify and assess the existing, emerging and future risks and look carefully into vulnerabilities within the current banking practices and procedures. It is high time for financial organisations to prioritise unity against money laundering and terrorist financing activities to protect the integrity and stability of country’s financial system.

Q: What will be your suggestions to the fresh graduates about how to build a career in ICC?

A: Focus and belief are two key parts of any graduate entering into professional world. To take compliance or ICC as a profession, the freshers need to focus on three essential development areas: i) professional certifications, ii) involving actively with global forums like ICA, GARP, ACAMS, PonSun, IIA etc. iii) learn to develop and utilise industry networks. Today's youths need to believe in their honest efforts and focus on their dreams. In short, never sleep with your dreams but wake up with one.

The interviewer is a  graduate of the MBA programme from the Institute of Business Administration, University of Dhaka. She can be reached at [email protected]