Risk-Based Financial Regulation and Compliance Officer Liability

Abstract

This chapter considers aspects of UK financial services law and regulation that require governance of risk and the maintenance of an internal compliance function. First, the chapter examines a number of key components of the law and financial services regulatory regime that require financial institutions to establish internal governance arrangements and systems of control for the purpose of identifying and managing risk in financial services. In so doing, the chapter examines the interplay between certain aspects of financial regulation and the discipline of risk management and seeks to allow discussion about whether compliance with such risk-focused regulation is straightforward or complex. Secondly, the chapter provides an insight into the evolving nature of ‘compliance’, the characteristics and responsibilities of a firm’s compliance function, it’s positioning within a firm’s overall control environment and the extent to which a compliance officer and those working in a compliance function, including those working as a money laundering reporting officer, are accountable for their professional activities and may have personal liability for when things go wrong.