Chapter 2Compliance in the Twenty-First Century

“Do the right thing. It will gratify some people and astonish the rest.”

—Mark Twain

Formal compliance structures, as mentioned earlier, are a twenty-first century phenomenon, though the foundation for the same started in the 1980s. The Basel set of accords with the expectation of disclosures and transparency, market discipline and customer protection, and prevention of financial crime have shaped the operations of the compliance universe. The 2002 Sarbanes-Oxley and the 2005 BCBS 113 document on compliance are credited for their contributions toward the evolution of compliance discipline in the financial services industry, especially in the banks. The growth of this discipline also has been propelled by the fact that the industry realized the risk and the consequent price of noncompliance.

The compliance universe in the twenty-first century is growing both in breadth and depth. The new normal is characterized by uncertainty, volatility, and a regulatory system that is trying hard to rein in the situation. With the ever-increasing complexity of the business environment and ever-deepening regulatory dictates, compliance expectations continue to proliferate. Compliance management is here to stay. Owing to increasing need for operational transparency, organizations are finding it necessary to adopt a consolidated and harmonized approach to compliance. Both the regulated and the regulators have to accept this fact and plan accordingly. ...

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