Bank CFOs present their top emerging risks for 2021


The transition to hybrid working arrangements stemming from the pandemic is among the top emerging compliance risks in the second half of 2021, a group of large bank compliance officers said this week.

Speaking at an event hosted by the Securities Industry and Financial Markets Association, compliance officers at some of the biggest and most powerful banks – from Morgan Stanley to Goldman Sachs – added that the growing regulatory scrutiny environmental, social and governance issues is both a major concern and an opportunity. .

Additionally, the burgeoning digital asset industry will become increasingly difficult to manage as it takes hold in traditional banking, they said. Finally, after the so-called volatility in meme stocks earlier this year showed how social media can lead to wild swings in the market, chief compliance officers explained how they intend to keep their businesses and employees out of the headlines.

Here’s what they had to say:

Post-pandemic workforce

Keeping tabs on employees in a hybrid environment – which combines remote and on-site work – could be difficult, CCOs said.

Michael Richman, CCO at Goldman Sachs, said he expected more workers in the company’s consumer-focused sectors will work from home more often, including those in call centers and salespeople in business units. private and banking assets.

“I think more businessmen will be out of the office than they were before, which will put pressure on compliance,” Richman said. “I think a lot of the people who supervise, monitor and try to detect their activity will be out of the office.”

Mary Beth Findlay, CCO at Credit Suisse Securities (USA) LLC, stressed that more flexible agreements will require a completely new look at the “new control landscape”, especially after the relief offered by bank regulators in the midst of the pandemic.

“As we build a new program and the relief is different, now we have to take a step back and look at something lasting,” she said. “What will this new framework for flexibility look like? “

Despite the challenges, many CCOs argued for a hybrid working environment in the future, as a number of general counsel from major banks had Tuesday.

“It definitely helps to have people together to learn, side by side,” Findlay said. “[But] it doesn’t have to be all the time. “

Edvard S. Olsen

Edvard S. Olsen, CCO Americas at Barclays, elaborated on the key challenges that he believes will be associated with the hybrid work environment.

He highlighted internal challenges such as maintaining the office culture and developing talent, as well as external concerns including monitoring new communication channels and data privacy issues.

“We’re at an inflection point from an industry perspective,” Olsen said. “The ones who adapt and really manage this most effectively and are the most agile, I think, will really be the leaders in the space.”


From the White House to the head of the United States Securities and Exchange Commission, there has been a months-long push for reforms on environmental, social and governance issues.

At the SEC, this has materialized in a series of initiatives such as the launch of an ESG Enforcement Task Force and calls for a new standardized disclosure framework that would include more stringent reporting requirements linked to climatic risks.

SEC Chairman Gary Gensler recently asked its staff to consider potential metrics that could be used in the future development of rules on new ESG disclosure frameworks.

Raul F. Yanes

“[ESG is] a growing business opportunity … but also presents challenges in new packaging and disclosures, in conflicts and how to handle those issues, ”said Raul F. Yanes, CCO at Morgan Stanley.

“There has been a signal from the SEC, in any case, that they expect a framework fairly built around these risks,” Yanes added, noting that compliance officials will “need to think a little differently about the way we take the traditional compliance tools and wrap [them] around a new domain. “

Jennifer Taylor, CCO at Citigroup’s institutional client group, stressed that the update is not “just about regulations, but also the various reporting standards that we will need to follow,” arguing for a holistic approach to the company wide.

“The business-to-business approach to ESG risk management is going to be so important because it will pervade all of our activities,” she said. “The compliance program will have to adapt and evolve.

Digital assets

A range of global financial institutions – from JPMorgan Chase & Co. and BNY Mellon to Mastercard and PayPal – have put their weight behind cryptocurrency.

In March, Goldman Sachs also announced that it would launch a crypto trading desk focused on trading Bitcoin futures and other derivatives.

Richman, Goldman’s CCO, acknowledged that the emerging space is a “complicated area.”

“It’s not just about trading cryptos, it’s about issuing crypto-denominated debt, it’s about granting crypto-backed loans, there is custody and under-custody, futures and structured notes, private funds and ETFs, ”he said. “Compliance has to react to that and develop a compliance program around this new product, or whatever.”

Richman also highlighted the disclosure and adequacy issues surrounding crypto, as well as the risks of financial crime.

Crypto has become a particular focus of the US Treasury Department’s Financial Crimes Unit, which recently hiring its very first digital asset advisor and named crypto in a new anti-money laundering list priorities.

“One of the things that we struggle with [with] and think about what our personal trade policy should be regarding our employees who trade crypto? “Richman added.” There aren’t many answers, and we’re trying to figure it out. “

Social media driven market activity

Nancy swift

Nancy Swift, head of corporate compliance at Fidelity Investments, noted that 2021 has changed the way compliance will have to approach social media.

It used to be “a lot of capturing, holding, and monitoring them, but now we’re seeing social media driving market events,” she said.

Swift, who was referring to the market volatility earlier this year surrounding the stock of video game retailer GameStop and other memes stocks, asked other panelists how they are tailoring their schedules.

Morgan Stanley’s Yanes said the company is setting rules for how employees should or should not react to these market events, including those affecting “internal communication. [and] avoid conflicts. “

Goldman also provides advice on what employees can include in social media communications and when they need compliance approval, Richman said.

Without such a frame, “the volume is so high, the speed is so fast [that] it will be very hard for us to [operate] in a timely manner so that they can achieve their business goals, ”he said.

–Edited by Steven Edelstone.


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