Compliance Lessons Learned from Deutsche Bank

Deutsche Bank recently announced that it is restructuring its compliance functions as the bank’s longtime chief risk officer prepares to depart after 25 years at the institution.

Deutsche Bank stated that it intends to restructure the chief risk office to create a seamless transition, shifting compliance and anti-financial crime responsibilities to the bank’s chief administrative officer, Stefan Simon. This reported shake-up is designed to allow the bank to consolidate functions that require coordinated dialogue with regulators.

“We have invested a great deal in our controls over the past few years and have made significant progress under Stuart’s leadership,” outgoing chief risk officer Christian Sewing said. “We know that we must continue to invest and improve further—and Stefan’s job will be to do just that.”

Sewing had been attempting to fix the bank’s public image and reputation with regulatory bodies. Earlier this year, Deutsche Bank had agreed to pay $130 million in a bribery settlement and commodity-trading scheme allegations. This settlement was the latest incident in a series of fines that the bank has paid over the years in the U.S. and U.K., including fines over weaknesses in its anti-money-laundering procedures.

The Risks of Non-Compliance

Banks and other financial services firms often struggle to cope with the burden of governance expectations, risk management requirements, and strict regulations.

Non-compliance can result in hefty regulatory fines, severe reputational damage, and operational disruptions that ultimately affect the bottom line.

Lesson #1: Don’t let an immature compliance function expose your institution to risks and penalties.   

Financial institutions must continually track and monitor risks, both in isolation and to map their interdependencies and interconnectivity. Implementing a technology architecture that gives your organization complete visibility and agility is becoming increasingly critical in our dynamic business environment.

Compliance Benefits of GRC Technology

A GRC technology architecture will provide financial institutions with:

• A complete view into risks scattered throughout the extended enterprise
• The ability to track regulations and provide the organization with the full scope of requirements
• A complete audit trail of who did what and when to prevent and contain internal fraud
• An integrated and coordinated view of risk and compliance across the entire organization

Lesson #2: Increase risk awareness and compliance visibility through GRC technology.

Banking is the backbone of any healthy economy and has grown in complexity over the years, making effective GRC more important than ever for financial institutions. Organizations need a technology-enabled GRC program that provides holistic visibility into risk, compliance, and controls across their organization and improves the quality of their risk information, reporting, and processes.

Further reading on compliance management and technology:

• Cracking the Compliance Code: Compliance Technology Benchmarks & Benefits
• Why GRC Matters: 50 Risk & Compliance Statistics