Enhancing Compliance in Nigeria

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Compliance which is evolving, is no longer confined to the financial and insurance industry, it has become the cornerstone of organisations across all industries. Compliance and risk management covers a wide range of business areas, whether it’s data protection issues in the Human Resource department, tax and corruption guidelines in sales and finance, or website compliance in online marketing – today, a variety of regulations, directives, and laws shape a company’s everyday operations both inside and outside. The Compliance Institute, Nigeria is leading the charge in changing the compliance culture and narrative in Nigeria, Africa and the world, writes Adedayo Adejobi

Compliance functions have gone through a major period of growth and investment since the 2008 financial crisis. Many Nigerian firms have seen an increase in their compliance functions since then.

The spectrum of the various laws and rules that characterise compliance in an organisation is constantly changing in our globalised and digitised world. With a raft of more than 50,000 regulatory changes existing worldwide.

In the United States alone, companies need to adhere to a wide range of regulations, including antitrust and competition laws, environmental regulations, healthcare laws, employment and labor laws, security laws, political activities and contribution laws, and regulations regarding trade secrets and confidential information. Nigeria, through the Compliance Institute, Nigeria has risen to the occasion of not just adopting but also complying with these regulatory compliance stipulations.

Nigeria’s changing regulatory landscape is one of the most important challenges for company compliance officers. Only those who are up-to-date can reduce the risks of penalties and reputational damage through risk-reducing behavior within their organisation.

The Pattison Boleigha –led Compliance Institute, Nigeria and his colleagues in the boards , whom all poised to take compliance to the next level, have spotted the many challenges Nigerian companies face with navigating, monitoring and evaluating Nigeria’s regulatory landscape.

Two years ago, following its strategic alliance with the Centre for National American Security (CNAS), the growth has reflected in part, the post -financial crisis regulatory reform agenda-including not only resilience and-for banking-resolution requirements, but also a host of retail conducts, wholesale conduct, anti-money laundering, corporate governance, more intrusive supervision and individual accountability.

It is instructive to note that the Compliance Institute, Nigeria, has over the years increased its resources and have widened their range of tasks, with a dramatic increase in their monitoring and surveillance activity, whether manual or substantially automated.

With the Institute’s leadership, compliance functions across DFI’s have witnessed an increased profile and higher expectations placed upon them. Moreover, having strengthened the control environment and enhanced compliance with regulatory requirements, the focus and mindset of Compliance in many firms remains overly risk-averse, conservative and still struggling with the remediation of past problems, resulting in limited latitude to support- as well as continuing to challenge – the business. The focus may be partly the result of perceptions of regulators’ expectations.

In addition, in some firms there is lack of clarity over the mandate and role of Compliance, how it fits within the three lines of defence, and the relationship between compliance and the business.

Boleigha and his colleagues in the board of the CIN explained the role of compliance in the financial services sector has changed significantly over the years. Compliance has and continues to evolve to meet the ever increasing demands and complexity of financial regulation, he says.

“Compliance has to evolve from traditional methods of managing compliance towards integrated risk management using automation to leapfrog compliance from gatekeeper to game changer.

“To meet the demands of a rapidly changing financial services industry, the compliance function has to shift its focus by using data insights to inform decision making and creating value for the business,” he said.

He added there have been an increase in the use of robotics process automation and predictive analytics for risk assessment, monitoring and testing, complaints management, surveillance and regulatory reporting.

“This creates efficiency and saves costs in the long run,” Boleigha says.

Pattison Boleigha, who assumed his position in 2017 has in the last five years and counting proven to the Nigerian compliance community a big task ahead of her.

“As the Head-honcho, I am saddled with the responsibility of spearheading Africa’s emergence as a notable force in the global compliance chain.

“I am primarily responsible for overseeing the Compliance Programme for CIN in Nigeria and to ensure compliance with regulatory requirements and policies of Nigerian banks and other institutions.

“He is also responsible for safeguarding compliance and the reputation of Nigerian banks, whilst driving culture change within Nigerian business organisations,” he explains.
First, as regulation has become more important in shaping business strategy, front –office management has become increasingly involved in analysing and implementing regulatory reforms.

Front-line business functions have taken on greater responsibility for customer due diligence and other financial crime regulatory requirements, some credit and insurance underwriting sanctioning, some surveillance activity and, in some cases, compliant handling.

Compliance can only support and challenge the business effectively if it evolves in response to changes in the business itself and is fit for future financial services.
Accelerated by the pandemic, the Compliance Institute, Nigeria has leveraged technology so they can respond in an agile way to future changes in external conditions with this new reality.

In the words of the Chairman, Communications and Partnership, CIN, Abimbola Adeseyoju, ‘‘Compliance needs to keep up with the pace of change here, in particular to deliver compliance with information, technology security, the control, security and privacy of data, artificial intelligence, cyber security, outsourcing, anti-money laundering regulatory reporting and associated obligations’’

Across the value-chain, business models and organisational structures are changing as a result of the pandemic and the CIN’s resolve, competitive pressures and wider market developments.

For an industry driven by the CIN, the focus is shifting from silos-based compliance functions to functions that support various sectors, industries and business service lines.

The CIN, is championing the need to transform from functions focused on preservation, conservatism and remediation to ones that, in addition to maintain regulatory compliance and capital conservation, operate in a more strategic and predictive capacity.

An important driver of these changes is digitalisation. It’s most apparent in the banking sector, which originally defined the concept of compliance. Due to the sector’s high number of regulations, banks are seen as less innovative than organisations in other sectors.

But because of digitisation, new technologies are emerging at ever shorter intervals, which in turn enable the development of innovative products. These change the customer experience: whether it is mobile payment transactions, crowd lending platforms, or cryptocurrencies and blockchain technology.

New service providers are entering the market with innovative solutions that are competing with the classic banking model. These new competitors include FinTech start-ups and established IT corporations. Their business models are very different from most banks as they’re based solely on a part of the value chain.

Yet customers appreciate these new models and increasingly expect digital products even from traditional banks. Thus, the banking industry is being forced to reconsider its ways of interacting with customers.

With Digitisation changing the whole market and having a major impact on regulatory compliance as well, companies need to recognise this at an early stage and take a holistic approach to compliance.

According to Chairman, Committee Programmes, Education and Examination; CIN, Isioma Gogo-Anazodo, “As an institution, we are making strategic investments to ensure a more proactive approach to risk identification and a robust industry-centric outcome, by utilising, and engaging with evolving technology and data analytics. Our up-to-date learning virtual learning and industry-specific webinar series is setting a tone for the future of a compliant Nigerian business climate’’

Speaking on the next steps in transforming Compliance in Nigeria and Africa, Vice President of the institute, Isah Ibrahim, said that it has recognised how the business landscape was changing. In line with that, it is has changed its business model.

He added: “To adapt to the new normal, we are identifying ways for compliance to become more strategic and predictive in supporting and challenging the business, whilst pursuing opportunities to add value.”

The subject of compliance covers all departments of a company and sectors of the economy.

With the CIN playing the big brother to African countries and cheerleader on matters of Compliance, an increasing number of organisations in Nigeria and across Africa, today recognise the importance of central compliance management.

This trend is accompanied by the development of new roles. More and more organisations are using Chief Compliance Officers or establishing entire compliance departments within their organisation.

According to Deloitte, 33 per cent of companies they surveyed had a designated Chief Compliance Officer position. Compliance is becoming increasingly important: in times of change and globally organised, increasingly digitised corporate processes, it is important to clearly define compliance responsibilities and processes in order to reduce the risk of legal violations across hierarchical levels.

In order to have a holistic compliance management strategy throughout the organisation, the business needs to connect the corresponding processes, IT systems, and trained employees. Only by incorporating compliance into all of these aspects can a company create the foundation for a compliance culture.