Contextualizing compliance officers and their state of practice

Published date01 September 2019
AuthorSalomi Demetriou,Maria Krambia‐Kapardis,Ioanna Stylianou
Date01 September 2019
Bus Soc Rev. 2019;124:385–411.
In 2014, the Financial Times declared that “the age of the CO has arrived” (Grant‐Hart, 2016). The
same article asserted that 70,000 new full‐time jobs would be created in Europe alone to be able to
DOI: 10.1111/basr.12181
Contextualizing compliance officers and theirstate
of practice
© 2019 W. Michael Hoffman Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc., 350 Main Street, Malden,
MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.
1School of Management and
Economics,Cyprus University of
Technology, Limassol, Cyprus
2School of Business and
Management,University of Central
Lancashire (UCLan), Preston, Cyprus
Maria Krambia‐Kapardiss, Cyprus
University of Technology, Limassol,
The compliance officers' (CO) profession has been evolving
over the last few decades. The expectations placed upon the
individuals holding such a position vary across jurisdictions,
but they are all expected to ensure employees and manage-
ment of the business entity comply with the law. Given the
limited research on CO in Europe, and the increasing public
interest in this profession, the current authors have carried
out a survey in Cyprus in an effort to map out and con-
textualize the CO' profession. The findings illustrate CO's
academic and professional qualifications, their awareness of
their legal liability, the level of knowledge and job perfor-
mance of their duties as prescribed by law, as well as gaps
in the performance of duties as expected by management,
boards, and regulators. The policy implications derived
from the study suggest coherence and synergies to be found
through common exam and postgraduate qualification in the
field of financial compliance.
compliance officers, knowledge gap, legal duties, liabilities,
respond to the current needs of the various corporations, following regulation. Thus, the function of
the compliance officer (CO) is taking a global perspective and is now deemed an extremely significant
role. Academic research in the area of compliance officers (CO), particularly in Europe, is rather scant.
Thus, this article will attempt to contextualize the compliance officer's role and duties in an effort to
map what the future is likely to hold for them. For the purpose of this study and to simplify matters, the
term “compliance officer” will be used for “those employees of a company who are in charge of dealing
with ethical or legal compliance issues that arise in their company” (Weber & Fortun, 2005, p. 100).
As Martin (2015) suggests, in order to have an effective complianceprogram, it is required that there is
specific high‐level personnel within the organization who will be responsible for this type of programs.
The CO is defined as “an independent and objective fact finder with the mission of ensuring the
organization is in compliance with all applicable laws, regulations, standards, policies/procedures,
and the code of conduct” (Forman, 2013, p. 56). The position should be dedicated to “managing the
company's compliance and ethics responsibilities through investigation, monitoring, education, and
prescription, but not through control of employees” (Martin, 2015, p. 198). Therefore, the CO's pri-
mary task is to ensure that both legal and organizational policies and rules are followed and that the
company's employees act with honesty and integrity (Snell, 2015b).
According to Duszak (2008) a CO can be your best friend (by keeping you out of trouble) or your
worst adversary (by reporting you when you step out of line). As the literature suggests, the CO may
not always be the most popular person in the organization as part of his/her job entails the unpleasant
task of informing senior management and administration that the company's personnel are not fol-
lowing regulation. Consequently, in order that COs perform their roles and tasks effectively; they are
required to uphold the highest possible professional standards and to act as models for the rest of the
company's employees to look up to (Belton, 2009).
It is expected in Europe, United States, New Zealand, and soon in Australia that banking and
finance institutions and all those businesses providing administrative services such as setting up com-
panies, opening bank accounts, are involved in buying real estate on behalf of their clients employ
a compliance officer(s) and set up a compliance department. The CO plays the most critical role
in the management of the organization's ethical or compliance context (Treviño, den Nieuwenboer,
Kreiner, & Bishop, 2014). Similarly to the CO, the chief CO or Ethics Compliance Officer (ECO)
can carry many different titles. What is significant to note is the fact that those COs who head these
departments are becoming “increasingly concerned that they will be held liable for the actions of oth-
ers at their companies merely because they are in charge of their companies' compliance programs”
(Martin, 2015, p. 169). Therefore, it is being suggested that for compliance programs to work and to
be effective, COs and chief COs should be given enough authority and command to exercise their
powers without fearing repercussions or being held accountable for the organization's failures, when
the correct advices have been provided.It becomes clear that in order to meet their challenges, COs
need to be granted sufficient authority and this, in turn, will enable them to win legitimacy. An issue
also addressed by Bottoms (2019) and Tankebe (2019) where they both argue that the leaders in an or-
ganisation ought tocreate the moral climate that emphasis the principles of legitimacy, as legitimacy
is "never given but is forever an unfinished business"(Krambia‐Kapardis, 2019, p. 270).
Drawing on the literature, the following section will present and analyze the various characteristics
that a CO is expected to have. Even though some similarities have been identified in professional and
academic background, job responsibilities and other skills, it is important to remember that there is not
a single, standard profile for a CO (Verhage, 2009). Furthermore, it should be noted that regarding the
CO's demographics, the literature suggests that compliance departments include people from diverse
ethnical backgrounds, age groups and gender, making the demographics irrelevant to the profile of
the “effective” CO.

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