Health and safety regulatory compliance internally

Health and safety
Regulatory
Compliance
• Internally generated and sanctioned Rules & Advice:
•
Corporate governance policy,
•
Corporate Ethics policy.
•
Corporate Risk policy
•
Risk Appetite Statement
•
Corporate Sales policy
•
All corporate policies, procedures and guidelines.
•
Environmental and sustainability reporting
Non-regulatory
Compliance

10
Financial costs of non-compliance are significant
and increasing
▪
Reuters report major
banks are spending
around USD1.3b a year
on financial crime
compliance
▪
The estimated costs of
non-compliance is
USD850b for the top 50
global banks since the
2008 financial crisis in
the form of write-downs,
trading losses, fines and
higher compliance
costs.

11
Some examples of compliance breaches from recent
history
Company Description
Equifax Credit rating firm Equifax makes its profits from selling personal, often
sensitive information to financial institutions and lenders.
In 2017, it revealed that it had been at the center of one of the worst
cyberattacks and data breaches in history, with the information of some
145 million people, about half of the U.S. population, compromised.
Equifax was aware of the system flaw before the hack. CEO and senior
executives sacked. Justice department investigating insider trading.
Yahoo In 2017, Yahoo admitted that 3 billion user accounts had been
breached during 2013-2014. Stolen were: names, email addresses,
telephone numbers, encrypted or unencrypted security questions and
answers, dates of birth, and passwords.
The breach affected the sale price of Yahoo to Verizon by USD 350m.
Under new GDPR European rules their late disclosure would have
attracted a fine of up to USD160m

12
Compliances breach examples (cont.)
Company Description
Volkswage
n
In 2015, the US Environmental Protection Agency issued a notice of
violation of the Clean Air Act. The agency had found that Volkswagen
had intentionally programmed turbocharged direct injection (TDI) diesel
engines to activate their emissions controls only during laboratory
emissions testing. 11 million cars were affected manufactured from 2009
to 2015. Volkswagen pleaded guilty to criminal charges in 2017.
Immediately lost $20b in market capitalisation (1/3 of market value). Audi
CEO Rupert Stadler was arrested in 2018. Senior R&D staff suspended.
Volkswagen CEO resigned and charged with fraud and conspiracy in
2018. $18b spent on rectification and $2.8b in criminal fines.
Wells
Fargo
2016 – admitted to staff creating 2.1 million false accounts in order to
meet excessive sales targets through cross-selling in response to top-
down pressure. 2017 – admitted to 570k consumers charged for
unneeded auto insurance + found an extra 1.4 million false accounts.
Forced to repay $2.6m fees and $186m in fines with loss of CEO.
Sacked 5,300 staff.

13
Compliances breach examples (cont.)
Compan
y
Description
Danske
Bank
Potentially the World’s largest money laundering scandal. In 2018 the
Estonian branch of Danske Bank admitted that between 2007 and
2015, 9.5m payments were made through the branch by 15,000 non-