WEBVTT 00:00:00.266 --> 00:00:03.900 Hello. It's my absolute pleasure to welcome you to this Certified 00:00:03.900 --> 00:00:07.566 Compliance Risk and Internal Control Manager Training Program. 00:00:07.966 --> 00:00:12.300 I'd like to introduce the course to you and to set out what it is 00:00:12.300 --> 00:00:15.666 that we'll be going over for the several hours that you'll be 00:00:16.100 --> 00:00:19.333 taking this training course. 00:00:19.333 --> 00:00:22.700 In our first module, we'll be introducing the course. 00:00:22.700 --> 00:00:27.066 And in fact, in doing that, we will be looking at the complex 00:00:27.066 --> 00:00:31.433 and sophisticated markets in which we find ourselves in today's business world. 00:00:31.700 --> 00:00:35.100 I'd like to please note that although the course is for compliance 00:00:35.266 --> 00:00:39.566 and internal control managers throughout different industries, 00:00:39.766 --> 00:00:44.400 we focus specifically on financial services in that area. 00:00:45.100 --> 00:00:47.833 We're also going to be looking at the challenges and conflicts 00:00:47.833 --> 00:00:50.866 of interest that arise, especially in these complex 00:00:51.000 --> 00:00:53.633 and very sophisticated markets that we find ourselves 00:00:54.000 --> 00:00:56.066 once we see those conflicts. 00:00:56.066 --> 00:00:59.866 We could better understand the need for internal controls 00:01:00.000 --> 00:01:01.400 and for compliance frameworks. 00:01:01.400 --> 00:01:04.700 In fact, one of the questions that we're going to ask is exactly that 00:01:04.900 --> 00:01:06.366 Why isn't this working? 00:01:06.366 --> 00:01:11.533 Exactly why is it that we continue to see the scandals and the financial fraud 00:01:11.533 --> 00:01:15.733 and other types of business conflicts that constantly go well? 00:01:16.266 --> 00:01:19.533 We're going to start to look at the frameworks, the structures and the 00:01:19.533 --> 00:01:24.000 principles in order to make effective compliance organizations. 00:01:24.300 --> 00:01:28.800 In fact, we're actually going to see that the culture of compliance 00:01:29.466 --> 00:01:34.233 and very definitive drivers of an effective compliance culture 00:01:34.800 --> 00:01:38.700 will be at work when we build these effective compliance departments. 00:01:39.333 --> 00:01:42.466 We're going to look at the various areas in compliance departments, 00:01:42.700 --> 00:01:48.200 the skill sets required, the areas, the types of managers and the 00:01:48.400 --> 00:01:51.233 the skills and the qualities and the capabilities 00:01:51.233 --> 00:01:54.000 that many of the folks in those areas would clearly need. 00:01:54.300 --> 00:01:55.700 And finally, we're also going to be looking 00:01:55.700 --> 00:01:58.700 at some case studies and conducting some exercises 00:01:58.700 --> 00:02:01.900 in order to make sure that what you've learned will continue. 00:02:06.166 --> 00:02:11.633 Welcome. It is my absolute pleasure to welcome you to our course. 00:02:11.900 --> 00:02:15.766 Uniquely Compliance The Certified Compliance Risk 00:02:16.000 --> 00:02:19.000 and Internal Control Manager Training Program. 00:02:19.700 --> 00:02:21.866 My name is Mario DiFiore. 00:02:22.666 --> 00:02:24.966 And as we begin our course, 00:02:24.966 --> 00:02:27.900 I certainly would like to put this into perspective. 00:02:29.000 --> 00:02:31.300 All of us are very aware 00:02:31.300 --> 00:02:35.366 that no matter what business we're in, whether it is a business 00:02:35.366 --> 00:02:38.966 where we buy and sell goods, services and things, 00:02:39.433 --> 00:02:42.766 or whether it is part of the financial markets, 00:02:43.033 --> 00:02:48.666 whether it's trading investment banking sales, trading research, 00:02:49.033 --> 00:02:54.033 stock, asset management, portfolio management, whatever it is. 00:02:55.066 --> 00:02:57.966 Our businesses demand success. 00:02:58.900 --> 00:03:02.233 In fact, if we were to look at profitability, 00:03:02.633 --> 00:03:06.033 we would say, yes, of course, we all want to be profitable 00:03:06.300 --> 00:03:10.500 and we all want to be successful on an individual basis. 00:03:10.866 --> 00:03:13.500 Of course, we all want to be profitable. 00:03:13.700 --> 00:03:15.833 We all want to be successful. 00:03:15.833 --> 00:03:21.466 And even on an organizational basis, all of us want our organizations 00:03:21.466 --> 00:03:25.166 to be profitable and we want them to be successful as well. 00:03:26.233 --> 00:03:27.700 Well, did you know 00:03:27.700 --> 00:03:32.033 that academic research as well as professional practice. 00:03:33.033 --> 00:03:36.166 All evidence the same issue, 00:03:36.966 --> 00:03:41.866 and that is the successful businesses comply. 00:03:42.633 --> 00:03:44.966 What exactly do they comply with? 00:03:44.966 --> 00:03:50.166 They comply with the laws, rules, regulations, the ethics 00:03:50.400 --> 00:03:55.433 codes of conduct, good corporate governance and best practices. 00:03:56.300 --> 00:04:01.600 Indeed, that is exactly where we want to start our course 00:04:02.500 --> 00:04:06.233 to understand that profitability is a given 00:04:06.500 --> 00:04:09.033 for all of us in the business world, 00:04:09.433 --> 00:04:12.033 whether it is on the commercial side of things, 00:04:12.233 --> 00:04:14.700 whether it is on the financial side of things. 00:04:15.100 --> 00:04:20.800 Yes, of course, profitability is key and critical to our success. 00:04:21.833 --> 00:04:24.033 But no matter how we look at this, 00:04:24.500 --> 00:04:28.833 the academic research is 100% clear. 00:04:29.466 --> 00:04:33.700 And those of you in professional practice know this for a fact as well. 00:04:35.000 --> 00:04:37.000 And that is that 00:04:37.000 --> 00:04:41.466 for a business to be successful, it absolutely, 00:04:41.700 --> 00:04:44.566 categorically needs to comply 00:04:45.600 --> 00:04:51.066 with the rules, regs, ethics, codes of conduct, good corporate 00:04:51.066 --> 00:04:54.900 governance, and the best practices within the industry. 00:04:56.066 --> 00:05:00.600 Now, if we could put this into even a little bit of further perspective. 00:05:02.166 --> 00:05:07.233 I think we know that our markets, our products or services, 00:05:07.833 --> 00:05:11.066 they are not, as you could see on this line, 00:05:11.400 --> 00:05:15.800 rather linear, where everything goes in a straight line 00:05:15.800 --> 00:05:18.500 and we can get a ruler and plot it out. 00:05:19.100 --> 00:05:23.400 In fact, much more often it's a curved line 00:05:23.800 --> 00:05:28.300 and it's a line that does not follow a very straight and linear path. 00:05:28.300 --> 00:05:31.466 In fact, if you look on the right hand side of this slide, 00:05:31.766 --> 00:05:37.400 you could see in the welcome alone, it's not only that business, 00:05:37.666 --> 00:05:41.900 it's not straight, linear, definitive, 00:05:42.700 --> 00:05:45.666 but rather it's all over the place. 00:05:46.366 --> 00:05:50.033 It is dynamic in so many different levels, 00:05:50.966 --> 00:05:53.200 and it is that way for so many reasons. 00:05:53.833 --> 00:05:58.566 Due to technological advances. Things like. 00:05:59.566 --> 00:06:02.633 Artificial intelligence algorithms. 00:06:03.233 --> 00:06:05.266 Machine learning technologies. 00:06:06.566 --> 00:06:09.966 Whether geographic 00:06:09.966 --> 00:06:13.400 items that might impact the way that we do things, 00:06:14.100 --> 00:06:18.066 cognitive things, in other words, the way that we think and learn 00:06:18.066 --> 00:06:22.900 and so forth on the work place or in the workplace, 00:06:24.266 --> 00:06:26.433 quantitative advances 00:06:26.800 --> 00:06:29.566 using technology, sciences 00:06:29.566 --> 00:06:33.100 and so on, and even social advances 00:06:33.766 --> 00:06:38.866 impact the methodologies that we might use in our businesses. 00:06:39.800 --> 00:06:44.066 All of it, whether it's in a business that makes widgets 00:06:44.400 --> 00:06:50.066 or whether it's for crypto, central bank, digital currencies, ETFs, 00:06:51.233 --> 00:06:54.000 derivatives, algorithms. Any of that? 00:06:54.866 --> 00:07:00.900 I think we know that our businesses are dynamic 00:07:01.433 --> 00:07:03.833 and because of that dynamism. 00:07:05.066 --> 00:07:08.766 We need to understand a heck of a lot more 00:07:09.233 --> 00:07:14.800 than just a couple of formulas that help us forecast the stock price 00:07:15.200 --> 00:07:18.766 or help us forecast the price of a good or service. 00:07:19.800 --> 00:07:23.166 Now. That's just part of the issue. 00:07:24.066 --> 00:07:26.766 The profitability is definitive. 00:07:28.000 --> 00:07:30.800 But in addition to the profitability, 00:07:31.200 --> 00:07:34.700 we have a lot more that we have to deal with and that a lot more 00:07:35.600 --> 00:07:39.700 is making sure. That we have 00:07:39.700 --> 00:07:45.100 a playing field, appropriately governed, well-regulated. 00:07:46.066 --> 00:07:49.000 And that it is ethically oriented. 00:07:50.366 --> 00:07:52.633 So now that begs the question 00:07:53.100 --> 00:07:56.800 that I'm going to get to start this program. 00:07:57.433 --> 00:07:59.766 And that is so how do we prepare? 00:08:00.233 --> 00:08:02.366 Profit, but ethics, 00:08:03.666 --> 00:08:08.466 profitability, liquidity with compliance and regulation 00:08:08.833 --> 00:08:11.200 and best practices has to be followed. 00:08:11.866 --> 00:08:13.066 Is there a balance? 00:08:13.066 --> 00:08:18.033 No. There can never be a balance because the issue is it's not that 00:08:18.033 --> 00:08:22.500 we pick and choose the laws and the rules that we have to follow. 00:08:23.100 --> 00:08:29.433 We need a comprehensive program in order to make sure 00:08:29.700 --> 00:08:34.633 that all of the laws, rules, regulations, best practices, 00:08:35.100 --> 00:08:38.900 ethics, good corporate governance are being followed. 00:08:39.900 --> 00:08:44.233 So let me ask you, how are you prepared? 00:08:45.200 --> 00:08:47.100 How do you strategize? 00:08:47.100 --> 00:08:48.400 How do you execute? 00:08:48.400 --> 00:08:52.966 How do you carry all of this out in order to support our mission? 00:08:53.866 --> 00:08:56.866 Well, I'm very glad that 00:08:57.433 --> 00:09:02.433 one of the things that you did in order to prepare and strategize 00:09:02.433 --> 00:09:05.366 and execute and support your firm's mission, 00:09:05.833 --> 00:09:08.166 is to take this certification training course. 00:09:08.166 --> 00:09:11.000 That is for you to understand 00:09:11.566 --> 00:09:14.366 the uniqueness of compliance, 00:09:15.000 --> 00:09:17.866 to course specifically designed 00:09:18.666 --> 00:09:23.666 for certification for compliance risk in internal management. 00:09:24.666 --> 00:09:28.366 What would we then want to look at in this course? 00:09:28.966 --> 00:09:31.100 Well, before we go ahead with that, 00:09:31.600 --> 00:09:34.033 let me just make a bit of a short introduction. 00:09:35.066 --> 00:09:38.233 First, I definitely want to welcome you to this course 00:09:38.466 --> 00:09:41.466 now that we have a little bit of background in where we're going. 00:09:41.900 --> 00:09:47.066 But if I were you, I wouldn't want to take this course 00:09:47.233 --> 00:09:51.900 unless I knew exactly who it was who was trying to offer 00:09:52.166 --> 00:09:56.366 this training to me, this educational background to me. 00:09:56.366 --> 00:09:59.666 So indeed, my name is Mario DiFiore. 00:10:00.200 --> 00:10:03.566 I am, in fact, the dean and a professor here in New York 00:10:03.900 --> 00:10:06.566 at Fordham University's Gabelli School of Business, 00:10:06.566 --> 00:10:10.200 one of the top great business schools here in the United States. 00:10:11.233 --> 00:10:13.666 I'm also the editor in chief, and I'm 00:10:13.666 --> 00:10:17.433 also a journalist for the Journal of Financial Compliance. 00:10:17.866 --> 00:10:21.000 This is a peer reviewed, both 00:10:21.000 --> 00:10:24.666 academic and professional journal, 00:10:25.066 --> 00:10:29.266 specifically in the area of financial compliance. 00:10:30.466 --> 00:10:32.833 I'm a former Wall Street training director. 00:10:32.833 --> 00:10:37.500 I was the global head for compliance and risk trading 00:10:38.266 --> 00:10:41.433 for the commercial and investment bank Deutsche Bank. 00:10:41.700 --> 00:10:43.900 Most of you know that organization. 00:10:45.433 --> 00:10:49.500 Further. I'm a currently I'm an international consultant as well 00:10:49.500 --> 00:10:53.900 as being a professor at Dean of Finance and Business Economics. 00:10:54.466 --> 00:10:59.100 And I had a 12 year run at the Federal Reserve 00:10:59.400 --> 00:11:03.033 or Central Bank here in the United States where it was. 00:11:03.566 --> 00:11:05.400 I had many positions. 00:11:05.400 --> 00:11:07.566 I was in research and statistics. 00:11:07.566 --> 00:11:10.066 I was the senior international representative 00:11:10.066 --> 00:11:14.100 of the Federal Reserve, and I also was the deputy director 00:11:14.366 --> 00:11:19.766 of the Public Information Department, where I ran the press conferences 00:11:19.766 --> 00:11:22.866 and I conducted all the communications work 00:11:23.400 --> 00:11:25.066 regarding the Federal Reserve. 00:11:25.066 --> 00:11:29.100 In fact, I, I actually was the press spokesman 00:11:29.633 --> 00:11:33.400 on a number of the press conferences that we had. 00:11:36.700 --> 00:11:38.566 That's who I am. 00:11:38.666 --> 00:11:40.700 But what are we going to cover for the course if we're 00:11:40.700 --> 00:11:42.866 going to introduce this course? 00:11:42.866 --> 00:11:44.900 Well, we got a couple of things that we're going to be doing, 00:11:44.900 --> 00:11:47.666 but I think you could see all of them are quite hard hitting. 00:11:48.433 --> 00:11:52.766 In fact, none of them are high level pie in the sky. 00:11:53.700 --> 00:11:58.000 The first is we're going to on the outset understand 00:11:58.000 --> 00:12:03.866 the difference between compliance with the Upper Case and compliance 00:12:03.966 --> 00:12:07.833 with the lower case, one firm wide, 00:12:08.200 --> 00:12:10.500 the other, you specifically. 00:12:11.633 --> 00:12:13.500 We're going to look at the prime directive. 00:12:13.500 --> 00:12:17.000 Do you know that most academic research that studies 00:12:17.000 --> 00:12:19.866 this points to the same conclusion, 00:12:20.500 --> 00:12:24.200 and that is what a firm can demonstrate, 00:12:24.833 --> 00:12:27.166 not window dressing 00:12:27.800 --> 00:12:31.000 with actual culture of compliance 00:12:31.833 --> 00:12:34.566 that is almost built 00:12:34.566 --> 00:12:39.000 into the DNA of the organization and the people who work for it. 00:12:40.066 --> 00:12:42.966 A culture to comply 00:12:43.400 --> 00:12:46.200 to comply with corporate governance, 00:12:46.600 --> 00:12:50.966 to comply with ethics best practices within the industry. 00:12:50.966 --> 00:12:53.066 Rules, laws, regulations. 00:12:53.566 --> 00:12:55.600 That Prime Directive. 00:12:55.600 --> 00:12:59.900 One of the things we see is that that culture of compliance 00:13:00.400 --> 00:13:04.466 is one of the main drivers of a successful firm. 00:13:04.800 --> 00:13:08.033 In fact, we're going to see a great case study, Barclays 00:13:08.033 --> 00:13:10.833 Bank built on that exact issue. 00:13:12.200 --> 00:13:14.100 The three lines of defense. 00:13:14.100 --> 00:13:16.033 We're going to look at that. 00:13:16.033 --> 00:13:21.033 A compliance line of defense is not just unilateral. 00:13:21.433 --> 00:13:23.900 We see it on three different levels. 00:13:24.400 --> 00:13:26.633 The business line that owns the risk, 00:13:27.066 --> 00:13:31.266 the compliance and the control groups that support that. 00:13:31.666 --> 00:13:36.000 And then ultimately the audit folks that audit against all of that. 00:13:37.233 --> 00:13:40.566 We're next going to look at the development for you 00:13:41.233 --> 00:13:44.966 of a comprehensive, effective compliance program. 00:13:45.566 --> 00:13:50.833 What are the elements of an effective compliance program? 00:13:51.300 --> 00:13:54.966 We're going to look at several items in particular 00:13:57.033 --> 00:13:59.833 specialty documents and 00:13:59.833 --> 00:14:02.766 research papers that came out from the BIS, 00:14:02.766 --> 00:14:05.500 the Bank for International Settlements, an organization 00:14:05.766 --> 00:14:09.366 that I like to call the Central Bank of Central Banks around the world. 00:14:10.833 --> 00:14:11.966 We're going to look at that. 00:14:11.966 --> 00:14:15.966 We're going to look at a number of other best practices, documents 00:14:16.266 --> 00:14:18.900 for effective compliance in the workplace. 00:14:20.000 --> 00:14:23.700 In addition to that, we're also going to start looking at 00:14:24.200 --> 00:14:27.433 if we know what our overall program 00:14:27.433 --> 00:14:30.566 should be and the main components of that program. 00:14:31.400 --> 00:14:35.200 What are the metrics, the KPIs? 00:14:35.200 --> 00:14:38.566 That is key performance indicators, key risk indicators 00:14:39.266 --> 00:14:43.900 that actually help us measure how closely that we are 00:14:44.366 --> 00:14:48.300 to accomplishing that effective compliance program. 00:14:49.900 --> 00:14:52.633 We're also going to look at specific 00:14:52.633 --> 00:14:57.766 types of crimes, financial crimes, areas 00:14:57.766 --> 00:15:01.066 where violations of laws and rules would occur. 00:15:01.800 --> 00:15:05.966 Now, please understand, violations of laws 00:15:05.966 --> 00:15:11.700 and rules are not necessarily all the financial crime with the 00:15:12.100 --> 00:15:15.966 the shaky looking character on the corner sort of thing. 00:15:16.400 --> 00:15:19.700 There are often times where it happens with folks 00:15:20.000 --> 00:15:24.866 that look just like you arrived in a business suit, in a button down 00:15:24.866 --> 00:15:30.400 shirt, in a nice dress and so on in a business suit and so on. 00:15:31.566 --> 00:15:33.466 It could also happen 00:15:33.466 --> 00:15:38.500 when folks don't even understand that they're violating laws. 00:15:38.500 --> 00:15:41.833 Rules and regulations could be both purposeful, 00:15:42.400 --> 00:15:44.766 and it could also be accidental. 00:15:45.900 --> 00:15:49.000 We're going to look at one of the most 00:15:49.000 --> 00:15:53.600 comprehensive types of financial crimes out there, 00:15:53.833 --> 00:15:56.466 and that would be the crime of money laundering. 00:15:56.833 --> 00:15:57.566 Of course, we're going 00:15:57.566 --> 00:16:00.600 to be looking at it in terms of anti-money laundering. 00:16:01.033 --> 00:16:03.666 But we're going to be looking at one of the most pervasive 00:16:04.000 --> 00:16:06.066 of the financial crimes that are out there 00:16:06.366 --> 00:16:08.633 that involved in money laundering. 00:16:10.100 --> 00:16:12.466 What I then want to do is once we have all that, 00:16:12.966 --> 00:16:17.000 I want to put it together in a way that many of us could see 00:16:17.266 --> 00:16:19.633 the internal relationship 00:16:20.033 --> 00:16:24.100 within the organization of the risks. 00:16:24.666 --> 00:16:27.800 Finding that compliance risk 00:16:28.200 --> 00:16:31.833 is one of the key risks of that organization 00:16:32.033 --> 00:16:36.966 and can be seen interrelated throughout the organization. 00:16:38.400 --> 00:16:40.800 Now we can have all that. 00:16:40.800 --> 00:16:43.700 We can understand the overall program, 00:16:43.700 --> 00:16:48.433 the policies, the procedures we could measure against those. 00:16:48.766 --> 00:16:52.066 We could understand the individual financial crimes 00:16:52.066 --> 00:16:56.066 like money laundering or insider trading and all that. 00:16:56.566 --> 00:17:01.066 We could understand that risk is tied throughout the organization. 00:17:02.400 --> 00:17:05.633 But unless we could align 00:17:06.566 --> 00:17:10.100 where our mission of the firm. 00:17:10.700 --> 00:17:15.766 The mission of our risk groups and the mission of compliance. 00:17:16.300 --> 00:17:19.500 We're going to ultimately be going in a whole bunch 00:17:19.633 --> 00:17:21.666 of different directions. 00:17:21.666 --> 00:17:24.466 So we want to want to really make 00:17:24.466 --> 00:17:28.300 concrete the alignment of those missions 00:17:28.966 --> 00:17:34.766 so that the compliance program works smoothly and appropriately. 00:17:36.266 --> 00:17:38.566 I'm going to then start rounding it out a little bit 00:17:38.566 --> 00:17:41.366 more and looking at some focused awareness. 00:17:41.900 --> 00:17:44.433 I want to look at things like cyber crime. 00:17:45.066 --> 00:17:49.066 I want to look at what we tend to call the rise of regtech. 00:17:49.433 --> 00:17:52.500 That is the use of technology 00:17:53.166 --> 00:17:55.966 in regulatory compliance. 00:17:57.266 --> 00:18:01.433 And finally, we want to end this with an understanding 00:18:01.666 --> 00:18:05.433 of the investigations that we would have to undergo 00:18:05.766 --> 00:18:09.300 in the skill sets required in those investigations. 00:18:10.100 --> 00:18:13.000 That's really the agenda that we want to look at 00:18:13.400 --> 00:18:15.500 and that's where we want to go. 00:18:15.500 --> 00:18:17.800 So are you with me? Are you ready? 00:18:17.800 --> 00:18:23.500 Are you absolutely ready to become a certified compliance 00:18:23.500 --> 00:18:28.466 risk in internal control officer? 00:18:29.366 --> 00:18:31.166 If so, let's start.