Truth: Organisations Need A Global Compliance Framework

When thinking about handling compliance at scale, and where possible, creating a global framework can allow the organisation to grow without limit.

This is the second part of the series 5 truths about global compliance. Read the first part here and download the paper to read the full version.

In 1956, the cognitive psychologist George A. Miller of Princeton University published a paper called "The Magical Number Seven, Plus or Minus Two." It became one of the most cited scientific papers of all time. Miller's idea was that the maximum number of objects a human can keep in short-term memory is seven, plus or minus two. Beyond this, the "working" category of memory struggles to retain the information. The Magic Number therefore can hold true for digits, playing cards, and potentially where golf balls are hit on a driving range.

The Magic Number exemplifies what we know, but beyond a certain degree of complexity we need a formal system to cope.

There is a close parallel with compliance. Above a threshold of complexity an improvised approach will collapse. The mind becomes overloaded and when this happens, errors can creep in. In a multinational organisation with dozens of entities to manage, each unique, the compliance function can be soon reduced to chaos.

When thinking about handling compliance at scale, and where possible, creating a global framework can allow the organisation to grow without limit.

But what is the best way to construct this framework?

"Each company is different," says Leila Szwarc, Global Head of Compliance and Strategic Regulatory Services at TMF Group. "There's no one size fits all solution. However, there are universally approved principles that when applied, will ensure the global compliance function would be able to handle all demands thrown at it."

She mentions that once a company is committed to such a review they should begin their process with an audit to understand where they are. "This may take three to six months," says Szwarc. Depending on the organisations, some will have an audit lead by internal officers and some by an external party. "Fresh eyes help," says Szwarc, to map out the current ways of working and their deficiencies. It will measure the gap between the requirements of each jurisdiction, the degree of compliance and its performance.

Due diligence work must also be done on CoSec information, to ensure harmonisation and accuracy across different sources of data is checked (the company's statutory...