Compliance Department

What is a 'Compliance Department'

The department or unit within a brokerage firm, bank or financial institution that ensures compliance with all applicable laws, rules and regulations. The compliance department generally has a wide range of roles and responsibilities within a firm. Depending on the business of the financial institution, these duties may range from monitoring trading activity, preventing conflicts of interest and ensuring compliance with regulations at brokerage firms, to preventing money laundering and potential tax evasion at large banks.
 

BREAKING DOWN 'Compliance Department'

As a firm's internal police force, the compliance department is unlikely to be the most popular unit in a firm. However, a competent compliance department is of the utmost importance in maintaining a firm's integrity and reputation.

Compliance demands for most financial firms increased regulatory oversight significantly in the wake of the 2008 credit crisis. This has led to increased demand for experienced compliance staff.

Although compliance costs have spiraled higher in recent years, the costs of non-compliance - even if inadvertent - can be far greater for a financial institution. Non-compliance may lead to stiff monetary fines, legal and regulatory sanctions, and loss of reputation.
 

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