Compliance Officers – Duties, Qualifications and Remuneration
What the job of a Compliance Officer entails and tips for getting started in the industry.
Compliance Officers are responsible for ensuring their organisational and business processes comply with government regulations. Their duties are diverse and can range from conducting risk assessments to advising the management. This article takes a look at the skills Compliance Officers need as well as their roles and responsibilities and personal liability risk.
Who is a Compliance Officer?
Compliance Officers are responsible for ensuring that all corporate processes and procedures comply with the law. And not only the law — a Compliance Officer is also responsible for ensuring that company operations comply with internal standards too. Without a Compliance Officer who actively monitors and drives compliance management, companies run the risk of violating applicable laws and regulations, thus exposing themselves to potential reputational damages and fines.
As compliance guidelines become more stringent, and following scandals such as ADAC in 2014 or more recently Wirecard, more and more companies – from medium-sized businesses to large corporations – are relying on their Compliance Officers. The Compliance Officer ensures that the company stays abreast of regulatory standards and fulfills the role of an in-house expert, keeping an eye on all developments and ensuring that compliance processes are fully implemented. Compliance Officers therefore, perform a very important role and demand is high for qualified specialists in this field.
What does a Compliance Officer do?
A Compliance Officer fulfills several functions:
- Monitors all operational processes and procedures using a compliance management platform to ensure that the company complies with all legal regulations and ethical standards.
- Manages information flow by researching, recording and analysing data and information. With a regular flow of information and conducting compliance risk assessments, they ensure that the business runs smoothly.
- Trains and educates staff so that they are informed of any legal changes and updates to compliance guidelines.
- Acts as contact person and liaison between department heads and senior management.
- Conducts regular assessments to determine whether policies are compliant with the law.
Compliance Officers provide a link between specialist departments and the management. They regulate the flow of information between management and specialist areas, while respecting different responsibilities and confidentiality requirements.
To avoid conflicts of interest, the Compliance Officer position should not be situated within or report directly to the legal department. Compliance Officers ensure that the company complies with the law while ensuring that the business runs smoothly. Ideally, the position is located directly under the board of directors, guaranteeing independence and also a direct reporting line to senior management. This ensures that unfiltered reports reach the management.
Compliance is a complex issue that affects all areas of a company and requires adherence to many laws and regulations. As a one-man band, a compliance officer can quickly become overwhelmed, depending on the size of the company. Establishing a compliance department ensures that a team is present to help take on tasks such as those related to the compliance management system, risk assessments and training.
Because a Compliance Officer communicates directly with the management and is involved in business decisions, they also play an advisory role. Unlike an external consultant, however, a Compliance Officer actively helps to shape these business decisions and seeks solutions to achieve business objectives while complying with all laws and regulations.
If the company is new to compliance, a Compliance Officer starts by setting up a compliance management system, a whistleblowing hotline and an approval manager to ensure that gifts and hospitality are properly registered and processed. If the company already has a compliance management system in place, they take over the supervision and organisation of this system. Either way, it is a Compliance Officer’s job to assess and identify potential risks within the company, develop proposals for dealing with and avoiding compliance risks, optimise existing processes and procedures and, if necessary, strengthen their department with additional resources and staff.
How do I become a Compliance Officer?
Compliance Officers require three primary skills – understanding of the law, entrepreneurial skills and confidence in handling data.
Additional requirements include:
- Analytical thinking and ability
- Strong communication skills
- Legal and moral integrity
- Strategic thinking
- Good command of English
- Expert knowledge of the company and the relevant market
- Management experience
The best starting points for a career as a Compliance Officer are degrees in law, business administration or information science. Bachelor degrees in business administration and information science take up to six to seven semesters to complete, and Masters degrees an additional three to four semesters. It usually takes ten semesters to complete a law degree up until the first state examination. While these requirements largely apply to Germany, chances are that the specific requirements may vary from country to country.
It is rare to start at a company directly as a Compliance Officer. Compliance Officers need to know their company and its market environment thoroughly before they can do their job effectively, so they usually start by gaining experience in another company position before moving to a role in compliance management. It is very common, for example, for Compliance Officers to start in the company’s legal department and later move into a compliance role.
Because legal knowledge plays such an important role in compliance management, it is difficult to make a career change from other fields of study and occupations. Trained lawyers or business economists who have completed compliance training have the best prospects here.
How much does a Compliance Officer earn?
The salary formula for Compliance Officers is simple – the more their professional experience, the better the salary. The position requires high standards of integrity, excellent communication skills and management knowledge. For this reason it is rare for companies to employ Compliance Officers in junior positions.
There are three different seniority levels in compliance with a corresponding salary range:
- A Compliance Officer can expect to earn between €50,000 and €75,000 per year.
- A Senior Compliance Officer can expect to earn between €70,000 and €100,000 per year.
- A Chief Compliance Officer can expect to earn between €90,000 and €200,000 per year.
Responsibility and personal liability of Compliance Officers
A Compliance Officer earns a high salary and this reflects the high degree of responsibility that comes with their position – they are after all responsible for ensuring that the company’s business practices comply with all legal requirements and ethical standards. In direct communication with management, they also monitor and ensure that their company complies with all laws, policies and regulations when working towards its business objectives. In doing so a Chief Compliance Officer bears the highest degree of personal liability risk.
This raises the question of whether Directors and Officers liability insurance (D&O insurance) could help to mitigate this personal liability risk. Individual companies should clarify whether their D&O insurance policy covers their Compliance Officer because the level of coverage normally depends on how much responsibility this position holds. If the coverage is inadequate, the company should renegotiate.
A D&O insurance policy protects a Compliance Officer in a civil law context. It usually covers legal fees and also damages. Penalties and fines, on the other hand, are not always covered.
Companies would be advised to clarify the exact responsibilities their Compliance Officer holds and officially record these responsibilities as binding. This could be done, for example, through a Board resolution.
Tips on how to successfully analyse compliance risk in your organisation