Promoting an Enterprise-Wide Compliance Culture within Financial Institutions (FIs)

C

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The correct answer is C. Relevant information should be shared throughout the organization.

To promote an enterprise-wide compliance culture within a financial institution, it is essential that relevant information related to compliance is shared throughout the organization. Compliance should not be seen as a separate function, but rather integrated into all business operations.

All employees within the organization should be aware of the importance of compliance and how it impacts their day-to-day activities. This means that the compliance function should work closely with other business units to ensure that compliance considerations are integrated into all policies, procedures, and processes.

Sharing relevant information throughout the organization is critical to creating a culture of compliance. This includes sharing information related to regulatory requirements, changes in the law, and best practices. It also means that employees should be encouraged to ask questions and seek guidance when they are unsure about how to handle a particular situation.

The first line of defense (i.e., business units) should not establish policies independently of the compliance function. Compliance policies and procedures should be developed in collaboration with the first line of defense to ensure that they are practical and effective.

Revenue-generating business sectors should not have precedence over compliance. Compliance is essential to protecting the financial institution from reputational and financial risks, and failure to comply can result in significant fines and penalties.

The cost of compliance should not necessarily increase proportionately to revenues. Instead, the cost of compliance should be proportionate to the level of risk that the financial institution faces. This means that compliance resources should be directed to areas of the business where the risks are the highest.