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KPMG Book Looks At Managing Modern Risk (Part 2)

  1. What can you say specifically about off-shore tax evasion?

Girgenti: The recent release of the Panama Papers has placed a spotlight on the issue of off-shore tax evasion. Every country has anti-bribery laws, and every country has anti- money laundering laws. Most countries have laws dealing with tax evasion. It seems that despite all of

Richard Girgenti

Richard Girgenti

this, there may have been activity in off-shore holdings involving high net worth individuals, including politicians, celebrities and public officials on a massive scale. Like some of the events in the past, organizations, banks in particular, are going to have to look at what they’ve been doing to see if they missed something. The regulators and the enforcement authorities have already begun to ask banks and other financial institutions about their role in helping customers set up off-shore accounts and governments will also be looking at their laws and regulations to determine whether there were any loopholes. It wouldn’t surprise me to see a great deal more activity in this area in the upcoming months.

  1. How have unfair, deceptive and abusive consumer finance practices figured in?

Girgenti: Amid the 2008-09 financial crisis, rising mortgage foreclosures and consumer debt levels in the U.S. created a public outcry for better protection of consumers. What was uncovered during this period were a variety of unfair, deceptive, abusive and/or unethical practices that were at the root of the harm to consumers. In an effort to address some of the deficiencies that led to the financial recession, Dodd-Frank created the CFPB to assume oversight from a patchwork of different federal agencies.

  1. What’s in the future?

Girgenti: While there may be cycles with ebbs and flows of regulatory enforcement activity in the future, there can be no question that the bar for companies to manage risk has been raised. Companies need to continuously evaluate their risks and ensure that their compliance programs are effectively managing these risks. We must also never forget that most of the events that occurred in the past thatwere catalysts for this new era of regulatory enforcement—whether it was 9/11, the financial reporting crisis that followed 9/11, or the financial recession

Timothy P. Hedley

Timothy P. Hedley

in 2008—were, for the most part, unforeseen. What companies need to do today is prepare for the unknown. This means having all of the ingredients of effective compliance and a culture of integrity in place before the next big event.

Hedley: The closest I would get to a prediction is that staying ahead of organizational and individual compliance expectations is not going to get any easier.

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