RISE OF GLOBAL COMPLIANCE STANDARDS. TMF Group webinar with Association of Corporate Counsel

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1 RISE OF GLOBAL COMPLIANCE STANDARDS TMF Group webinar with Association of Corporate Counsel 25 April

2 AGENDA Introduction Global Compliance Standards Global Compliance Framework Example Bank of America Q&A 2

3 OUR SPEAKERS Matthew Eckford, Jennifer E. Bennett, Michele Museyri, Director - International Entity Management, TMF Group Managing Director & Associate General Counsel, Bank of America Corporation Vice President of Global Sales, TMF USA 3

4 GLOBAL REACH AND LOCAL KNOWLEDGE EMEA excl. Benelux Benel ux APAC Americas Emerging offices Present in over 80 jurisdictions Over 7000 qualified legal, paralegal, HR and payroll and accounting experts Centralized service delivery and single point of contact In depth knowledge of local compliance requirements Market s most used central databases are maintained by TMF Group No conflict of interest and a partner who can help coordinate with local service providers Established processes and project teams to manage your entities lifecycle 4

5 Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middlemarket businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 47 million consumer and small business relationships with approximately 4,500 retail financial centers, approximately 16,000 ATMs, and awardwinning digital banking with approximately 35 million active users, including approximately 24 million mobile users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. 5

6 GLOBAL COMPLIANCE STANDARDS Matthew Eckford TMF Group 6

7 GLOBAL STANDARDS Global businesses are engaged in a battle for every last ounce of market share and are pressured to realize every opportunity that the market presents. But they operate in a world where risk aversion is at an all-time high. In-house talent can no longer maintain the breadth of compliance knowledge needed. Processes are becoming more difficult to manage, as reporting and documentation requirements change and increase. At the same time, penalties for compliance errors and missed deadlines are increasingly severe. 7

8 GLOBAL COMPLIANCE FRAMEWORK 8

9 5 TRUTHS ABOUT GLOBAL COMPLIANCE Compliance is difficult and getting harder Organisations need a global compliance framework Sometimes it is better to outsource compliance functions, sometimes it is not Compliance mistakes can cause real damage The fine line between the present and the future never looked so blurry 9

10 GLOBAL COMPLIANCE FRAMEWORK A unified global approach Focuses and optimizes resource Identifies areas of risk Encourages internal collaboration/integration Provides a platform for internal business case Includes Guiding Principles, Resources and Technology 10

11 GUIDING PRINCIPLES Identify what support do you need Introduce global processes and procedures to maintain a coherent and unified governance methodology Prioritize local compliance you re only successful when your local entities are compliant Understand your corporate compliance appetite Implement single standard Standardize formalities Corporate Secretarial: Board consistency and cadence, delegated authority and document management Set up global compliance updates Create heat maps to focus scarce resource 11

12 RESOURCES Resource according to the size of your portfolio and complexities of jurisdictions Approach projects in manageable chunks and identify in-house/outsources expertise needed to cost-effectively complete Categorize entities geographically and assign responsibility to legal entity specialists that own their entities Augment local team knowledge with global advisor knowledge databases Document global processes and procedures Consider Automation as a solution for the future 12

13 TECHNOLOGY Consider what you may implement on the global scale robotic process automation, digitalization Manage digitalized silos Use the increasing importance of Information Governance to drive change, improve efficiency and efficacy of global teams Embrace our digital future 13

14 GLOBAL COMPLIANCE FRAMEWORK EXAMPLE Jennifer Bennett - Bank of America 14

15 WHY CREATE A FRAMEWORK Regulatory Tax Subsidiary Governance Framework Conflicts Limitation of Liability Oversight 15

16 ASSESSING COMPLEXITY OF SUBSIDIARY NEEDS Tier 1 Tier 2 PRINCIPAL OPERATING SUBSIDIARIES - represents a material proportion of operations and risk CRITICAL OPERATING SUBSIDIARIES AND INTERMEDIATE HOLDING COMPANIES - responsible for a key function of the enterprise - subject to governmental regulatory oversight - subject to potentially significant outside scrutiny, especially of related party transactions (taxation or minority interest) Tier 3 OTHER OPERATING SUBSIDIARIES AND HOLDING COMPANIES - limited or no operations/risk exposure - addresses a need, such as protection from liability, tax planning or residency requirements Tier 4 SPECIAL PURPOSE ENTITIES - created to address a specific need - no operating oversight needed - requires minimal governance oversights 16

17 SUBSIDIARY GOVERNANCE FRAMEWORK What is it? A Subsidiary Governance Framework seeks to manage subsidiaries with a consistent approach aligned to a Risk Framework and within a prescribed Risk Appetite. The Framework can be based on a tiered classification system, establishing the minimum requirements for subsidiaries Governance, Controls, Management reporting, Financial and regulatory, and Risk management practices The Framework requirements should be in addition to governance requirements that may be imposed by applicable law, rule or regulation or enacted through other Company Policies. 17

18 SUBSIDIARY GOVERNANCE FRAMEWORK How is it structured? Framework / 5-Tier Classification The tier classification (Tier 1-5) of a subsidiary represents the relative significance of each subsidiary to capital position, revenue generation, and/or risk profile; these criteria include both objective and subjective factors Tier 1 and 2 Subsidiaries should require the greatest level of oversight Key Features of a Framework Documentation of roles and accountabilities for Committees, Front Line Units, Control Functions, and subsidiary specific responsibilities for the Subsidiary Board of Directors Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 More Oversight Less Oversight Management and subsidiary level reporting and approvals including financial, regulatory, risk, liquidity, new product and capital information Compliance monitoring programs to ensure Framework requirements are appropriately satisfied 18

19 QUESTIONS AND ANSWERS To find out more please visit 19

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