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SA ‘sunny place for shady people’
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Sanchia Temkim
Business Day
Friday, May 28, 2010
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Among financial services companies there is a general absence of a culture of compliance with legislation governing the sector, and this needs to be addressed, according to compliance experts. Despite extensive legislation, SA had become a “sunny place for shady people” as the levels of crime and seeming absence of consequences from it had resulted in “greater levels of acceptance of all kinds of legal and moral transgressions”, said Ursula M’Crystal of consultancy group AML Solutions.
“Simply bringing in more and more legislation wouldn’t solve the problem without a change of mindset,” she said. “When it comes to compliance, attitude is everything.”
M’Crystal was speaking at the Compliance Institute’s seventh conference in Cape Town last week, where the lack of a mature compliance culture in the financial services sector and the important role culture plays in responding to new legislation were recurrent themes.
Conference speakers included South African industry representatives as well as regulators.
A specialist in the field of combating money laundering, M’Crystal was referring particularly to the legal requirement of reporting suspicious transactions.
M’Crystal said South Africans tended to perceive a large grey area between right and wrong and often focused on how to circumvent rules and regulations rather than to comply with them. She challenged the audience of compliance officers largely from the financial services industry to consider their own conduct when it came to laws, such as traffic regulations, tax evasion and exchange control contraventions.
She said because South Africans often took a liberal view on following laws themselves, they also failed to report contraventions by others.
Richard Rattue, of Compli-Serve, suggested that both South African companies and regulators needed to mature before a move from a rules-based approach to a principles-based approach to compliance could be considered. Speaking about the UK’s Treating Customers Fairly law, which is likely to be adapted to local conditions and brought in by the Financial Services Board, Rattue said it could fail in this country if local companies did not develop the right approach and invest in compliance resources.
A large number of consumer protection measures had been brought to bear on the financial services sector in recent years and consumers were among the most protected anywhere. However, corporate scandals such as that around Fidentia continued to occur.
Miranda Feinstein, a director at Edward Nathan Sonnenbergs and a member of the King committee, said recently the King 3 report on corporate governance focused on how to go about achieving compliance.
Mervyn King, chairman of the committee, has pointed out that “one cannot be prescriptive in the world of corporate governance — it is an ongoing exercise”.
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