Dan Le Blancq leads Davies’s offshore team, which is based in Jersey and part of our Asset & Wealth Management team, specialising in supporting regulatory operations for offshore financial services firms.
Lichen is amazing. You’ll find it on every continent (even Antarctica), quietly doing its thing, out of the spotlight, hiding in plain sight. Take a walk outside anywhere, and with a little lichen mindfulness you’ll soon start to spot it.
But the key thing about lichen is not its ubiquity, but the fact that it’s not one thing. It’s two.
Lichen is a classic example of symbiosis, just like the clownfish/anemone double act familiar to fans of Finding Nemo; two organisms working together in concert to thrive where neither would survive alone.
In the case of lichen, it’s a fungi and algae dream-team. The fungi provides the biological scaffolding, while the algae handles the photosynthesis. Pivot that thought from the natural world to financial services and you’ll discover the compliance function isn’t just one thing, either.
Many of the compliance departments I’ve worked with hold responsibility for two quite different functional components, namely regulatory assurance and regulatory operations.
The assurance bit focusses on monitoring, oversight and giving internal guidance/advice, and it usually holds the keys to the underlying control framework of policies and procedures.
The operations bit handles the high-volume processes with a chunky regulatory component, including onboarding, identity verification, periodic reviews, and sanctions screening.
These two functions are fundamentally different and require very different skillsets.
The assurance function needs high-level experience and technical expertise around laws, regulations and regulators. An analytical approach, and conservative lawyer-like perspective is called for on this side of the equation.
In contrast, the operations component needs a dynamic systems mindset, laser-focussed on delivering the most efficient processes to reliably hit the regulatory requirements, thousands of times a year, day-in-day-out.
Just like lichen, both components need to be balanced and work in harmony.
Too much weight on the assurance side, and reg-ops processes can become bogged down and inefficient (and uncommercial). Backlogs can start to spiral and the four horsemen of the regulatory apocalypse can hove in to view on the horizon.
Prioritise process efficiency over regulatory alignment, and things may look fine and dandy on the surface, but crucial regulatory requirements get missed, and those same horsemen sneak up from behind and wreak just as much havoc via an unexpected remediation.
And that’s why compliance is like lichen.
We should all take inspiration from Rudolf’s favourite snack to stay on the regulatory straight and narrow, with a compliance function working in a state of symbiotic balance of which even Sir David Attenborough would be proud.
To find out how we can assist with any aspect of your regulatory operations, offshore compliance, backlog remediations or other challenges, please contact us.