Prevention, Detection, and Remediation: CFTC's Compliance Guidance

On September 10th, the Commodity Futures Trading Commission (CFTC) issued new guidance for financial institutions on the evaluation of corporate compliance programs in connection with enforcement matters. This document comes not long after the Department of Justice (DOJ)’s release of their updated Evaluation of Corporate Compliance Programs, both part of an initiative “to get companies to invest in programs that prevent regulatory infractions” (Wall Street Journal).

The CFTC’s guidance is much shorter than the DOJ’s-consisting of only three pages-and focuses on the existence and effectiveness of a pre-existing compliance program, as well as efforts to improve a compliance program after an enforcement action. Despite its shorter length, the CFTC’s document provides valuable guidance for organizations to ensure a strong and effective compliance program to avoid regulatory enforcement actions.

During an evaluation, the CFTC will focus on whether or not an organization’s regulatory compliance program was reasonably designed to prevent, detect, and remediate compliance issues or violations.

Prevention

When conducting their analysis, the Division will look to see if your organization has appropriate preventive measures in place, including:

• Written policies and procedures
• Training of staff, supervisors, and compliance personnel
• Adequate resources devoted to compliance
• The overall structure, oversight, and reporting of the compliance function

Detection

An organization’s compliance program must have mechanisms in place to detect any issues related to compliance, including:

• Internal surveillance and monitoring
• Internal reporting system
• Handling of complaints
• Identification and evaluation of suspicious activity

Remediation

Finally, once a compliance issue was identified, the Division will evaluate if an organization:

• Addressed and fixed the issue, including curing financial harm and restoring integrity
• Disciplining individuals directly and indirectly responsible
• Identified and addressed deficiencies in their program that may have led to the issue

Using Technology for Compliance

The three elements outlined in the CFTC’s guidance can be automated and streamlined through technology, allowing for a more efficient and robust compliance program, which mitigates overall risk.

An automated compliance monitoring platform, like PerformLine, covers the prevention, detection, and remediation of compliance issues associated with your brand, including content from partners, third parties, or other individual contributors.

Prevention: An investment in a dedicated compliance technology shows commitment to having adequate resources for compliance, while still providing cost-savings through automation. PerformLine provides you with the oversight and reporting capabilities needed for a proactive approach to compliance.

Detection: PerformLine automatically monitors your brand across multiple consumer interaction channels, including the web, calls, messages, emails, and social media, and discovers any unknown placements of your brand. The platform also provides detailed reporting on these observations and helps you get down to the source of an issue.

Remediation: Once a compliance observation is detected, PerformLine automatically creates an alert and sends a remediation notice to the appropriate party in a timely manner. All of this is documented within the platform for a complete audit trail.

If you’d like to learn more about how PerformLine can help your organization manage these new guidelines from the CFTC and other regulators, our experts are ready to help.