The Future of Compliance Under Trump

posted by Lyric Hughes Hale on December 21, 2016 - 11:01am

This is a piece from Carole Basri, an adjunct professor at both Fordham University Law School and Peking University Law School. She discusses the changes that general counsels and compliance officers should be aware under the new Trump administration since there is a potential for a change in several areas including the following:

1.   There will probably be a simplification of existing regulations.

2.   The Dodd Frank Act's sweeping reforms may be rolled back but the likelihood is that it will remain largely intact due to corporate comfort with the Act as is; however, enforcement will be less rigorous by the Justice Department and the Securities and Exchange Commission.  Even the opportunity to roll back the whistleblower protections and awards will not be pushed by corporate America because many corporations have learned to live with it so long as a requirement is added that the whistleblowers receiving a bounty must first report the incident on the company hotline.

3.   Interestingly, large American corporations will generally champion keeping the reforms in place under the Dodd Frank Act since they have already created the compliance structure to support the reforms. I do not think banks will want to roll it back since they will feel the next administration will just want it back and that the infrastructure is already there so it is better to just leave it alone.

4.   Compliance departments will continue to grow internationally as developing (BRIC) and underdeveloped countries strive to fight corruption.  

5.   We are already seeing the following anti-corruption efforts in the BRIC countries:

In Brazil, with the Petrobras and the impeachment of President Dilma; 

In India, with the demonetization campaign of Prime Minister Modi; and 

In China, with the second five year plan to fight corruption, the installation of compliance officers in all large Chinese companies, and the decline in the luxury goods market.

6.   While Russia remains an outlier on the fight against corruption at this time, this will probably change soon.  Under a Trump administration, some or all of the sanctions will probably be lifted against Russian banks and other entities.  As Russia, joins in the larger international market, it will need more compliance with anti-money laundering, anti-bribery, sanctions and boycott laws and regulations.  This will lead to larger compliance departments for Russian companies and in particular, financial services companies.

7.   Underdeveloped countries will also have a need for their companies to expand compliance departments if they are to fight corruption and become greater players in the global economy.  This will be most apparent in Africa.

8.   Compliance departments will probably expand globally since it is at its heart self regulation rather than government regulation.  By this I mean that there will be more industry ( like FINRA) and governmental oversight of existing compliance programs in companies.  The mandate for expansion will not be to increase regulators but to increase the responsibility for effective compliance programs within each industry and company.  This is the essence of self regulation.

9.  In house legal departments and compliance departments will be professionalized with more certification and degree programs like the LLM in Compliance at Fordham Law School.  There will be an increased demand for trained in house lawyers and compliance professionals.