e-news

Foundation Members

Compliance

Volume 6 Issue 1 June 2007

Welcome to the latest edition of e-news

It would be impossible to convey how much the ACI office will miss Larissa, who first joined us two years ago as the Events and Education Assistant and moved on to become our Learning Centre Manager and later our We have an article from one of our CCP Professional Development Manager as Accreditation graduates, Ian Carah, an the role expanded. As Im sure those interview with our 2006 Honorary who have interacted with Larissa Fellow, Randal Dennings and a during her time at ACI will attest, she response from one of our members to was a wonderful asset to the Institute the invitation in the last edition to and will be much missed, not only on a comment on communication and professional level but a personal one training in compliance as well as an as well. Above all she always worked article from the Harvard Business for the best outcome and support for Review to inspire and a Cinderella story our members and aside from her to challenge your thinking! formidable and exacting standards in regard to grammar and punctuation in As usual we welcome articles and the office, this particular quality will be letters to the editor from our members difficult to replace. We wish her all the and guests and would encourage best in her new role and look forward everyone to put pen to paper (or to seeing her at a few ACI events! fingers to keyboard) and contribute your opinions, your latest thinking, your In the meantime we also want to feedback or response to articles or ACI welcome on board our new Events events. Co-ordinator, Hannah Tourle. Hannah This edition of e-news has been a while in the making but we hope you will agree that the quality and scope of articles in this edition is worth the wait.
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Contents
Welcome Presidents Address From the CEO Outsourcing Fund Administration In conversation with... Courage as a Skill Compliance TrainingA success story The Cinderella Syndrome Know Your Charity ACI Volunteer Program Accreditation & Education News

Enews is also a forum for members to catch up on ACI activities and internal news and be alerted to upcoming events, volunteer opportunities and accreditation and education news. We have been particularly active this year with our volunteer groups and internal strategic planning, with more groups planned for the near future and a couple that have been inactive for a while being revived, so we look forward to their output being able to be shared in enews and on the ACI website. On a sad note we are farewelling our Professional Development Manager, Larissa Cibas and as you will see from the advertisement in this edition, we are looking for a replacement to fill this role.

has been with us now for approximately six weeks and has hit the ground running with the first of our events for the new calendar coming to fruition just as she arrived on board keeping her very busy! Members will have an opportunity to meet Hannah at any of our Sydney events and some of our interstate events as the year progresses. We hope you enjoy this edition of enews and dont forget to send through your contributions, letters and feedback. You can email these directly to our National Manager at: naomi.burley@compliance.org.au

Your Editorial Team

Australasian Compliance Institute Inc. ABN 42 862 119 377 I www.compliance.org.au I Ph 02 9290 1788 I Fax 02 9262 3311

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ACI: but please feel free to send to a friend (or two)

From the President

Mr David Lawrence AACIPresident ACI
ENews has been absent for a while! This is not a reflection of the lack of activity in the industry or ACI. In fact, it is quite the opposite. It is interesting to reflect on the recent levels of activity. From discussions with industry participants and from general observation it would appear there was a lull in the demand for compliance professionals in the early part of this year. But this has changed and demand is again on the increase. It also appears that the level of demand is not being matched by the level of supply. The availability of compliance staff is limited both by the number of qualified and experienced compliance professionals and by the "brain drain of experienced staff overseas. It appears that this is only going to continue. What this means for compliance professionals is that those with quality experience or qualifications will continue to have an advantage in the market place. Attaining an ACI qualification will assist in this regard as the recognition for the qualification grows. ACI will be continuing to promote the value of its accreditation and its accredited members. The level of demand also provides an opportunity for ACI to promote the value of qualified and experienced compliance professionals. I recently presented at, and observed, an ACI CCP intensive. I was impressed by the calibre of the knowledge and discussion of those present. It highlighted that the profession and professional standards have evolved significantly over the last few years. It also highlighted that even those who have been in the industry for a number of years obtain value and knowledge from these intensives. To me, this demonstrates that the intensives are not just a rubber stamp for those who desire professional recognition, but a significant form of added value to the growth of the individual and the growth of the
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profession. The growing recognition of value of the accreditation courses is also reflected in the increasing numbers of courses being provided. This is one aspect of the high level of events and member service related activity taking place in the ACI offices. The Board of ACI is committed to a focus upon three core objectives - member services to provide professional support; accreditation and education; and representation of members to influence the external environment in which they operate. You will see these reflected in the organisational charter which drives the strategic direction of the organisation. You will also see this in the nature of ACI's activities over coming months. So whilst ENews has been quiet, ACI has not. ENews will once again, in conjunction with our weekly email updates, be a key medium for communicating with, and providing thought leadership for, our members. That is part of ACI's commitment to member service. David LawrencePresident ACI

Invitation to Volunteers
ACI will shortly be releasing invitations to form two working parties, one looking at the needs of those responsible for compliance in SMEs and the other devoting their time to examining the needs and potentially producing tools and resources for compliance professionals responsible for AML work in organisations. Both will be longer term groups who will set their own long term and short term objectives and we will be inviting members with an interest in these two areas to consider joining these groups. Further information will be available shortly on the Volunteering page of the ACI website and applications are preferably taken by email (so that we can keep track of things better!). Visit: http://www.compliance.org.au/www_aci/ page continued next default.asp?menuid=134
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The views expressed are those of the authors and do not constitute legal advice.

From the CEO...

Martin TolarCEO Australasian Compliance Institute
Hong Kong Overview Following on from the appointment of ACIs first Hong Kong based board Member, Annette Donselaar VP and Chief Compliance Officer at AIA and an invitation from the Hong Kong Tourist Board (HKTB) I spent the first ten days in Hong Kong making contact with the locally based compliance community. Not only does Hong Kong represent an excellent launching pad into the broader Asian market given its fusion of Eastern and Western cultures, common law traditions, but more importantly its service based economy is home to many of the worlds leading multinational organisations. During the visit I met with Mr Peter Tashjian on several occasions. Peter is the Chief Executive of the Institute of Compliance Officers (ICO). At present the ICO has approximately 200 locally based members and they run information evenings and training courses for compliance professionals. Peter and I are currently in early discussions with respect to forming an alliance between ICO and ACI and while it is early days we hope to be able to create the first link in what may become a global chain of compliance associations. To find our more about www.complianceofficers.org ICO visit Corporate Communications Manager for the Asia Pacific Region. Not only does Disney have a complex mix of local and international laws that must be complied with, but due to the high profile nature of the organisation and its strong affiliation with children, these compliance issues are magnified with the context of the need to mitigate any potential reputation risks that may appear. That is why Disney has recently appointed Kerry Chandler as the new Vice President of Corporate & Social Responsibility for the Asia Pacific Region. With any luck members who decide to attend our national conference in November will get to hear Kerry speak first hand on the complexities faced by Disney as they not only manage compliance programs across international jurisdictions, but also ensure their reputation as a family focused company remains intact while also having to fulfil the role of responsible corporate citizen. I also had the opportunity to meet with Mr Gary Cheung the Chief Executive and other staff from the Hong Kong Securities Institute (HKSI). The size of Hong Kongs financial services industry can be put in context once you realise that 45,000 exams were undertaken by students of HKSI in 2006. The most interest aspect to this meeting was the revelation that in Hong Kong the Responsible Officers (ROs) are required to train their staff to ensure that organisation compliance obligations are met, but at present, no one has responsibility for training the ROs. This is an issue we hope we can assist the HKSI with later this year when they plan to hold a series of events focussing upon compliance.

Other meetings were conducted with The trip was rounded off with a number of compliance professionals from a number of companies such as Asia Risk and Incisive Financial Hong Kong based organisations with view to not ...due to the high profile nature of the organisation and its only raising ACIs profile in the strong affiliation with children, these compliance issues are region but to also recruit new members and canvass what magnified with the context of the need to mitigate any professional support ACI could potential reputation risks that may appear provide. One of the more interesting meetings took place publishing. Both organisations were keen to find with Mr Jim Leung Regional Director of out more about ACI and ways in which International Labour Standards with the Walt partnerships could be developed that would build Disney Company and Alannah Goss Disneys ACIs profile within the region.
Volume 6 Issue 1
The views expressed are those of the authors and do not constitute legal advice.

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Outsourcing Fund Administration

Risks of conflicting objectives and market concentration
Ian Carah (CCP) - Director - Financial Services Consulting
Introduction Outsourcing is a key feature of the superannuation industry, and for most superannuation funds is an integral part of their strategic framework. This practice presents significant risks both from a regulatory and business perspective. There is sometimes a disconnect between a funds regulatory obligations and the business imperatives of material outsource service providers. The implications of this in respect of a fund administrator will be examined in this article. Background Significant changes in legislative requirements (Superannuation Safety Amendment Act 2004) (SSAA) have imposed comprehensive licensing and compliance obligations on superannuation funds. The Trustees of public offer superannuation funds are required to be licensed as Registrable Superannuation Entities (RSE) Licensees, and funds themselves must be registered as RSEs. The SSAA also provides for licensees to meet the obligations imposed by various Operating Standards; including outsourcing, adequacy of resources, risk management, fitness and proprietary, and capital requirements (net tangible assets). The Outsourcing Standard prescribes comprehensive obligations in respect to the relationship between the RSE and material outsource service providers, and these are detailed in Superannuation guidance note SGN 130.1 Outsourcing. Risks arise where the contractual obligations of the external service provider (specified in the Outsourcing Agreement) are not met to the standard which enables the Licensee to comprehensively meet their regulatory and compliance obligations. The dispute resolution provisions which are prescribed in the Guidance Note may in practice be unlikely to satisfactorily resolve an ongoing failure to deliver. This inability of the service provider to meet their contractual obligations does not alleviate the Licensee from meeting their obligations under the Superannuation Industry (Supervision) Act 1993 (SIS Act), the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations), and the Superannuation Safety Amendment Act 2004 (SSAA). The options for RSEs are limited given that outsourcing arrangements are generally long term contractual arrangements, fund administrators may be unable to deliver the standard of services to enable Licensees to meet their regulatory obligations, and the choices of competitor fund administrators are very limited with further industry rationalisation taking place. The issues identified arise as a consequence of events occurring currently within the industry; and the implications are at both an operational and strategic level for superannuation funds. Some funds believe that administrators are not delivering what is required for them to meet their regulatory obligations, or their obligations to members. Some funds who have switched administrators as a consequence of poor performance may end up with the same administrator following current industry consolidation. The current business model in the superannuation industry is fundamentally structured on the concept of outsourcing; fund administration, custodianship, investment consulting, and investment mandates. As a consequence of commercial outcomes and market developments, service levels and the ability to meet the outsourcing standard are under threat. Identification of compliance issues A number of critical compliance issues need to be considered at both the fund and administrator level. The key issues and the relevant principles identified in the Australian Standard Compliance

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The views expressed are those of the authors and do not constitute legal advice.

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Outsourcing Fund Administration

Risks of conflicting objectives and market concentration contd
programs AS 3806 2006 include: and top management to effective compliance throughout the organisation; Compliance policies of the service providers are not well developed or articulated; Level of resources allocated to the development, implementation, maintenance and improvement of their compliance program are inadequate; Compliance obligations are not satisfactorily identified and assessed at the fund administration level; Responsibility for compliant outcomes is not clearly articulated or assigned; Competence and training needs have not been identified and addressed to enable employees to fulfil their compliance obligations in respect of their outsourcing agreements; Behaviours that create and support compliance are not encouraged and behaviours that compromise compliance are not satisfactorily identified or addressed; Controls that are in place do not adequately identify compliance obligations or achieve desired behaviours; Performance of the compliance program is not comprehensively monitored, measured or reported; The service provider is unable to adequately demonstrate its compliance program through adequate documentation and practice; and The compliance program is not regularly reviewed and continually improved. There are sometimes significant shortfalls in the quality of the compliance framework within the service provider which inhibit the RSEs from meeting their regulatory obligations. Conclusions and recommendations There is a significant threat to the ability of some RSEs within the Australian superannuation industry to meet their regulatory obligations and
Lack commitment by the governing body

the provisions of the Australian Standard, and in fact to the effective operation of their fund. The ability of some fund administrators to implement effective administration services is impaired by their differing business objectives, their inability to effectively deal with the risks that have been identified, and the shortcomings within their own compliance frameworks. To enable RSEs to satisfactorily address this challenge it is imperative that comparable compliance standards as prescribed in the Australian Standard Compliance programs AS3806 2006 be imposed on fund administrators. Until the market offers alternatives to enable RSEs to meet their obligations, then a prescriptive solution is preferred. Failure to act decisively will have implications for the Funds, for the administrators, for the regulators, and for the industry. These implications will impact at both an operational and strategic level a failure to properly administer funds, an inability to meet member needs, compliance failures, not achieving regulatory benchmarks, and the failure of Funds to meet their strategic business objectives. The following are recommended:
That material service providers be required,

by regulation, to implement the Australian Standard Compliance programs AS 3806 2006; That RSEs be compelled by the regulators to comply with the Australian Standard; That the industry present a submission to their professional bodies highlighting the adverse impact this issue is having on some trustees and their members and making recommendations for change; That the industry present a submission to the regulators: to APRA documenting the impediments to effectively meeting RSE License Conditions (with limited power to act), and ASIC highlighting similar difficulties in meeting AFS Licence Conditions; That the provisions within the Outsourcing Standard (and consequently with Outsourcing Agreements) are considerably

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.

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Outsourcing Fund Administration

Risks of conflicting objectives and market concentration contd
strengthened, not only in the manner in which they are articulated, but in their ongoing enforcement; That the provisions within the Adequacy of Resources Standard (and consequently with RSEs Adequacy of Resources Policy) are considerably strengthened, not only in respect of the regulatory requirement for RSEs but in the requirements of the fund administrators; and That the business planning processes of service providers formally incorporate consideration of the operational and strategic objectives of the RSEs; in order to enhance the likelihood of RSEs meeting the objectives articulated in their respective business plans. Bibliography

impact of choice and APRA licensing, ASFA Research Centre

Australian Securities and Investments Commission, 2002, PS 164 Licensing: Organisational capacities
Ian Carah is the Director - Financial Services Consulting and recently completed the above work in satisfaction of his ACI CCP Accreditation.

Standards Australia, Sydney.

Compliance programs AS 3806-2006 2nd edition,

Standards Australia 2006, Australian Standard

Superannuation Industry (Supervision) Act 1993 (SIS Act). Available at http://

www.comlaw.gov.au

Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations). Available at Superannuation Safety Amendment Act 2004 (SSAA). Available at http://www.comlaw.gov.au General additional conditions for public offer RSE licensees under section 29EA of the Superannuation Industry (Supervision) Act 1993. Superannuation guidance note SGN 130.1 Outsourcing. Available at http:// Superannuation guidance note SGN 140.1 Adequacy of resources. Available at http://
www.comlaw.gov.au ASFA 2003 A risk management framework for superannuation funds. Best Practice Paper. 19 June 2003, Australian Association of Superannuation Funds, Sydney. Questions Outsourcing. www.comlaw.gov.au Available at http://www.comlaw.gov.au http://www.comlaw.gov.au

Outsourcing, 2006, APRA Frequently Asked

Clare, R. The shape of things to come: the

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.

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In conversation with
Randal Dennings, 2006 recipient of the ACI Honorary Fellow Award
Those of you who were present at the ACI Gala Conference and Awards dinner in October 2006 will recall the stunned disbelief with which Randal Dennings accepted his Award of Honorary Fellow of the Institute. When we caught up with him recently for this article Randal, with characteristic humility, continued to express his total surprise at being honoured in such a way, again, brushing aside his contribution to the profession and his fellow members saying it was no more than others have done and that is was another instance of his Clayton Utz team making him look good. Yet again it is striking that it is the very qualities that Randal was awarded for championing that shine through in this reaction, the ACI values of leadership, courage, integrity, excellence and teamwork and a generosity of spirit that led to him being nominated and awarded by his fellow members for his efforts to education and contribute to the development of his fellow compliance professionals. But it seems Randal has not finished providing advice for the industry. As we got to talking Randal expressed what ACI had meant to him over the years: a community where you could commiserate and celebrate with the peers who had an understanding of the difficult and, lets face it, sometimes lonely job compliance professionals had, especially in the early years. The ACI meetings were a place where you could speak your mind and share the experiences (and pain!) for the betterment of all. During the conversation it becomes apparent that the professional in compliance professional is something important to Randal and as ever he is not content to rest on his laurels, or let ACI do so either. Amateur hour is over. says Randal. Compliance and compliance professionals need to get serious. Not that they werent before, but Randal fears in the confluence of all the disciplines that there is a real risk that unless we professionalise compliance, its rightful place in the model will be lost. Randal sees signs in the language of the GRC model where it often expresses compliance as an assumed variable and calls the challenge for himself and his fellow compliance professionals. It is not necessary to stake out our ground in a competitive sense. He says. Rather, it will be through providing intellectual grunt, being intellectually honest in the way we do our jobs and backing it up by being grounded in sound research and experience. We need to make sure that everything we touch as compliance professionals is excellent. This is one of the reasons why he feels the Brian Sharpe Memorial Essay Award is so important, for the industry to encourage and recognise this kind of work. And Randal has a similar message for ACI, thinking that the time is now ripe to provide a balanced respected voice. In his experience, ACI submissions to Government and regulators do often punch above our weight and are unafraid of being a bit more hard line about when it should speak and what it should say. The more we do this, the ACI draws upon its untapped power of being a truly unbiased and informed

For Randal, the education, training, and sharing of acquired wisdom has been there since the beginning with senior practitioners, and he notes ...due to the high profile nature of the organisation and its that it was the calling of all strong affiliation with children, these compliance issues are the experienced members magnified with the context of the need to mitigate any to give their time and potential reputation risks that may appear knowledge to help others through the traps. It is in this way, he says, that the formal accreditation commentator and resource. The ACI's sole process the Accreditation and Education interest is in the due administration of the law and Committee and the Board have built on this sensible and workable legislative outcomes that foundation is something that makes him proud achieve the legislative objectives. It may be that and provided one of the career highlights for Randal once again has his finger on the pulse of him when he recently attended the CCP (Fellow) the compliance community who have responded residential program. with a new enthusiasm to ACIs volunteer

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The views expressed are those of the authors and do not constitute legal advice.

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In Conversation with contd...

continued from previous page...

invitations and donated their time and intellectual input to providing comment on ACIs behalf on the issues that affect them as professionals. Randal sees it as a challenge for all compliance professionals in the coming year and by doing so demonstrates once again why he belongs with his other Fellows and past recipients of this award. Congratulations again Randal from everyone at ACI and we look forward to your continued involvement and input for the benefit of the profession as a whole.

Professional Development Manager - ACI

Peak industry body Hands on business development CBD location Competitive salary package Join a growing organisation that is committed to providing significant benefits and value to its members. Over the past year the organisation has grown considerably, producing various achievements such as the development of the Accreditation Intensive Program & Education Seminars to assist in career development and training. As Professional Development Manager, you will be responsible for managing and promoting the Accreditation & Education Business Unit (financial and human resources), Accreditation & Education Committee and other volunteer groups. This will include organising and attending meetings as well as preparing agendas. You will also be responsible for creating and maintaining the Accreditation and Education Program and support documentation, as well as managing the LMS. To be successful in this role it is critical that you have previous Professional Association experience. Additionally you will possess: Solid understanding of Adult Learning Ability to guide a committee to achieve successful learning outcomes Comfortable and confident speaking with training managers, as well as selling the benefits of the program Administration of RTO Strong commercial acumen Passionate, pragmatic, hands on approach For further information contact ACIs CEO, Martin Tolar, by email: martin.tolar@compliance.org.au or call 02 9290 1788.

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.

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Courage as a skill
Harvard Business Review Article Reprint/Access
ACI would like to make available to members the article as described below through the HBR Article Access singleclick system. You will need to type in the URL as below into your internet browser to access the article. Link: http://custom.hbsp.com/b01/en/implicit/ p.jhtml?login=AUST031207S&pid=R0701E Title: Courage as a Skill Author: Kathleen K. Reardon Description: A division vice president blows the whistle on corruption at the highest levels of his company. A young manager refuses to work on her boss's pet project because she fears it will discredit the organization. A CEO urges his board, despite push back from powerful, hostile members, to invest in environmentally sustainable technology. What is behind such high-risk, often courageous acts? Courage in business, the author has found, seldom resembles the heroic impulsiveness that sometimes surfaces in life-or-death situations. Rather, it is a special kind of calculated risk taking, learned and refined over time. Taking an intelligent gamble requires an understanding of what she calls the "courage calculation": six discrete decision-making processes that make success more likely while averting rash or unproductive behaviour. These include setting attainable goals, tipping the power balance in your favour, weighing risks against benefits, and developing contingency plans. Goals may be organizational or personal. Tania Modic had both types in mind when, as a young bank manager, she overstepped her role by travelling to New York -- on vacation time and on her own money -- to revitalize some accounts that her senior colleagues had allowed to languish. Her high-risk manoeuvre benefited the bank and gained her a promotion. Lieutenant General Claudia J. Kennedy weighed the risks and benefits before deciding to report a fellow officer who had plagiarized a research paper at a professional army school. In her difficult courage calculation, loyalty to army standards proved stronger than the potential discomfort and embarrassment of "snitching" on a fellow officer. When the skills behind courageous decision making align with a personal, organizational, or societal philosophy, managers are empowered to make bold moves that lead to success for their companies and their careers.

Discounted ACI Shop Items

ACI is clearing the cupboards and has the following items at special reduced to clear rates! Take advantage of these following special prices!
Black Comply or Die T-shirtsSizes, S, M, L, XL $17.50 each inc gst Black Comply or Die Caps $17.50 each inc gst Australian Compliance Institute Black Leather Portfolio Organiser $30.00 each inc gst Australian Compliance Institute Black Synthetic Satchel with space for laptop $30.00 each inc gst

To make an order contact the ACI office directly on (02) 9290 1788 or email admin@compliance.org.au

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.

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Compliance Training - A Success Story!

Debbie Wright (Associate) - Compliance Manager, Westpac Banking Corporation
I read with interest Debbie Isles' story on 'The Trials and Tribulations of Compliance training' in the December 2006 edition of ACI's Compliance E-news, and empathised with her on the difficulties of teaching compliance. Well here is a compliance training story from another 'Debbie', but of a different nature a 'trials and tribulations' story that resulted in a great success the launch of the Doing the Right Thing in Westpac e-learning module our new compliance training tool!! My organisation, Westpac, like most other large financial services organisations, has always experienced problems in delivering compliance training that has been meaningful to its management and employees. After all, most people think compliance training is a real bore and a chore, and have no time or patience for it. Feedback received from our employees was that we had delivered too much compliance training which in many respects was long and tedious, and did not reflect the real-life situations that our employees were subjected to in their daily work environment. Early last year we decided it was time to do something about this, and a group of people representing different business units and our Enterprise Learning teams met to decide on an approach to deliver a short e-learning module that encapsulated the key compliance messages that our employees needed to know. We wanted to tailor it to their work environment, which considering the diverse business functions and global locations, was quite a feat to undertake! We'll make it a maximum of two hours and roll it out right across the Westpac Group, I was told. Privately, I thought it was impossible, but I was all in favour of making a difference and delivering a better experience for our employees, so I gave it a go. As enterprise compliance training fell under my responsibility I was nominated as the compliance subject matter expert for the Financial Services components of the module, working closely with a senior manager from our Enterprise Learning and Development team, Michelle Novis. Michelle managed the project and did a wonderful job of keeping us on track, remaining good humoured as issues arose, and supporting me when I had disagreed with some of the work produced. After a short time we became known in the Learning and Development team as 'the Dynamic Duo', never giving up and always finding solutions to issues. Anyone who has ever worked for a big organisation would know how difficult it can be to implement any kind of change across different business units. Gaining the agreement from all stakeholders on the content, coverage and business unit engagement was just one of the many challenges that we faced. There were many issues to resolve, but with some consultation between representatives from all the key stakeholders, we were able to decide on the key coverage points, based on the content of our existing 'wordy' manuals and e-learning materials. We adopted the approach to frame the learning around the Westpac Group's key values of 'Teamwork, Integrity and Achievement', while incorporating key learning elements from existing materials, and presenting the information in a set of different work scenarios. Scenario based learning is what people remember the best, rather than reading a lot of wordy manuals which you can only remember for the time that you do an assessment, and afterward it's forgotten. We included several multiple choice questions and answers in the scenarios to assist with the person's learning and absorption of the material, and ended the learning with the completion of a short assessment afterward. As suggested by the company engaged to complete the training, The Learning Group, we categorised different learning themes into six submodules, while continuing the main theme of 'Living the Westpac Values' and 'Doing the Right Thing'. Each sub-module was set in a different setting, which helped to hide the feeling that you were learning about 'that boring subject of

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Compliance Training - A Success Story contd

compliance'. There was some debate over how to present the learning elements should we have a 'superman' Compliance professional 'flying in' to assist on some difficult issues covered in the training, or would two 'Starsky and Hutch' characters (if you're old enough to remember them or have seen the recent movie) to act as observers be more catchy? We discounted those ideas and decided instead to introduce two 'cartoon character' employees, Lily and Gordon, at the beginning of the module, to observe the scenarios and make the occasional observation or light-hearted comment. For the most part this worked quite well. All employees were initially given a five month rollout period to complete the module. As always, there were some initial IT issues (large size modules such as ours take up a lot of bandwidth) and we had to split up the module to accommodate differing capacity in our extensive network. This caused some delays so a longer timeframe was allowed for those impacted by the delay of the revised module. It's now nearly nine months since the launch and around 80% of our Australian employees have completed the module. In January we decided to nominate the module for the Australian Institute of Training and Development's E-learning Achievement award, and you can imagine my delight when we were advised in March that our nomination had reached the finals! Michelle was a previous award winner so the nomination was probably more of a thrill for me as I don't have a training background.

The interactive element of the module and the links to policies and additional information that we provided throughout was very well received by learners. We provided further support with a menu of links to policies, as well as publishing an 97% were either satisfied or very satisfied Intranet site page with policy links for easy access 98% said relevant to their role to all employees. CD and Finalist in the Australian Institute's Training and Development Epaper versions were also learning Award category made available for people "The whole thing is very well done and entertaining, so there is little who were unable to easily pain and some good reminders. I actually enjoyed completing the complete the module assignment. Didn't think I would ever give that response to online at work (such as required assessments." home-based and mobile workers). "I thought in general the training was excellent, particularly the format

and interactive aspects. It gave some good grounding in 'the Stakeholder engagement basics', though I think the major strength was in the potential to and support was also a get people thinking: the case studies were also well thought out." primary key to the module's success, and "I would like to compliment the team on the "Doing the right thing at Michelle worked with the Westpac". This assessment was brilliant. The graphics where subject matter experts fantastic. It made it enjoyable to do." and business unit stakeholders to ensure The above are some statistics and feedback comments received on that appropriate input and Westpac's 'Doing the Right Thing' e-learning module launched in engagement was sought. September 2006. An introductory preview session was held prior to the module's release, which enabled us to We attended the awards dinner in April where we obtain and act on some valuable preliminary were not initially named with the other finalists feedback before the official launch. who were called to the stage to receive their

framed certificates. (It seems funny to me now but

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Compliance Training - A Success Story contd

at the time when the others in our group saw the humour in this oversight, I did not). However, we were announced separately later and it was still an honour to be recognised at the finalist level, even though we did not win the award. 'All the finalists are winners' we were told by the hosts to help alleviate the disappointment of those who would not take away an award on the night. All things considered it was an exhausting but rewarding experience and I am also pleased with the module's satisfaction rate. I am also very gratified by the fact the sub-module that I helped develop which was about a customer complaint was the most popular module in our survey. Reaching the finals of the AITD's awards will go down as one of the greatest highlights of my working career and while I've been in compliance, and I am very grateful for the opportunity to have been a part of this milestone in Westpac's compliance training journey. It could not have happened without the great work of a team of people. In particular, credit should go to Michelle Novis, who is a great asset to Westpac's Learning and Development team, and Jane Earle, our module designer from the Learning Group, who were pivotal to its success. And of course I'll always wonder if we would have won the AITD award outright if we'd gone with the 'Starsky and Hutch' characters instead of Lily and Gordon?!!
Debbie Wright is a Compliance Manager with Westpac Banking Corporation and an ACI Associate

ACI Events
ACI is pleased to announce that thanks to the generous continuing sponsorship of PricewaterhouseCoopers we are able to welcome back onto our Events schedule, the well respected Thought Leadership Seminar Series. The first of these will go to four of our capital cities during June, with the next in the series scheduled for September/October. The seminars this year will develop thematically over the year, beginning with the June sessions topic: Enabling the Business to Take the Right Risks. Ernst & Young are also generously sponsoring a half day seminar for ACI during June on the topic of AML and the Risk Based Approach. These events draw on the experience of the expert speakers to provide their knowledge and points from the lessons they have learnt from their work so far in this area to assist attendees in adopting this particular approach to the AML regulation within their organisations. Due to the number of phone calls we get every week about this topic, ACI is also reviving one of its previous seminar themes - Compliance 101 Your first day on the job. This half-day session will be held in Sydney at the end of June as is ideal for anyone who has no background in compliance who may recently begun a role with compliance responsibilities or have had these responsibilities added to their role and are thinking Where to I start?. This program sits outside ACIs Accreditation program as it does not require the one years work experience of the Associate program minimum and provides the basic fundamental knowledge to assist someone to get up and running in their role. ACI is also currently working on two sector forumsone for Mining at the beginning of July and one for Finance at the end of July. We also welcome suggestions for new events and submissions of papers for events and seminars already on the calendar.

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.

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The Cinderella Syndrome: Why the Ugly Sisters Rule

David H Price (Associate) - Director - Tortoise Technologies Pty Ltd
What is the Cinderella Syndrome you may ask, who are the ugly sisters , how is this a critical issue for the survival of compliance in Australia and why should anyone be interested in this ? This article addresses these four questions and poses some possible ways forward for the compliance community. Let us begin with the Cinderella Syndrome : go out of business; no one can keep up with the flood of regulations and who has time to make submissions to government inquiries or find out the latest body set up by government to help business comply ? Many in business offer the foregoing as their reason for not taking their compliance obligations seriously and see the plethora of regulators as one of the ugliest of the sisters, because these regulators make no effort to comply with their own regulations. For example, which Minister of the Crown, or regulator , could meet the following benchmarks : CHECKLIST version one for use with Regulators Top score is 100 points ; anything below 85 is a fail ( yes, a fail if a Regulator or a Minister fails, there should be some penalty ) Has a regulator obeyed the regulations it enforces? Is there are a balance between qualitative measurements of compliance and quantitative measurements? How many regulations were created in the past twelve months? How many regulations were removed in the same period? Has the staff of the regulator increased or decreased? What proportion of the staff of the regulator deal with those regulated? How many staff of the regulator conduct on going educational events for other regulators, those representing the regulated and those who are regulated? How many of the regulated have accessed the complaints and /or dispute resolutions services of the regulators? How many times have enforcement proceedings been used? How often is the information on the website of the regulator updated ?

Corporation X has a compliance officer because it is a responsible organisation, however this person is kept out of sight of those who make money for Corporation X . One day, Corporation X makes the news because one of its best selling products is found to contain banned substances and is responsible for the deaths of a number of young mothers .For some years, Corporation X has denied that this product contained such substances and besides, it was much cheaper to use the banned substances . A public relations and media blitz is immediately undertaken, but it backfires and now the directors, CEO and senior managers are charged with a variety of offences . The compliance officer is brought out from the cellar and told to save the bacon of the ugly sisters, or else !!!.
This is only a fairy story of course, because it never happens that way in real life, does it ?? In this fairy story, if the compliance officer did manage to save the bacon of the ugly sisters, they would be returned to the cellar and left there until the next crisis. Unfortunately, truth is often stranger than fiction, so variations of this fairy story occur in the real world all too often. In all the real life versions of this fairy tale, there are two common factors: the compliance function, if it existed, was treated as Cinderella the corporate culture rewarded profit and denigrated those who questioned this ethos of the corporation

OK, some organisations do treat compliance as the ugly sisters treated Cinderella, but since when has compliance been a money earner, rather than a cost ? Business organisations need to make money or they

Each question would be scored out of 10 ; if any one question rated below 7, then a FAIL assessment should be made, even if the total is 85 or more .

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.

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The Cinderella Syndrome: Why the Ugly Sisters Rule contd

CHECKLIST version 2 for use with Ministers of the Crown ( The same scoring system would apply here) Has the Minister met with the CEO of the Regulator in the past twelve months? If so, how often have they met? How many conferences has the Minister addressed? How often has the Minister referred matters, of whatever nature to the Regulator? Has the Minister held any round table meetings with representatives of the regulated? Are any Ministerial guidelines to the Regulator reviewed on a regular basis, by the Minister and the regulator? How often has the Minister met any of the regulated? Who, in the office of the Minister, has responsibility for ensuring that regulations are user friendly? How many meetings has this person had with senior officers of the regulator? Who, in the office of the Minister, meets, on a regular basis, their equivalents in offices of other Ministers, to discuss problems faced by regulators in general? What process is in place, for ensuring that regulations which have a sunset clause , are reviewed, around six months before the sunset clause comes into effect? If a new Minister is appointed, what protocols are in place for ensuring the new Minister understands the role of the regulators who now fall within his jurisdiction ? generated ( in a professional practice), then the culture of that regulator or professional practice will draw its values from those imperatives. Education is irrelevant, because it gets in the way of progress and progress is what life in such places is all about. So, what is offered as a way forward, that will enable Cinderella to leave the cellar behind forever, that will ennoble the ugly sisters and enable regulators and business to perform their respective roles in building the economy of Australia ? The following relate to Ministers of the Crown and regulators : Regulators should be penalised for not themselves following the regulations they lay on business Regulators should be rewarded for conferring with other regulators before introducing regulators Ministers of the Crown should be rated by all regulators under their jurisdiction ( rather than under their control, because no Minister is ever in control of anything) for their ability to deliver whole of business regulation

For business organisations, the challenge is to use compliance as a competitive advantage ; it is the process of achieving legal compliance that confer a competitive advantage . An example of a process that could deliver a competitive advantage is set out below :-

There is a universal law of business, that may be stated as follows:-

WHAT GETS DONE IS WHAT GETS REWARDED

If promotion, recognition, respect, are based solely on the number of successful prosecutions ( in the case of a regulator) , or on the amount of fees

This brings five relatives of the ugly sisters together and has them working with Cinderella, rather than against Cinderella and will deliver a healthy, ethical corporate ecology, which is the reason for compliance .

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.

Page 14

Know Your Charity: How to protect yourself from fraud and fight terrorist financing
Hany Abou-El-Fotouh, CAMS Assistant General Manager Head of Compliance Oman International Bank
Genuine and fake charities have been misused for terrorist financing and fraud. Financial institutions must protect themselves from being used by terrorist to financing terror operations. Similarly, individuals must be alert no to donate their hardearned money before they are confident that the money would not fall in the wrong hands.
Originally, charities were formed to provide aid to groups of the community that need assistance. The majority of charities are legitimate channels to help people in need. However, some charities are frauds that have been created to take advantage of the needy and the generous. And some charities have been used for money laundering or terrorist financing. For example, In February 2004, the assets of Al Haramain Foundation's (AHF) branch in Oregon were blocked. AHF has allegedly violated currency and monetary instrument reporting requirements, tax laws, and other money laundering offences. According to International Narcotics Control Strategy Report of 2005, individuals connected with AHF appear to have concealed movement of over $100,000 to Chechen mujahideen. How Charities Raise Funds? Charities rely on several methods to collect funds for philanthropic or humanitarian purposes. Most rely on a variety of income sources that can include:

Sales of tickets to special events or sales of products

Part of these funds have been and are vulnerable to being diverted to terrorist networks, often without the donor's knowledge. How Financial Institutions Apply `Know Your Charity' Financial institutions must carry out enhanced due diligence on charitable organization accounts. The relationship must be approved at a senior management level and risk-rated `high'. The relationship officer should visit the premises of the charitable organization and prepare a visit report. The report should include sufficient details such as:

The organization's legal type, license of activity, source of capital (if applicable), number of employees, years established, years at present location, nature of activity, geographical location of activity etc Details about owners/directors and their powers Check if a Politically Exposed Person (PEP) or a connected individual owns the charitable organization partly or fully Check if the charitable organization is authorized to accept donations locally or overseas

Public support, Government funding, Private foundations grants; or Fees collected for services they provide as part of charitable programs.

Financial institutions should recognize the `indicators' or "red flags" that call for further scrutiny. Some of the indicators are listed below:

Corporate layering: transfers between bank accounts of charities and directors or staff of the charitable organization for no apparent reason Wire transfer by charitable organizations to beneficiaries located in countries known to be bank or tax heaven or countries of concern Lack of apparent fund-raising activity (i.e. lack of small checks or typical donations) connected with charitable bank deposits Transactions with no logical economic purpose (no link between the activity of the charitable organization and other parties involved in the transaction)

There are several solicitation methods, which include mandatory religious donations. A charity can raise funds in many different ways. Examples of most poplar solicitation techniques are:

Fundraising events, i.e., raffles, and marathons/races Direct in-person requests Direct mail or telephone solicitation requests Newspaper and magazine advertisement

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.

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Know Your Charity: How to protect yourself from fraud and fight terrorist financing contd
Tips Before You Donate Money As a donor, you should have some answers before you give money. Questions frequently asked are "How do I know that this charity is legitimate?" and "Where does this money go once I make a donation?" The following tips are designed to help you know whether a charity is genuine and how to avoid being victimized by a charity that is not legitimate or that may fund terrorists without your knowledge: Do not give cash to strangers. You do not know if that person would use your hard-earned money for the charitable purpose or divert it elsewhere. Do your homework. Take the time to learn about the charitable organization you support or considering supporting. Ask for literature and read it. Tell the solicitor that you would like to do some research on the charity. Read and understand everything before you make a decision. Ask questions e.g. ask where and how your contribution will be used. Dont be deceived by a convincing name. A fake or dishonest charity will often have an impressive name, or one that looks like the name of a reputable, legitimate charity. Dont let pressure win. Dont surrender to pressure and feel that you must contribute on the spot. Legitimate organization will not expect you to donate instantly. Remember, you can say no. Don't pay cash. Once you have a satisfactory answer to all your questions, you can make all donations by check to the charitable organization or by credit card. But beware! Do not give your credit card number to someone you do not know. On November, 7 2002, the US Treasury Department issued a document entitled "U.S Department of the Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S Based Charities." The guidelines are mainly aimed at financial institutions and charitable organizations. However, the Treasury Department also advises individual companies that donate directly to charities to regularly check its list of individuals and organizations the department has designated as related to terrorism. (The list and the guidelines can be found at www.treasury.gov) Donating to a charity is a way to support the needy during these troubled times. Sadly, there are some people ready to take advantage of your kindness. Therefore, you must do your homework before donating your hard-earned money and reasonably take all measures to ensure that the money does not fall in the wrong hands. Hany Abou-El-Fotouh. CAMS is the Head of

Compliance, Oman International Bank, Muscat. He speaks frequently about compliance and anti-money laundering issues and is a member of MECOF, the Middle East Compliance Officers Forum, a strategic partner in that region with ACI.

http://finance.groups.yahoo.com/group/ middle_east_compliance/

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.

Page 16

ACI Volunteer Program News & National Conference call for Workshop Presenters
Volunteering with ACI
ACI currently has active Working Parties looking at Enforceable Undertakings; providing a submission to the Productivity Commission in regard to APVMA and the possibility of a working party looking at legal privilege and providing comment to the ALRC, all of these instigated by interested members so we would encourage you to come to us with your ideas for projects and issues that need to be addressed! Future invitations will include a working party to look at the needs of members working for SMEs, Anti-Money Laundering and an invitation to members to participate on the ACI Events Committee. As invitations are finalised they are released onto the Volunteers page of the ACI website so if you are interested please keep an eye on this page: http://www.compliance.org.au/www_aci/default. asp?menuid=134 Other invitations for working parties will continue to be released throughout the coming months but again, if members identify an issue around which a group would like to produce a body of work, please contact the ACI office to facilitate the formation of a Working Party. It not only assists individual members in demonstrating their commitment to the profession but ultimately provides resources for all members. Submissions and other materials from volunteer working parties is made available for members on the ACI website under Tools & Resources Library and are free to members. If you have any suggestions for projects or any further enquiries regarding volunteering in general please feel free to contact Naomi Burley at the ACI office on (02) 9290 1788 or email naomi.burley@compliance.org.au

ACI National Conference 2007

ACIs National Conference this year will be exploring the theme of:

Compliance: the value proposition measurement and marketing How do you measure effectiveness, how do you demonstrate value
Whilst plenary speakers are currently being confirmed ACI would like to issue a call for Workshop Presenters for the Conference on this theme. We are looking for up to six individuals who can present a case study from their practical experience in a company and draw out the set of principles and processes that helped them establish compliance as a value proposition within their business and how they measure and demonstrate their value and effectiveness. This would require the individual providing a thirty minute presentation on their case study and then facilitating a workshop activity to provide the participants with practical tips, traps and examples of how to go about doing the same thing in their organisations. The workshops would be duplicated on the two days. Presenters also need to be happy to have their work printed and displayed around the conference and then made available on the ACI website as a resource for other members following the conference. If you would like to respond to this invitation please provide a detailed submission regarding the case study and material you would want to cover and send through to ACIs Events Coordinator, Hannah Tourle, at: Hannah.tourle@compliance.org.au Submissions will be evaluated by the Events Committee and volunteers contacted as soon as possible thereafter to make necessary arrangements to include their session on the program of workshops.

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.

Page 17

Accreditation & Education News

Congratulations to our recent graduates of the Accreditation program who were acknowledged at the Regulators Conference:
CCP (Fellow)
Sylvia Aloizos Sandra Birkensleigh Neill Buck Toni Crimmings Maria Dalton Randal Dennings Annette Donselaar Robert Emery Anne Heilman-Inglis Deborah Latimer David Lawrence Lucienne Layton Christopher Lee Heather Loewenthal Amanda Morgan John W Murray James ODonnell Pauline Pereira Julie Winkler ING Group AMP Group National Australia Bank Catholic Church Insurances Ltd Commonwealth Bank Bank of Queensland Star City Pty Ltd PricewaterhouseCoopers Neill Buck and Associates P/L IDEO Pty Limited Plum Financial Services Clayton Utz Solicitors AIG MBF ING Australia Limited MLC ASX Limited PricewaterhouseCoopers Andrea Lock Stefanie MacDonald Kelly Lin Mai Greg Martin Marie-Eve McNicoll Maree O'Brien Bridget Peck Steve Puxty Luis Ramalhosa Tassie Strafkos Lilliana Vojvodic IOOF Investment Management Ltd ASX Limited CMC Markets Asia Pty Ltd Integral Energy Plan B Financial Services MLC NAB Auscoal Services Pty Ltd MLC Hydro Tasmania ASX Limited

Upcoming Training The Associate Intensive in Sydney on the 1st of June is completely full and we are looking forward to a very exciting session. Were sure the participants will find the training as valuable as the attendees at the recent Perth Associate did. ACI was particularly pleased with the success of this Intensive in Perth which demonstrated again the wide variety of industry sectors that the training is applicable to and that ACI is not as finance sector centric as many members would believe, with attendees from a spectrum of sectors. Places are still available though for the Sydney Associate Intensive in August and the Gold Coast Intensive in November. Those intending to undertake the CCP level work should also be aware that the only remaining opportunity to do this in 2007 will be in September, when the CCP Residential will be held in the Blue Mountains. Registrations for all training can be made on the ACI website:http://www.compliance.org.au/www_aci/ events_listing.asp Further information about these training options can be obtained from the ACI office as well.
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CCP
Peter Borbiro Samantha Brown ATO Skandia

Associate
Lisa Arnold Dean Austin Peter Bingham Annetta Chawynski Vanessa Darby Adriaan den Dulk Rebecca Ellis George Gholam Jennifer Heng Philip Higgins Kim Ho Cheryl Johnstone Filomena Kinkead Eric Lauro Financial Services Consulting Macquarie Bank Transend Networks Pty Ltd Australian Alliance Insurance MLC Risk Resource Pty Ltd ING Australia Limited NAB CGU Insurance Ltd RAC WA The Money Managers Ltd Bendigo Bank InsuranceLine Essential Services Commission of SA

Volume 6 Issue 1

The views expressed are those of the authors and do not constitute legal advice.