The evolving role of compliance: How companies need to enforce their three lines of defence to protect the business

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Abstract: Despite the increasing legal and regulatory requirements for financial institutions within the European Union, scandals surrounding compliance and corporate governance failures are continuously being revealed. Apart from significant fines and monetary losses as well as reputational damage for the concerned organisations, such scandals lead to pressure on legislators and international (supervisory) bodies to again further increase regulatory requirements. This paper describes the Three Lines of Defence Model within organisations in connection with the Danske Bank scandal and outlines key principles that can serve as the basis to strengthen the compliance environment and culture within organisations to prevent major scandals.

Keywords: Three Lines of Defence Model; compliance; Danske Bank scandal

Renata Hoes joined Generali Investments Luxembourg S.A. as Chief Compliance Officer and Money Laundering Reporting Officer in July 2015. Before moving to Generali Investments Luxembourg S.A., Renata was a member of PwC Luxembourg’s Governance, Risk and Controls Department. While at PwC, Renata was a member of PwC’s Fight against Financial Crime task force and an expert in general compliance matters with over 18 years of international experience in the insurance and asset management industry. Before joining PwC, Renata was Head of Compliance at a leading management company in Luxembourg where she was in charge of strategic, tactical and operational compliance matters for the company. Prior to this, Renata gained over 12 years of experience in the cross-border life insurance industry as Head of Compliance. In 2000, she joined Luxembourg’s largest cross-border life insurance company, and in 2009, Renata joined an international insurance group to set up and develop the Compliance Department in its bancassurance branch in Luxembourg. Renata is the President of the Luxembourg Chapter of the Association of Certified Fraud Examiners (ACFE), member of various working groups of the Association of Luxembourg Fund Industry (ALFI), as well as a member of the Association of Luxembourg Compliance Officers (ALCO). She is also a member of the European Association of Data Protection Professionals, and was admitted to the Institut Luxembourgeois des Administrateurs in June 2018. Renata is a regular speaker at conferences on the topics of antimoney laundering/counter-terrorism financing (AML/CTF), compliance and new regulations.

Karin Gehlert led the AML Team of a Central Administrator in Luxembourg before joining a leading management company as Head of AML/CTF in March 2019. Prior to this, she was a member of the Governance, Risk and Controls Department of a Big Four Company in Luxembourg. Karin has more than 10 years of experience in audit and financial crime compliance within the asset management and private banking industry. Karin is a Certified Fraud Examiner and Fellow Chartered Certified Accountant and serves as a Member of the Board of Directors of the Luxembourg Chapter of the ACFE.