Strengthening Compliance Through Leadership, Ethics, Transparency, and Cultural Capital

This paper provides a practitioner’s perspective on the compliance deficiencies in banks, which are found deep-rooted in the cultural deficit and ethical vacuum. It dives into the behavioural dimensions and suggests ways to strengthen the efficacy of compliance through leadership, ethics, transparency, and cultural capital. It underlines that compliance deficiencies arise chiefly because of the gap between stated and realized organizational ethos, ethical vacuum, and leadership conundrums. Lack of the desired tone and action from the top and weaknesses in the ethical foundation of organizational behaviour leads to a deterioration in the effectiveness of compliance. It examines what it takes to achieve and nurture cultural capital and strengthen trust and finds that knowing the theory is not sufficient and one must have a strong ethical cultural capital and sound leadership. An organizational fabric built on integrity, inclusivity, independence, ethics, and transparency though difficult to put in place and sustain, once engrained in the organization’s bloodstream makes it natural and spontaneous to have effective compliance and governance system