The Professionalization of Compliance: Its Progress, Impediments and Outcomes

78 Pages Posted: 9 Oct 2020 Last revised: 15 Apr 2021

See all articles by James A. Fanto

James A. Fanto

Brooklyn Law School and Co-Director of the Center for the Study of Business Law & Regulation

Date Written: August 21, 2020

Abstract

This article explores the background and reasons for the uncertain professional status of compliance. After identifying the nature and origin of compliance, it explains that there is now an accepted model of compliance activities. It then elaborates on the key features of an occupation that scholars identify as having achieved professional status and explains the ways in which compliance has progressed to achieving them. It discusses how this field does not possess all the features of a profession, particularly the state government-approved licensing that provides control over their occupation by practitioners. The article then offers several reasons for this incomplete professional status, with the most significant being the ambiguous relationship between compliance and the established legal profession and the federal government’s preference for compliance officers not to be members of a strong profession. It observes how, from time to time, legal authorities and lawyers assert control over compliance as if it were in their domain of influence, but at other times they have been passive or complacent with respect to compliance practitioners. It explains how the federal government through regulators and enforcement officials benefits from compliance officer’s weak professional status by using them as their eyes and ears in organizations. The article then argues that the outcome of compliance’s professional journey matters for organizational conduct, contending that having a strong professional identity would give compliance officers the independence and authority in organizations that would enable them to guide and advise organizational actors on how to conduct their activities in accordance with law, regulation and ethics. It offers recommendations as to the future of compliance as a profession, both from an ideal and practical perspective. It observes that compliance might ideally become an independent profession by being grounded in organizational studies. However, it explains that the legal profession will likely continue to exercise its authority over compliance, which means that the compliance field risks remaining a subdiscipline of that profession with negative professional consequences for compliance officers. The article concludes by recommending that compliance officers who are lawyers should become a recognized part of the legal profession, but it acknowledges that this professional outcome awaits developments in the compliance field and pressure from compliance officers themselves demanding professional status.

Keywords: compliance, professionalism, business organizations

JEL Classification: K22, K23

Suggested Citation

Fanto, James A., The Professionalization of Compliance: Its Progress, Impediments and Outcomes (August 21, 2020). Brooklyn Law School, Legal Studies Paper, No.651, Available at SSRN: https://ssrn.com/abstract=3678677 or http://dx.doi.org/10.2139/ssrn.3678677

James A. Fanto (Contact Author)

Brooklyn Law School and Co-Director of the Center for the Study of Business Law & Regulation ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States
718-780-7566 (Phone)
718-780-0375 (Fax)

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