JP Morgan Chase 2015 Annual Report Download - page 157

JPMorgan Chase & Co./2015 Annual Report 147
COMPLIANCE RISK MANAGEMENT
Compliance risk is the risk of failure to comply with
applicable laws, rules, and regulations.
Overview
Each line of business is accountable for managing its
compliance risk. The Firm’s Compliance Organization
(“Compliance”), which is independent of the lines of
business, works closely with the Operating Committee and
management to provide independent review, monitoring
and oversight of business operations with a focus on
compliance with the legal and regulatory obligations
applicable to the offering of the Firm’s products and
services to clients and customers.
These compliance risks relate to a wide variety of legal and
regulatory obligations, depending on the line of business
and the jurisdiction, and include those related to products
and services, relationships and interactions with clients and
customers, and employee activities.
For example, one compliance risk, fiduciary risk, is the
failure to exercise the applicable high standard of care, to
act in the best interests of clients or to treat clients fairly, as
required under applicable law or regulation. Other specific
compliance risks include those associated with anti-money
laundering compliance, trading activities, market conduct,
and complying with the rules and regulations related to the
offering of products and services across jurisdictional
borders, among others.
Compliance implements various practices designed to
identify and mitigate compliance risk by implementing
policies, testing and monitoring, training and providing
guidance.
In recent years, the Firm has experienced heightened
scrutiny by its regulators of its compliance with regulations,
and with respect to its controls and operational processes.
In certain instances, the Firm has entered into Consent
Orders with its regulators requiring the Firm to take certain
specified actions to remediate compliance with regulations
and improve its controls. The Firm expects that such
regulatory scrutiny will continue.
Governance and oversight
Compliance is led by the Firms’ Chief Compliance Officer
(“CCO”) who reports directly to the Firm’s COO. The Firm
maintains oversight and coordination in its Compliance Risk
Management practices globally through the Firm’s CCO,
lines of business CCOs and regional CCOs to implement the
Compliance program across the lines of business and
regions. The Firm’s CCO is a member of the Firmwide
Control Committee and the Firmwide Risk Committee. The
Firm’s CCO also provides regular updates to the Audit
Committee and DRPC. In addition, from time to time, special
committees of the Board have been established to oversee
the Firm’s compliance with regulatory Consent Orders.
The Firm has in place a Code of Conduct (the “Code”), and
each employee is given annual training in respect of the
Code and is required annually to affirm his or her
compliance with the Code. The Code sets forth the Firm’s
core principles and fundamental values, including that no
employee should ever sacrifice integrity - or give the
impression that he or she has. The Code requires prompt
reporting of any known or suspected violation of the Code,
any internal Firm policy, or any law or regulation applicable
to the Firm’s business. It also requires the reporting of any
illegal conduct, or conduct that violates the underlying
principles of the Code, by any of the Firm’s employees,
customers, suppliers, contract workers, business partners,
or agents. Specified employees are specially trained and
designated as “code specialists” who act as a resource to
employees on Code of Conduct matters. In addition,
concerns may be reported anonymously and the Firm
prohibits retaliation against employees for the good faith
reporting of any actual or suspected violations of the Code.
The Code and the associated employee compliance program
are focused on the regular assessment of certain key
aspects of the Firm’s culture and conduct initiatives.