Fluff v. Substance: the Art of Compliance Window Dressing (Part 1)

A week ago, I initiated a highly scientific research poll (ok maybe not that scientific) aiming to bring a touch of humor to the often sober world of compliance.

A phenomenon that has been increasingly raising eyebrows and sparking debates among the compliance community is the practice of “tick-the box compliance”, or what most of us refer to as “window dressing.”

In Part one of a two-part series, I delve into the nuances of this intriguing concept, exploring its implications and shedding light on the creative labels our compliance community has coined for it. Part 2 is your comprehensive guide to recognizing telltale warning signs of window-dressing.

Now, before you envision yourself following Martha Stewart instructions and adorning your living space with exquisite curtains matching with your indoor plants, let’s clarify that this type of decoration doesn’t involve aesthetics but financial matters. In fact, we owe the term “window dressing” to the world of accountancy, where it’s defined as “a technique used by companies and financial managers to manipulate financial statements and reports to show more favorable results for a period.” Window-dressing is a dishonest business practice, and is usually done to mislead investors.

In the world of compliance, this can be likened to judging whether a company is genuinely  implementing its compliance program, or if it’s merely flooding the scene with superficial communication about its values and ethics, fluff that lacks any substantial foundation.

The poll’s specific goal was to craft a catchy term to describe a company’s compliance program that focuses on minor misconduct while conveniently overlooking more profitable agreements, creating the illusion of a robust compliance effort. A situation analogous to catching small fish while allowing the big whales to freely slip through.

The responses poured in from around the world, revealing a collective sentiment that speaks volumes about this aspect of corporate citizenship.

Let’s take a closer look at the poll results, and the creative terms proposed:

The Choices:

  • Profit-priority Compliance: A straightforward name that captures the essence of a compliance program geared more towards safeguarding profits than upholding ethical standards.
  • Selective Vigilance:  highlights the act of focusing on minor infractions while conveniently overlooking larger transgressions.
  • Convenient Morality: A term that speaks to the ethical paradox faced by some companies, where moral considerations seem to take a back seat to financial gains.
  • Fluff Vanilla: A touch of humor here, as Fluff Vanilla seems to embody the idea of superficiality in compliance efforts, like sprinkles on ice cream that lack substance.

The community not only cast their votes but some also threw their witty suggestions into the ring. Some of the fun additions proposed by our creative readers included:

  • Strategic Oversight:I find the word ‘oversight’ has an interesting (and convenient) double meaning. Hence ‘strategic oversight’ would be my choice”, suggested Ray Blake, Director at the Dark Money Files. His term suggests a deliberate choice in deciding what to observe closely, while closing ones eyes on other areas. It resonates with the strategic maneuvers often witnessed within corporate corridors, where decisions are crafted with a calculated emphasis on specific facets.
  • Moral Flexibility or Moral Relativism:Moral flexibility or moral relativism come to mind” proposed Vera Cherepanova, Founder of Studio Etica. A perfect reminder that when ethics are flexible to accommodate financial interests, the integrity of compliance can be compromised.
  • Low-Bearing Fruit Reviews: suggested Christine Berger, Senior Compliance and Trust Officer. A play on “low-hanging fruit,” this term conjures images of compliance officers reaching for the easy wins while ignoring more complex, but potentially more impactful, transgressions. A whimsical nod to the idea of cherry-picking issues to address. Also suggested by Christine:
  • Short-Term Policy Renewal: A term that highlights the transient nature of some compliance efforts. It suggests that policies might be renewed or updated regularly, but the underlying problems remain unaddressed, revealing a short-term view on long-term issues.
  • and Particular Area Focus:  this label implies a targeted compliance approach, albeit at the cost of broader oversight.

The Verdict: With a resounding 46% of the votes, “Selective Vigilance” emerged as the preferred term among our community.

In the words of Lisa Osofsky, departing Director of the UK’s Serious Fraud Office, “The resources invested in compliance must not simply be window dressing.”

The U.S. Department of Justice’s Criminal Division Evaluation of Corporate Compliance Programs  strongly emphasizes the importance of “a well-functioning compliance program” that should not be “merely a ‘paper program’ or one that exists only on paper.”

This sentiment finds resonance in the poll responses received. Selective vigilance, as the poll has underscored, brings into focus the motivations of certain compliance programs.

A natural question emerges: does this behavior result from limited resources pushing compliance teams to prioritize seemingly urgent matters? Or is it a strategic move to safeguard lucrative alliances?

Amid the amusement sparked by our poll, we mustn’t overlook the underlying seriousness. “Selective Vigilance,” despite its playful name, poses tangible risks for corporations and the societies they operate within. It prompts us to consider the consequences – eroded trust, damaged reputation, and a culture that embraces ethical ambiguity, not to mention the potential damage to the spoiled populations.

The discourse around these terms opens a window into an ever present reality. Our exploration isn’t just linguistic. It’s a call to action, urging equilibrium between profit and principle.

If you are interested in this topic, join us in part 2 of this series, where I offer a comprehensive guide to recognizing undeniable warning signs. As a compliance officer, mastering these cues is essential in unveiling the tactics used to obscure corporate misconduct.

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