Monitorship

When a firm has been found to have serious control failures, the authority may not trust its own assurances. A monitor, chosen with the authority's approval but paid by the firm, is appointed for a set term, often a few years. The monitor reviews policies, tests controls, interviews staff and writes reports for the authority, which are sometimes shared in part with the public. The firm must give full access. A monitor must stay independent of both sides. At the end, the monitor certifies whether the compliance programme is reasonably designed and working. Monitorships are expensive and intrusive, so authorities reserve them for cases of serious or repeated misconduct, and they may give way to self-reporting when the firm's improvements are already convincing. Authorities extend or end the term depending on what the monitor's reports show.

As part of a settlement for repeated sanctions breaches, a bank agrees to an independent monitor for three years. The monitor reviews screening systems, samples alerts, and reports every six months to the authority. In year two, the report finds that alert backlogs persist, and the authority extends the term by one year.