It was recently reported that Amazon has quietly been dipping into the banking business over the past few years, to the tune of making some $3 billion in loans to small businesses that sell through its online platform. As Amazon has led the greatest amount of disruption in first book selling, then later retail sales, in the 21st century, in addition to its corporate Web services and movie streaming, this move should bring the notice of not only banking retailers but also banking regulators.
Yet, Amazon’s move into the banking sector raises compliance lessons for The Man From FCPA, and for all other compliance professionals, as the banking sector is one of the most heavily regulated commercial sectors in the United States. Indeed, the current House of Representatives has passed legislation to make access to capital easier. Yet, Amazon was able to make this business line profitable while complying with the claimed onerous rules promulgated in the wake of the 2008 banking crisis and the passage of Dodd-Frank.
Amazon’s foray into banking demonstrates how effective risk management does not slow a company down; the opposite is true with a best practices compliance program, as it allows a company to move faster, more nimbly and more agily. A compliance program that properly assesses a company’s risk in new product line, service line, or geographic market can move faster to manage that risk. Further, through operationalization of the risk, a company moves the risk out into the corporate disciplines that are closest to the risk and at the best place to manage it through an appropriate level and amount of internal controls.
How robust are the company’s compliance controls? Consider this example: The Amazon parcel delivery system comes under the direct purview of compliance. By understanding the legal, business, and transportation risks involved, the company is working to revolutionize the delivery business in addition to banking and the other businesses the company has marched into over this century. When a business type points to you and says that compliance is hurting business, you should point back to Amazon and delineate how Amazon uses the risk management aspect of compliance as a competitive advantage.