Professional Ethics and Compliance key terms

The principles and standards of behaviour expected of members of a profession, guiding decisions where self-interest, client interest, and the public good may conflict.

Consistently acting in line with stated values and rules, especially when doing so is inconvenient or unobserved. It is a core ethical attribute assessed in conduct reviews.

A legal and ethical obligation to act in another party's best interests, placing their interests ahead of your own and avoiding exploitation of the relationship.

Situations where personal, financial, or organisational interests could improperly influence professional judgement. They must be identified, disclosed, and managed or avoided.

A formal document setting out the behavioural standards, prohibitions, and expected practices for staff. It translates broad ethical principles into concrete, enforceable expectations.

A structured process for resolving dilemmas, typically involving identifying stakeholders, applicable rules, consequences, and testing the decision against core values before acting.

The set of statutes, rules, and supervisory guidance that governs an organisation's activities. It defines minimum standards and the consequences of non-compliance.

A public authority with statutory power to authorise, supervise, investigate, and sanction firms and individuals within its remit, aiming to protect markets and consumers.

The independent second-line team that advises on regulatory obligations, monitors adherence, and reports on compliance risk to senior management and the board.

The risk of legal or regulatory sanctions, financial loss, or reputational damage arising from failure to comply with applicable laws, rules, and standards.

A governance model where business units own risk, a compliance or risk function provides independent oversight, and internal audit gives independent assurance to the board.

The process of identifying clients, verifying their identity, and understanding their activities and risk profile before and during a business relationship.

Laws, rules, and controls designed to prevent criminals from disguising the proceeds of crime as legitimate funds, including monitoring and reporting obligations for firms.

Risk-based checks on a client's identity, ownership, source of funds, and purpose of relationship, applied at onboarding and refreshed when risk changes.

An individual entrusted with a prominent public function, or a close associate or family member, who presents higher corruption risk and requires enhanced due diligence.

Additional scrutiny applied to higher-risk clients or transactions, such as extra identity checks, senior approval, and closer monitoring of activity.

A confidential report filed with the authorities when a firm suspects money laundering or other financial crime, typically without tipping off the client.

The obligation to submit accurate, complete, and timely information to a regulator, such as financial returns, transaction data, or notifications of significant events.

Improper conduct that undermines market integrity, including insider dealing, unlawful disclosure of inside information, and manipulation of prices or benchmarks.

Trading or encouraging others to trade in financial instruments using inside information not available to the market, which is a criminal offence in most jurisdictions.

Precise, non-public information about an issuer or instrument that, if disclosed, would likely significantly affect its price or trading decisions.

Conduct that gives false or misleading signals about supply, demand, or price, such as wash trades, spoofing, or disseminating false information.

Information barriers within a firm that restrict the flow of confidential or inside information between business areas to prevent conflicts and misuse.

Payments, benefits, or non-monetary rewards given or received that could bias professional behaviour. Rules typically require them to be disclosed or prohibited.

Benefits offered to or received from clients or counterparties. Firms set thresholds and approval rules so that such benefits do not influence decisions improperly.

Offering, giving, requesting, or accepting an advantage to influence someone improperly. Modern laws often cover both public officials and private-sector persons.

The abuse of entrusted power for private gain, encompassing bribery, facilitation payments, embezzlement, and related forms of dishonest advantage-taking.

The shared values, behaviours, and habits within an organisation that shape how staff act toward clients, markets, and each other, and how conduct risk arises.

The risk that business behaviour or decisions cause harm to customers, markets, or the firm's integrity, leading to redress, sanctions, or reputational damage.

A supervisory principle requiring firms to deliver fair outcomes across the product lifecycle, including clear communication, suitable advice, and fair complaint handling.

The obligation to ensure that advice or a product matches a client's objectives, financial situation, risk tolerance, and knowledge, and is properly documented.

A regulatory standard requiring firms to act to deliver good outcomes for retail customers in products, price and value, communications, and support.

An environment where staff feel safe raising concerns about misconduct or poor practice without fear of retaliation, supported by accessible reporting channels.

Reporting wrongdoing or regulatory breaches, internally or to an external authority, by someone with inside knowledge, often protected by law against retaliation.

Staff trading in investments for their own account, usually subject to pre-clearance, holding periods, and restrictions to prevent conflicts and insider dealing.

Pay and bonus structures that can drive behaviour. Regulators expect them to reward sound risk-taking and fair customer outcomes rather than short-term volume.

The signals senior leaders send through their words and actions about the importance of ethics and compliance, which strongly shape staff behaviour.

The structures, roles, and processes by which an organisation is directed and held accountable, including board oversight, committees, and clear delegation of authority.

The amount and type of risk an organisation is willing to accept in pursuing its objectives, expressed through limits, statements, and escalation thresholds.

A regime assigning named senior individuals responsibility for specific business areas, with regulatory approval and personal accountability for failures in those areas.

Measures a regulator takes against a firm or individual for breaches, including fines, public censure, restrictions on business, prohibition, or criminal referral.

The risk that negative stakeholder perception damages a firm's value, relationships, or licence to operate, often stemming from conduct or compliance failures.