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Ensuring regulatory compliance in banking and finance through effective controls: The principle of duality in the segregation of duties
Author(s) -
Engdahl Oskar
Publication year - 2014
Publication title -
regulation and governance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.417
H-Index - 45
eISSN - 1748-5991
pISSN - 1748-5983
DOI - 10.1111/rego.12027
Subject(s) - compliance (psychology) , neglect , argument (complex analysis) , duality (order theory) , loyalty , autonomy , work (physics) , control (management) , dual (grammatical number) , law and economics , economics , business , accounting , law , political science , psychology , social psychology , management , marketing , mechanical engineering , art , biochemistry , chemistry , mathematics , literature , discrete mathematics , psychiatry , engineering
Today the segregation of duties is commonly used to ensure regulatory compliance in various industries. This article considers the organizational requirements for the effective implementation of this principle, through an examination of a duality‐based segregation‐of‐duties type control system and its fundamental characteristics. Cases from the S wedish banking and finance sector are discussed to show how breakdowns in duality‐based systems have compromised compliance and even encouraged crime, and how crimes could be carried out in practice. Particular attention is paid to the critical role that gullibility, loyalty, and dependency relations among employees played in these cases, in leading control persons to neglect their responsibility to review and approve their colleagues’ work, while bringing no consequences for their ability to carry on performing their work tasks. The argument is made that an effective duality‐based segregation‐of‐duties type control system presupposes social relations characterized by relative autonomy and third‐party dependence, along with work task interdependence.