Conversely, poor organisational culture will hamper business growth, customer satisfaction, recruitment and employee retention, as well as hinder management’s ability to oversee conduct within the firm and can lead to regulatory breaches and misconduct.
Sometimes evidence of poor culture is easy to spot. Binance had a poor organisational culture which valued profits over regulatory compliance. The serious money laundering violations, Bank Secrecy Act breaches and related failings led to Binance facilitating transactions by its clients with sanctioned jurisdictions as well as allowing money to flow to terrorists, cybercriminals, and child abusers. Binance’s culture meant that it failed to register the exchange with the relevant regulators, created an intentionally weak compliance program, and engaged in fraud and deception to help the exchange’s U.S.-based customers continue trading.
By the end of 2023, Binance and its founder and chief executive officer, Mr Changpeng Zhao, had pled guilty to a variety of criminal charges.
Ultimately, Binance agreed to a $4.3 billion fine in the US and was fined an additional $ 6 million in Canada. Mr Changpeng Zhao was fined US$50 million, agreed to step down from his roles in the organisation and was sentenced to 4 months in prison. Inarguably a better organisational culture would have avoided all of this.
While Binance is an extreme example, you can see why organisational culture is a regulatory priority.
For firms one of the issues with poor organisational culture is that it can be hard to identify from within, and once identified, it generally takes significant time, effort and resource to effect change.
The Grant Thornton Regulatory Consulting team can help you understand what influences and drives your firm’s culture and help you implement real change. Please do not hesitate to reach out to a member of Grant Thornton’s Regulatory Consulting.