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5 Ways To Overcome Compliance Challenges In Financial Services


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Come to check the best 5 ways to overcome the compliance challenges!

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5 Ways To Overcome Compliance Challenges In Financial Services

  2. 2. REDUCE REGULATORY PERSONAL LIABILITY Regulators including the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have declared their intent to hold individuals personally liable for corporate misconduct. WHAT TO DO »» Prove that you did everything in your power to keep employees up to date with rules and regulations. »» Make sure your training records are up-to-date. Training records are nearly always reviewed during an inspection or audit by regulatory authorities to check that employees have received the appropriate compliance training and their certifications are current and valid. »» Use a Learning Management System (LMS) for managing compliance training and certifications to ensure your organization is always ready for a compliance audit. FACTS ¶¶ Libor Scandal in the UK: a 14-year prison sentence was handed down to a trader for fraud. ¶¶ The U.S. SEC fined a former Chief Compliance Officer $25,000 for failures after the president of the company stole $670,000 from client accounts (June 2015) 1 . ¶¶ The Hong Kong Securities and Futures Commission reprimanded a former Compliance Officer of a financial group and fined her $150,000 for managerial and supervisory failures. (August 2014)1 . 1
  3. 3. WHAT TO DO »» Develop detailed job descriptions that clearly state employee responsibilities. »» Keep job descriptions up to date. »» Use an integrated Learning and Performance Management System to manage job profiles and build job profiles to cover both current and future roles. Job descriptions, when done correctly and maintained, provide a tremendous layer of compliance protection and can mitigate risk2 . Chief Compliance Officers and Senior Managers need to collect and maintain the evidence to show how they discharged all their obligations and responsibilities3 . CREATE JOB DESCRIPTIONS 2
  4. 4. FACTS ¶¶ Financial institution have typically more than 20,000 suppliers6 . ¶¶ In 2012, $25 billion in fines was issued against five leading mortgage servicers, in part for missteps by their suppliers6 . The Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) indicated that banks and other financial institutions will be facing increased scrutiny by auditors. Indeed banks and other financial institutions are expected to review the third party’s program to train and hold employees accountable for compliance with policies and procedures. Banks need to review training programs to ensure that the third party’s staff is knowledgeable about changes in laws, regulations, technology, risk, and other factors that may affect the quality of the activities provided4 . WHAT TO DO »» Move from a reactive approach to compliance to a proactive one by managing all (staff & third party) training records using one system. »» Ensure documentation remains current. Training records need to be accurately updated with the exact version of each course taken. »» Be prepared for compliance audits and have training records always ready for inspection by using the efficient centralized reporting tools for a complete view of the whole supplier network. MANAGE THIRD PARTY RISK 3
  5. 5. WHAT TO DO With an electronic system, training records are always up-to-date and inspection-ready. You won’t need to waste time to gather and check if your training records are up-to-date. An electronic system assures that everything is in order and easily accessed. KEEP TRAINING RECORDS UP-TO-DATE Banks have been hit with big fines in recent years for failing to keep adequate records. In this new regulatory landscape the UK Financial Conduct Authority (FCA) wants to ensure that boards and senior management take a closer look at record keeping (SYSC 9)7 . FCA rules on record-keeping (SYSC 9), state that firms must: (( Arrange for orderly records to be kept of its business and internal organization. (( Enable the appropriate regulator to monitor the firm’s compliance8 . (( Maintain appropriate records to demonstrate compliance with the rules in this sourcebook and keep them for at least 3 years after an employee stops carrying on the activity9 . FACTS ¶¶ In 2014, a UK bank was fined £37.7 million for failing to keep appropriate records10 . 4
  6. 6. WHAT TO DO »» Train your employees on information security policies and procedures on a regular basis. »» Training programs should be continuously updated to address the constantly evolving threat landscape as well as organizational changes impacting data privacy and security12 . »» Use an LMS to maintain a certification list, keep track of which individuals are certified, identify individuals whose certifications may need renewal and automatically send reminders to those individuals and their managers who lack key certification prerequisites. Analysis of more than 15 billion transactions in the past 12 months revealed a 40% increase in cyber criminal activity targeting the financial sector. Over the past few years, large U.S. banks have been subjected to a barrage of cyber attacks, which have been extremely costly. As a result of attacks, their stock prices dropped by 0.4% to 1%11 . Each year companies implement the latest security technologies, but most breaches can actually be traced back to human errors. AVOID CYBER THREATS FACTS ¶¶ In 2016, the average annualized cost of cyber crime for companies in financial services is $16.53 million - it is higher than any other industry13. 5
  7. 7. 1. manage-personal-regulatory-report.pdf 2. 3. 4. 5. 6. McKinsey Working Paper on Risk, Number 46, McKinsey & Company 7. 8. 9. 10. 11. 12. 13. SOURCES: • NetDimensions, NetDimensions Talent Suite, NetDimensions Learning, NetDimensions eLearning, NetDimensions Exams, NetDimensions Performance, NetDimensions Analytics, and NetDimensions Talent Slate are trademarks or service marks of NetDimensions Limited. All other trademarks, trade names, service marks and logos referenced herein belong to their respective owners. Did you like this collateral? Then you might also be interested in our White Paper: Make Compliance Easy with your LMS Download Now