With banks' regulatory compliance challenges only increasing, they must find ways to reduce the associated legal costs, such as by using legal process services providers with experience in handling Know Your Customer (KYC), eDiscovery, foreign bank organizations, Deferred Prosecution Agreements (DFAs), non-prosecution agreements (NPAs), the Dodd-Frank Act and much more.

1. Managing Costs Related to Increasing
Banking Regulation
As compliance costs continue to grow, banks can figure out ways
to rein them in such that efficiencies are also enhanced.
Executive Summary
Many large banks reported disappointing earnings
in 2014. Among the contributors to higher costs
were the expenses associated with increased
regulatory activity.
Investigations and efforts to comply with new
regulations can weigh heavily on the bottom
line. Discovery, document review, revamping
agreements and training staff require a signifi-
cant investment of resources.
For example, in the last few years banks have
agreed to pay billions of dollars in fines for issues
ranging from conducting business with countries
sanctioned by the United States to manipulating
interest and currency rates. It is clear that regula-
tors are closely tracking the banks on most issues.
Deferred prosecution agreements (DPAs) and
non-prosecution agreements (NPAs) make for
additional stress on banks from regulators.
In December 2014, Standard Chartered PLC
announced that it had agreed to a three-year
extension of the DPA it entered into in December
2012 with the U.S. Department of Justice and the
New York County District Attorney’s Office.1
The bank has agreed to retain a monitor to
evaluate and make recommendations about its
sanctions compliance program. According to
Standard Chartered, the agreement acknowledg-
es that the bank has taken a number of steps to
enhance and optimize its sanctions compliance.
These include implementing more rigorous U.S.
sanctions policies and procedures, training staff,
hiring senior legal and financial crime compliance
staff and implementing additional measures to
block payment instructions for countries subject
to U.S. sanctions laws and regulations.
Many other banks also had to undertake such
efforts. Despite an often challenging regulatory
and legal environment in 2014, banks must
prepare themselves for ongoing activity in 2015
that will continue to add to costs.
This continuing emphasis on reforms will add to
internal pressure from the C suite and sharehold-
ers to control costs in 2015.
Legal departments will need to identify ways
to save money on current investigations and
litigation, prepare for new regulations such as the
Federal Reserve Board’s recovery and resolution
guidance and proactively manage compliance to
minimize the chances of penalties.
As this white paper points out, alternative legal
services, such as a legal process services provider,
offer a way to quickly staff and accomplish these
goals and initiatives.
cognizant 20-20 insights | june 2015
• Cognizant 20-20 Insights

2. cognizant 20-20 insights 2
Ways to Utilize Legal Process Services
For banks with an eye on both regulatory concerns
and the bottom line, legal process services
providers can play a variety of roles. Banks can
consider legal process services in any or all of the
following areas:
• Management of information systems: Regu-
lators are requiring more and more visibility
into contractual data that is housed in a man-
agement information system. One example
of such regulation is the Federal Reserve’s
recovery and resolution mandate. In January
2014, the Federal Reserve issued SR Letter
12-17/CA 12-14 and related communications,
which outlined the need for eight large U.S.
banks to be prepared with certain key informa-
tion from contracts and legal documents in the
event of instability at the bank. The deadline
has been set for December 2016.
Such a project requires large groups of
attorneys and paraprofessionals to review
contracts and upload them to a searchable
repository. Banks that decide to tackle this
internally will have to hire large numbers of
paid staff members. Using law firms will also
be an expensive proposition. On the other
hand, an experienced legal process services
provider can offer reasonable costs, high
quality and hands-on management to complete
the project. The provider can partner with the
bank to structure the right solution.
Banks should consider reaping other benefits
from their efforts around recovery and
resolution guidance. They may also want to
have legal service providers simultaneously
develop capabilities to search for other terms
from a business perspective.
• ISDA review/collateral management: Under
the requirements of the Dodd-Frank Act, the
documentation around ISDAs can present
significant risks. Banks must develop solid
document management systems to remain
in compliance and effectively manage inter-
nal and external investigations. Among the
record-keeping requirements, banks need to
retain ISDA master agreements, CSAs, relevant
amendments and confirmations, in electronic
form, for swap transactions in existence on or
after April 25, 2011; retain relevant agreements
through the life of a relevant swap and for five
years after the swap terminates; and swap deal-
ers must retain relevant records in an electroni-
cally accessible form for counterparties, which
must be accessible within three business days.
By using legal process services providers,
banks can organize their contracts and other
information to comply with their reporting
obligations, as well as make data available for
investigations and business purposes.
• eDiscovery and document review: Regardless
of current or future cost pressures, eDiscovery
and document review are often at the top of
the list when discussions turn to cost savings
and legal process service providers.
Even matters that are ultimately settled can
cost millions in discovery expenses. This is
an area where banks can realize significant
savings by working with a third-party provider,
for the short as well as the long term.
Choosing the right provider is important. Many
providers are primarily focused on discovery
and document review, and lack capabilities
beyond litigation support. Banks looking to
hire legal process services providers should
consider partnering with specialty companies
that have a broader reach and range.
• Creating new corporate entities: When banks
need to establish new corporate entities, such
as a U.S. bank holding company for a foreign
bank organization (FBO), new contracts may
need to be generated or existing agreements
may require amendments to account for the
new entity. Much of this administrative work
can be performed by a third-party service
provider, since it is often not a good use of
in-house counsel’s time to manage such
routine activities.

3. 3
Five Ways to Manage Costs Amid
Changing Regulations
Banks looking to manage the costs and pressures
of growing regulations should consider five steps:
• Earlier is better. A proactive approach will help
minimize expenses, stress and risk. The legal
and compliance departments are often the
first to learn of regulatory changes, pending
litigation and investigations, and planning a
response and course of action should occur as
soon as possible. This should include consulting
with key stakeholders right away. Getting input
and sign-off early on will help ensure that the
process is as smooth and thorough as possible.
• Ramp up with experienced legal process
services. The banking industry is complex and
changes quickly. It is therefore important to
work with providers that understand both the
banking industry and the regulatory mandates.
Many legal process services providers are
niche players, often with limited resources and
a short history in the legal sphere. Others may
lack an established track record. Banks should
look for stable, known entities that can ramp up
as required to sustain operations.
• Understand and streamline the scope of
the work. Quickly understanding the scope of
work is one of the most challenging aspects of
adapting to changing regulations and investi-
gations. Once the legal or compliance team
gets its arms around the scope, it is time to
start streamlining processes and setting expec-
tations.
• Establish sound processes to head off poten-
tial issues. By establishing clear processes,
banks can proactively address issues such
as “know your client/know your customer”
(KYC) and anti-money-laundering regulations.
Federal regulators have made it clear that
banks will be fined or face sanctions for violat-
ing KYC regulations.
Federal prosecutors spent four years preparing
a case against a Colombian cocaine cartel that
allegedly laundered tens of millions of dollars
through several major international banks. The
investigation led to the seizure of more than
$200 million and the confiscation of more than
a ton of cocaine.2
• Be flexible. While banks need to plan ahead,
they also need to continually assess the
balance and load of their projects and goals.
Looking Ahead
Banks are under extraordinary pressure from
shareholders as well as regulators. Reining in
legal costs through the use of legal process ser-
vices will strengthen compliance measures and
minimize risk.
By identifying areas of concern and partnering
with the right legal process services provider,
banks can be better positioned to deal with
changing regulations this year – and beyond.
Footnotes
1 https://www.sc.com/en/news-and-media/news/global/2014-12-09-Extension-of-the-Deferred-Prosecution-
Agreements.html.
2 http://www.acfcs.org/financial-crime-wave-morgan-stanley-fined-for-kyc-gaps-corruption-crackdown-in-
china-continues-and/.

4. About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business
process outsourcing services, dedicated to helping the world’s leading companies build stronger busi-
nesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfac-
tion, technology innovation, deep industry and business process expertise, and a global, collaborative
workforce that embodies the future of work. With over 100 development and delivery centers worldwide
and approximately 217,700 employees as of March 31, 2015, Cognizant is a member of the NASDAQ-100,
the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and
fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.
World Headquarters
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Teaneck, NJ 07666 USA
Phone: +1 201 801 0233
Fax: +1 201 801 0243
Toll Free: +1 888 937 3277
Email: inquiry@cognizant.com
European Headquarters
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Paddington Central
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Phone: +44 (0) 20 7297 7600
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Email: inquiryindia@cognizant.com
­­© Copyright 2015, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is
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About the Authors
Rohan Sukhdeo is Associate General Counsel and Head of Cognizant’s Legal Process Services
(LPS) Practice. As head of LPS, he leads all LPS business development efforts in the U.S. and
comanages the overall development of Cognizant’s LPS Practice globally. He can be reached at
Rohan.Sukhdeo@cognizant.com.
Michael Kreiner is an attorney and leads client services and business development for Cognizant’s Legal
Process Services (LPS) Practice. He is a member of the Association of Corporate Counsel (New York)
and the New York State Bar Association. He received his J.D. degree from Fordham University School of
Law and his B.A. from Union College. Michael is admitted to practice in New York. He can be reached at
Michael.Kreiner@cognizant.com.
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