How regulatory changes and tech advances are reshaping compliance surveillance

The 2024 Surveillance Benchmarking Survey & Report from 1LoD, co-sponsored by MCO, unveils significant insights derived from thousands of discussions with surveillance leaders within the financial services sector.

According to MCO, this comprehensive report highlights that compliance surveillance is a perpetual process, marked by continuous iterations and necessary due to the ongoing risks of market abuse and employee misconduct.

Insightful contributions from over 30 leading global banks featured in the 2024 report elucidate the current state of trade and communications surveillance. It’s evident that regulatory pressures are increasingly shaping surveillance strategies. Notably, last year’s WhatsApp penalties have escalated investments in communication surveillance technologies. However, once remediation efforts conclude, there is a tendency for reduced spending, which could potentially open gaps for future non-compliance issues as both regulations and technology continue to evolve.

MCO Director of Solution Sales Keith Pyke emphasises the necessity of an overarching view in compliance. He explains, “messaging surveillance and retention is just one component of an effective compliance strategy. A holistic approach encompasses multiple risk areas, including employee trading and MNPI, integrated into a unified platform which enhances operational efficiency and usability for compliance teams and employees alike.” This integrated strategy not only provides a broader view of compliance risks but also offers substantial operational benefits.

While larger financial institutions have historically faced the brunt of regulatory scrutiny, attention is shifting towards mid-sized and smaller entities. Recent actions by the SEC, which imposed a $6.5m penalty on a small adviser for failing to maintain electronic communications, signal this shift. MCO VP of Sales Jason Patel highlights the increasing expectations for comprehensive archiving systems capable of extended storage and complex data management, crucial for both regulatory compliance and effective supervision.

The technological landscape within financial surveillance is rapidly evolving. The transition from outdated systems to advanced solutions like AI is expected to significantly enhance the detection of compliance issues while reducing inefficiencies associated with false positives. However, the adoption of new technologies must be managed carefully to avoid creating new risks, particularly in terms of data coverage and system integration.

As the regulatory environment continues to adapt, so too must surveillance practices. The integration of new technological solutions is crucial for ensuring comprehensive regulatory coverage and operational effectiveness. Financial institutions must remain vigilant, ensuring their surveillance systems are robust enough to mitigate potential risks and align with ongoing regulatory demands.

Read the full post here.

Keep up with all the latest FinTech news here.

Copyright © 2024 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.