In the complex world of today’s regulations, simple compliance checks and routine procedures no longer suffice.
According to Corlytics, regulatory authorities demand comprehensive, traceable, and verifiable evidence of proactive compliance efforts from firms. The necessity for thorough audit trails and real-time monitoring underscores this need.
Compliance is no longer a mere box-ticking exercise; robust systems of traceability and accountability are crucial for companies to avoid penalties, uphold their reputation, and earn stakeholder trust. For example, the UK’s Financial Conduct Authority (FCA) underscores the importance of solid compliance monitoring programmes, which should include detailed documentation of all compliance activities like monitoring reports, audit trails, and incident logs, to ensure transparency and accountability.
The challenge of traceable compliance is significant, and it grows more critical as technology becomes increasingly integrated into organizational structures. Companies face the pressure not only to adhere to regulations but also to explicitly demonstrate compliance through a documented audit trail. This requires a strategic linkage between regulatory obligations and actionable controls, ensuring that each obligation connects to a specific policy, procedure, and control, facilitating dynamic traceability.
As compliance requirements evolve, regulators and stakeholders now seek verifiable evidence that systems function as intended, relying on the reliability of diverse data types. This shift compels firms to adopt advanced compliance solutions capable of meeting regulatory standards and enduring scrutiny through consistent, demonstrable results.
However, mere assurances from systems are inadequate—firms must engage in proactive monitoring, focusing on transparency, accountability, and regular system testing and validation to prevent oversights and regulatory breaches.
In the world of FinTech, building trust in compliance systems is paramount. At Corlytics, we adhere to a stringent testing regimen during technology deployment, ensuring every system element is thoroughly checked and validated. This meticulous approach is essential because if compliance professionals cannot clearly articulate their processes and technology functions to regulators or stakeholders, it raises a potential red flag.
Metro Bank’s recent £16.7m fine from the FCA, discounted from an initial £23.9m, serves as a stark reminder of the pitfalls of insufficient compliance systems. The bank was penalised for failing to rectify severe deficiencies in its automated transaction monitoring system, introduced in 2016.
Despite ongoing regulatory guidance, the bank’s systems lagged in necessary compliance updates, highlighting risks from inadequate risk assessments and customer screening processes. These flaws in system setup and oversight persisted undetected for years, despite early warnings from a junior compliance team member.
This high-profile case underscores the risks associated with insufficient regulatory alignment and the dangers of blindly trusting technology without rigorous verification and continuous oversight.
Our aim at Corlytics is to transform regulatory compliance into a visible and verifiable process. A connected compliance environment not only boosts efficiency but also builds trust among compliance professionals and regulators. The US Department of Justice (DOJ) advocates for dynamic compliance programs that evolve continually to address emerging risks and adapt to changing business conditions.
This necessitates an interconnected compliance environment, where all compliance content—from obligations to policies to controls—is dynamically mapped, enhancing visibility and enabling institutions to swiftly adapt to regulatory changes and align compliance efforts with current standards.
Keep up with all the latest FinTech news here.
Copyright © 2024 FinTech Global
