• Chiara Gelmini, Business Practice Manager at Appway


• 03.04.2018 08:30 am
Compliance , North America

The US, like many other regions worldwide, is taking regulation more seriously than ever in recent years. But while other places, such as the UK, are balancing their introduction of more stringent regulations with strong support for the FinTech industry and innovation, the focus for the US is decidedly more compliance-based.

It’s not a big surprise that the country isn’t easygoing with its regulatory pressure. As Chris Hamblin, editor of Compliance Matters, points out in WealthBriefing’s Global Compliance and Innovation Trends in Wealth Management study, “Regulators are innumerable in the US because of its federal nature.”

For financial institutions with business ties in the US, these are the five regulatory areas that the country has its eyes on for 2018:

• Regulators Exams

These audits from regulators are becoming increasingly important for financial institutions. Regulators are both expecting and requesting more proactive demonstrations of compliance. A good example of this is FINRA exams shifting to risk-based and annual broker-dealer audits.

• DOL Fiduciary Rule

Even though it’s unclear to what extent the DOL rule will be enforced, it’s evident that the regulatory industry feels it’s necessary. It’s imperative to understand and profile investors in granular detail and provide them with clear information about the costs of products and services, as this measure is all about ensuring that advice given to clients is in their best interest.

• Fee vs. Commission

The shift to a fee-based business, especially in the broker-dealer and wealth management segment, confirms that the industry is moving towards greater transparency and customer protection.

• FinCen Customer Due Diligence

In addition to the original four anti-money laundering pillars, institutions are now required to risk-profile clients, monitor for suspicious activities, and revise records more diligently.

• Cyber Security

Financial fraud and data breach are in the spotlight right now, which means it’s a priority for financial institutions to:

a. Train their employees on potential threats and how to avoid them

b. Put in place systems, controls, and governance to closely monitor security

c. Spot and report any breaches as soon as they’re noticed, and then fix the issues to prevent them happening again

It’s clear that financial institutions need a tool that supports and boosts transparency, monitoring, and reporting. Compliance needs to be dynamically and holistically embedded into a business’ various operating systems, and especially those connected with clients. Businesses must implement continuous, engaged, and contextual compliance. This requires a compliance by design approach, facilitated by technology that is flexible, scalable, and contextual. Now more than ever, consumer protection and transparency are extremely vital.