The Compliance Revolution or the Critical Evolution of the Roles


By FINTECH Books Contributor, Birgul Cotelli

Clients to be accepted to a bank are presumed guilty until the due diligence process clears them from being a money launderer, market abuser, tax evader, organised criminal, or a terrorist. The banks, wealth managers or other financial services firms’ employees may behave as they please until they are caught in their wrongdoings.

The legislators and regulators issue laws and implement directives to avoid being on black lists or having negative peer reviews.

Since the financial crisis in 2008, with enforcements, fines, uncovering of wrongdoings, and loss of trust in the financial system, the situation has only accelerated. Therefore, today, not only is the job unfinished, but also has increased in complexity.

The acceleration of this regulatory inflation has increased dramatically as a result. Consequently, the expense required to track and manage regulation has caught the attention of those responsible executives for compliance budgets.

Responsible capital market actors are in search of efficiencies on all fronts. Digital solutions and artificial intelligence are being proposed to, or used by, not only the financial institutions but clients and the regulators as well.

One client solution on the horizon, is preparing a certified client financial ID. With this solution, clients can approach financial advisors and portfolio managers with their KYC and due diligence performed and certified by external professionals.

Financial institutions are automating their offers with robot advisors. Financial regulators are pledging to utilise the technology to reduce the regulatory burden on all the financial services firms.

The responsibilities and roles are being redefined and reassigned to make compliance affordable for everyone. Productivity stagnation is at such levels that the negative effects of regulatory burden make it necessary to revolutionise the compliance function.

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