Category: Blogs

Regulatory flux and the path towards continuous compliance

Post author By Infobelt
Post date October 29, 2021

Regulatory flux and the path towards continuous compliance

Last month we touched upon Regulatory Relationship Management (RRM) as a framework used to satisfy regulators and their regulatory requirements. Here, we point to the next steps forward by addressing the challenges and impacts of non-compliance and providing you with thoughts on assessing your current compliance state—finishing off with actionable remedies to avert non-compliance.

“The cost of non-compliance is 2.71 times higher than the cost of compliance”

— Ponemon Institute and Globalscape
“The True Cost of Compliance with Data Protection Regulations”

The Top Challenge to Continued Compliance

For highly regulated financial institutions, having an effective regulatory compliance strategy is a fundamental part of the business process. Organizations that are compliant with regulations have an advantage in terms of winning customer trust. A vigilant organization will reduce the potential negative impact on its brand. On the other hand, companies struggling with compliance are exposed to the risk of fines, business disruption, and reputational risk. The effort to repair a company’s reputation and restore customer confidence can be daunting.

A compliant organization optimizes value for its customers and minimizes risks. Nevertheless, keeping up with the sheer amount of constantly evolving regulations has become increasingly challenging. A global survey by Thomson Reuters Regulatory Intelligence backs this up by revealing that the top challenge to continued compliance is regulatory flux. Regulations are constantly being amended and revised to reflect social, cultural, political, and technological changes in the regulatory environment. Compliance requirements across international jurisdictions only add more complexity to the regulatory burden — a burden that does not look to loosen.

The Price for Non-Compliance

Organizations must remain vigilant for gaps in their regulatory programs. While the price tag for compliance measures may seem costly, the potential costs for non-compliance include operational disruption, decreased investor confidence, legal fines and penalties, diminished brand value, and loss of employee morale. Ultimately, according to a study by the Ponemon Institute and Globalscape, the cost of non-compliance is 2.71 times higher than the cost of compliance.

Assessing Your Path

Key indicators

The ability to course-correct depends on people-readiness and process adoption. Asking the following questions will inform your next steps towards regulatory risk mitigation:

Are adequate risk assessments in place?
How thoroughly are you assessing your compliance risk exposure?
Do you have enough skilled staff allocated for compliance?
How sufficient is your technology in managing compliance?
What is your company’s attitude towards compliance?
Who is accountable for non-compliance?

Actionable Remedies to Non-Compliance

Build a Culture of Compliance

Actionable Remedies to Non-ComplianceCompanies strengthen their compliance culture by plugging the gaps in their policies and procedures and putting into place reviewing and monitoring mechanisms. They conduct compliance training and communications with a strategic intent of curbing non-compliance. Making personnel policies, screening, and evaluation of employees, vendors, and agents mandatory for vigilance and course corrections is also part of the remedy. Instituting monitoring, auditing, and internal reporting systems, including disciplinary measures for non-compliance is another. Most importantly, setting the right tone at the top is vital to maintaining a healthy compliance culture. To do so, companies create the role of the chief compliance officer, who is empowered with responsibilities of monitoring regulations, managing compliance, and mitigating business risks.

Make way for intelligent automation

Regulatory technologies provide the capabilities for companies to be up-to-date with the magnitude of regulations as they change. Workflow tools enable the relevant stakeholders to access the impacted regulations so they can take corrective measures. Archiving, retention, and disposition technologies allow companies to preserve information as per compliance requirements and make this information searchable and accessible for future inspections. Encryption prevents leakage of confidential data and alleviates privacy concerns. Cloud storage technologies enable companies to save on hardware and infrastructure costs. End-to-end business process automation significantly improves productivity.

Unify the information governance activities

Tie these individual regulatory technologies together, and you can create an automated, unified governance infrastructure. This unified infrastructure will enable you to achieve policy integration and process transparency across your records management life cycle. You can generate risk reports instantly and monitor the compliance health of your organization through comprehensive dashboards.

One such product that can create your unified governance infrastructure is Infobelt Omni Archive Manager. Infobelt Omni Archive Manager is an advanced data archiving platform for all data types that enhances information protection and privacy and increases process efficiency. It gives businesses a comprehensive process to allocate, organize, and archive data according to industry regulations.

Putting It All Together

Once your organization understands the value of compliance and is ready to take action, you may want to find and consult with a regulatory technology partner, such as Meji Partners or Infobelt, and utilize their services. Infobelt is the only company that delivers a complete end-to-end books and records management system. Meiji Partners provides an independent advisory voice that helps uncover hidden risks and challenges presented by regulatory obligations.

Once your organization understands the value of compliance and is ready to take action, you may want to find and consulaBy proactively reducing the likelihood of a significant non-compliance event, an automated information governance strategy sets your organization apart in the marketplace. It gives you a competitive advantage while also protecting your brand.t with a regulatory technology partner, such as Meji Partners or Infobelt, and utilize their services. Infobelt is the only company that delivers a complete end-to-end books and records management system. Meiji Partners provides an independent advisory voice that helps uncover hidden risks and challenges presented by regulatory obligations.

October 29, 2021

Blogs

CRM for Regulatory Compliance

Post author By Infobelt
Post date September 30, 2021

Lawyer Legal Advice Law Compliance Concept

CRM for Regulatory Compliance

Meeting compliance goals through Regulatory Relationship Management (RRM) Framework

RRM stands for Regulatory Relationship Management. To understand RRM, let’s start with something more familiar to you, such as Customer Relationship Management (CRM). Probably when you think CRM, Salesforce comes to mind.

CRMs such as Salesforce align your business model to your customer relationships. The goal of CRM is to drive your sales to funnel and retain customers. Similarly, RRM aligns your business and compliance model with your regulatory relationships. The purpose of RRM is to satisfy regulators (precisely their regulatory requirements).

In CRM, you are trying to understand the customer and satisfy their needs. In RRM, you are trying to understand the regulator and meet their needs.

What is RRM?

CRMs such as Salesforce align your business model to your customer relationships. The goal of CRM is to drive your sales to funnel and retain customers. Similarly, RRM aligns your business and compliance model with your regulatory relationships. The purpose of RRM is to satisfy regulators (precisely their regulatory requirements).

In CRM, you are trying to understand the customer and satisfy their needs. In RRM, you are trying to understand the regulator and meet their needs.

“Taking a proactive approach to regulatory compliance saves reputation, money and hundreds of man-years”

— RegTech industry expert

What are some of the key features to look for in an RRM solution?

Modeling your operational and compliance framework

Most importantly, your RRM should let you create a model that addresses your organization’s operational and compliance demands. Your RRM should link regulations to required regulatory records, then map your books and records to your compliant archives. These are just a few examples, but the RRM solution should be flexible enough for you to create an accurate representation of your real-world operational and compliance characteristics.

Customizable workflows with built-in attestation models

Equally as important, your RRM solution should have customizable workflows that ensure that each line of business within your organization completes specific regulatory tasks to remain compliant. The world’s top RegTech companies suggest that you customize these workflows to each line of business and be scalable as your organization grows. Keeping these workflows as simple as possible is a significant factor in ensuring adoption throughout your company.

Actionable dashboards with real-time compliance health-scores

A good RRM solution should have actionable dashboards that give business leaders a compliance health score in real-time. Workflows with built-in attestation models will feed the dashboard, highlighting any areas within the organization that require remediation. “Taking a proactive approach to regulatory compliance saves reputation, money and hundreds of man years,” suggests a RegTech industry expert. “This approach will allow business leaders in the Financial Services Industry to get ahead of issues long before they have become a serious problem.”

Notifications regarding regulatory changes and business impact

What would a Regulatory Relationship Management system be without regulations? A significant component of any RRM is that it is updated with the newest rules and regulations constantly. The design of your RRM must notify relevant stakeholders about which regulatory requirements have changed, provide the impact that the regulatory change has on the organization, and have the necessary workflows to manage the regulatory change properly. “Without a constantly updated and direct feed, an RRM is rendered useless,” suggests a RegTech Operations Leader

Notifications regarding regulatory changes and business impact

Analysts suggest that the regulatory compliance technology industry will see a growth rate of over 52% through 2025. RegTech companies provide financial services firms, such as investment banks, commercial banks, private equity groups, and insurance companies a proactive and strategic approach to keeping up with the constantly changing regulatory landscape.Analysts suggest that the regulatory compliance technology industry will see a growth rate of over 52% through 2025. RegTech companies provide financial services firms, such as investment banks, commercial banks, private equity groups, and insurance companies a proactive and strategic approach to keeping up with the constantly changing regulatory landscape.

Learn more about RRM RegTech solutions. Email us at [email protected].

September 30, 2021

Blogs

The Regulatory Compliance Outlook for the 2nd Half of 2021

Post author By Infobelt
Post date July 27, 2021

The Regulatory Compliance Outlook for the 2nd Half of 2021

For the financial services industry and global economy, COVID created unprecedented disruptions that ultimately required financial businesses to change pace. Although global markets and businesses are now on the path to recovery, these firms are still challenged with heightened risk and uncertainty. As we enter the second half of 2021, our team has identified areas that will require close monitoring from leadership and compliance teams.

Ransomware Attacks

Ransomware attacks often target a company’s sensitive internal data, making unprotected, unbacked up data a key vulnerability within a firm. Without a safe, secure, and separate store of a company’s vital data, its operations can be brought to a complete standstill by a ransomware attack. Downtime caused by an attack can stretch to over a month as companies work to clean systems and restore data.

While traditional ransomware protection comes in the form of anti-virus software, Infobelt Omni Archive Manager works differently. Omni Archive Manager is a secure data archiving platform, providing an additional layer of data protection from attacks by creating an immutable copy of your company’s data separate from your operational network, and therefore, safe from an attack. Omni Archive Manager works by archiving all of your data hourly, ensuring a near real-time store of your company’s data that can be recalled and restored in the event of an attack.

Scrutiny on market transactions, specifically related to COVID transactions and stimulus payments

In 2020, FINRA reviewed 79.7 billion transactions every day. Because of the large amount of aid that was distributed to businesses and individuals during this time period, regulators will be specifically reviewing for anti-money laundering and fund misuse. Proper documentation and policies will be integral to making sure your firm is not scrutinized during this time.

Shift to digital business

There is no doubt the pandemic has changed business and workplace activity. Operations evolved by implementing digital controls and processes, and this theme continues even as many businesses go back into the office. Regulators will require greater oversight on these digital transactions, specifically on technical innovation and operational changes.

Preparedness is the key to tackling the compliance requirements posed by emerging regulatory changes. Regulators will continue to be stringent on requirements, and making sure your team is informed and prepared in case of scrutiny is vital to your firm’s success with regulators. Maintaining a positive relationship with a regulator is vital to your firm’s success, especially during this time. Our team has previously put together a blog on bolstering your relationship with regulators. To read, click here.

July 27, 2021
Infobelt

Blogs

3 Ways to Get Regulators on Your Side

Post author By Infobelt
Post date May 17, 2021

3 Ways to Get Regulators on Your Side

Financial institutions have a love‐hate relationship with regulators. Nearly 13 years after the 2008 financial crisis, Americans are wary of Wall Street, but believe regulators are essential to maintaining credibility and ethical standards.

Most Americans agree that additional regulations are necessary, but for financial institutions, regulators pose a significant threat to operations, revenue, and growth. A regulator inquiry involves time, people, and resources to address.

A CATO Institute study observed public attitudes on Banks, Financial Institutions, Consumer Finance, and the Federal Reserve.

Americans do not think that regulators help banks make better business decisions (74%) or better decisions about how much risk to take (68%). Instead, Americans want regulators to focus on preventing banks and financial institutions from committing fraud (65%) and ensuring banks and financial institutions fulfil their obligations to customers (56%).”

Throughout Infobelt’s interactions with both regulators and regulated industries, we have learned how to make the experience and the interactions smoother, more efficient, and cost effective. Here are our top 3 recommendations:

Create and document clear roles and responsibilities.

Having documented processes will help the regulator understand who is involved and responsible for each aspect of the compliance program. Firms need to show the examiners their compliance program has adequate funding to support the staff and technology resources needed to satisfy the regulatory requirements. The examiners will want to see that you are testing and reevaluating your compliance program as often as necessary.

Build a relationship with your regulator.

The most important time to build a relationship with your regulator is when you have no active inquiries. Your regulator can provide you with access to a tremendous amount of data that can be helpful to learn. In addition, regulators can help you and your firm adjust to upcoming regulation changes, provide industry information, and help create more effective compliance programs

Prepare and respond quickly to inquiry requests.

If you do land under investigation, maintain a spirit of cooperation and explain the facts that led to the investigation. Regulators want to see that the firm is trying to resolve any issues. You are better off admitting a shortcoming in your compliance efforts than having it discovered by examiners.

Infobelt has worked with highly regulated entities and financial regulators to resolve internal and external inquiries, create comprehensive compliance strategies, and manage regulator requirements. The CATO Institute and Harvard Law School helped provide valuable insight for this blog.

May 17, 2021
Infobelt

Blogs

Understanding and Appropriately Responding to Regulator Changes due to COVID-19

Post author By Infobelt
Post date December 1, 2020

Understanding and Appropriately Responding to Regulator Changes due to COVID-19

A Summary of Financial Regulator Changes due to the COVID-19 Pandemic

There is no doubt that COVID-19 will continue to disrupt various industries, people, and businesses for years to come. Like many companies, regulator representatives who traditionally conduct on-premise inquiries and in-person meetings have needed to adjust to accommodate the health and safety of all persons involved.

Regulators have introduced new measures and provided greater reprieve on certain regulatory requirements due to COVID-19. The combination of business uncertainty and ever-changing regulations makes this an integral time to keep up to date with regulation and regulator changes. The new presidential administration and post-COVID operations may also impact a firm’s regulatory reporting in the future. In addition, firms are shifting their priority and resources to areas of their business that need more attention.

With uncertainty surrounding business requirements for regulatory reporting, Infobelt provides a resource for firms to understand all changes to regulator operations. Here is a summary of regulator changes due to the COVID-19 pandemic:

FINRA

FINRA has proposed rules changes to temporarily amend certain timing, services, and other procedural requirements during the pandemic, including suspension to in-person signing and implementing extensions to office inspections. FINRA also created a COVID Fraud Task Force “to establish a coordinated response across the organization to potential COVID-related fraud in the broker-dealer industry and in U.S. markets.” FINRA has since resumed regulatory inquires, including cycle examinations, but will continue to evaluate all circumstances on a case-by-case basis for individual firms. “FINRA remains fully operational through the support of our robust remote work capabilities and continues to carry out all of our regulatory responsibilities, protecting investors and market integrity…We also understand that firms must prioritize resources to respond to and protect their investor clients amidst unprecedented market turmoil.” During this time, FINRA would also like to remind everyone to keep aware of fraud, illicit schemes, and other manipulative activities that arise from the conditions created by COVID-19.

To view FINRA’s COVID-19 temporary amendments to regulations, click here.

SEC

The SEC encourages all parties to file and serve documents electronically during this time. The SEC and its associated offices have moved to conducting examinations off-site through correspondence, unless it is absolutely necessary to be on-site.

As quoted from the SEC COVID-19 announcement page, “Like the rest of the agency, the Division of Enforcement and the Office of Compliance Inspections and Examinations continue to execute on their mission of protecting investors and remain fully operational. The agency is actively monitoring our markets for frauds, illicit schemes and other misconduct affecting U.S. investors relating to COVID-19 — and as circumstances warrant, will issue trading suspensions and use enforcement tools as appropriate.”

Most significantly, the SEC has a temporary exception for Rule 606. Rule 606 outlines data reporting timing for customer orders in equities and options trading.

To view all SEC announcements due to COVID-19, please click here.

MSRB

The MSRB filed a proposed rule change to provide regulatory relief on a temporary basis to brokers, dealers, and advisors in light of the challenges due to the COVID-19 pandemic. In a statement posted to their website, “The MSRB remains fully operational and able to continue our important work safeguarding the municipal market. We remain in close communication with fellow regulators, including the SEC and FINRA, and market participants.” In addition, MSRB has temporarily suspended late fees and modifies due dates for certain regulatory obligations.

To view the document in its entirety: click here.

CFTC

The CFTC issued a series of temporary, targeted relief to designated market participants in response to the COVID-19 pandemic. These efforts are designed to help facilitate orderly trading and liquidity in the U.S. derivatives markets.

To view all CFTC letters covering COVID-19, click here.

Maintaining a current and relevant regulations library is cumbersome and costly. Infobelt wants to ease the difficulty of keeping up to date with all regulator and regulation changes. Our team will happily provide a demo upon request.

Erica Minne and Kyra Neff contributed to this article and would be happy to discuss the information detailed above.

December 1, 2020
Infobelt

Blogs

Reducing the Financial Impact of Regulatory Compliance on Your Business

Post author By Infobelt
Post date April 1, 2020

Reducing the Financial Impact of Regulatory Compliance on Your Business

How Infobelt’s end-to-end solution is making regulatory compliance less challenging for our clients.

You certainly remember the Great Recession, which impacted financial markets in the U.S. and across the globe from December 2007 through June 2009. The most significant U.S. economic downturn since the Great Depression, it was a result of the bursting housing bubble, which in turn had a significant impact on the high-risk mortgage-backed securities and derivative products that were heavily marketed at the time. Shortly after the global economy began to recover, the U.S. and other countries across the world knew they needed to act to prevent history from repeating itself. To curtail high-risk behavior and restore consumer confidence in the markets they began to implement stringent regulations across the financial services industry and committed the necessary resources to enforce them.

While the success of these regulations is debatable, we can agree that they dramatically increased the compliance burden on banks and other financial institutions. With regulators having the authority to issue harsh penalties for violations, efforts to ensure full compliance were necessary for regulated entities to remain competitive. Complying with the new regulations was easier said than done though, and these institutions quickly realized that full compliance came with a high cost. Given the intricacies of the financial markets and the need for regulators to be thorough, the new regulations were unsurprisingly complex and extensive. This inevitably led to increased costs, since it is difficult to comply with that which you don’t understand. Companies now had to maintain a compliance department that could digest the new information, implement procedural solutions capable of putting this knowledge into action, and continually maintain this system even as regulations evolved. They also needed to invest in technologies that aided their compliance strategies, which presented challenges since there was no single solution compatible across the wide array of programs being utilized.

Infobelt’s Take

Infobelt understands the challenges that regulated organizations face when building a compliance strategy and we have developed a suite of software that can address all our clients’ compliance needs.

Our cornerstone software, Infobelt Omni Archive Manager, is our archiving and records management tool. Fully customizable, it can archive any type of data, even that with an unstructured format, and allows you to customize your retention schedule to fit your compliance needs.
Our books and records solution, Infobelt REGENT, is the key to providing traceability between regulations, stakeholders, business applications and archived data, allowing you to respond to regulatory inquiries accurately and efficiently.
Our online resource, Infobelt REGLIB, has compiled the regulations from regulators across the world, including (but not limited to) the SEC, CFTC, FINRA, and ESMA, in a uniform, easily digestible format.

When utilized together they form a one-of-a-kind, comprehensive compliance solution that reduces the costs associated with maintaining an extensive, and expensive, records compliance staff.

Whether your company needs assistance with designing a compliance strategy or is looking to reduce corporate liability by implementing a compliant RegTech platform, Infobelt, Inc. is your complete Books and Records solution.

April 1, 2020
Infobelt

Blogs

Electronic Recordkeeping for the 21st Century

Post author By Infobelt
Post date January 2, 2020

Electronic Recordkeeping for the 21st Century

Infobelt analyzes proposed revisions to a decades-old electronic recordkeeping regulation.

In November 2017, five financial services associations¹ sent a letter to Securities and Exchange Commission (SEC) Secretary Brent Fields proposing revisions to a decades-old electronic recordkeeping regulation. While the revision has not been formalized, the framework was released to the public on November 5, 2019 for comment. Given the wide-ranging impact of this revision, we at Infobelt, Inc. believe it’s important that all businesses in the financial services industry understand the possible changes.

The regulation in question is SEC 17 CFR 240.17a-4(f), which was implemented in 1997 during the United States’ technology boom. Given the rapid adoption of new technologies, the SEC wanted to issue electronic data retention guidelines. As the foundational electronic recordkeeping regulation, it acted as a guideline for other regulatory agencies as they built their policies (such as the Commodity Futures Trading Commission (CFTC) 17 C.F.R. 1.31).

If you’re interested in reading the regulation in its entirety, click here to view it on Infobelt’s RegLib website.

The language used in crafting the SEC regulation was rules-based and not technology-neutral. The resulting regulation was functional but hindered the adoption of modern technologies. A particularly rigid component required the use of “write once, read many” (WORM) technologies (such as non-rewritable CD-ROM) to ensure data was preserved correctly. These WORM technologies are now outdated, expensive, and, when considering the modern technologies that companies utilize, redundant.

In June 2017, after receiving its own petition for change, the CFTC recognized these limitations in 17 C.F.R. 1.31 and prepared a revision to modernize the language. As the CFTC’s rule was based on SEC 17 CFR 240.17a-4(f), it led the previously mentioned financial services associations to petition for the SEC to follow suit. Resulting from that petition is a regulation framework that is more concise, principles-based, and technology-neutral.

Infobelt’s Take

The revision will allow companies to invest in modern technologies that are more cost-efficient and can benefit the business beyond acting solely as moment-in-time backup, though that benefit doesn’t come without risk. To avoid facing harsh penalties from regulatory agencies, companies must now be prepared to invest significant resources in ensuring that these new technologies are compliant today and remain compliant tomorrow. Founded by financial services industry experts, Infobelt, Inc. understands the regulatory burdens companies face. We developed a dynamic, comprehensive suite of record management tools utilizing user attestations, workflows, and data archiving to offer a single solution for all highly regulated entities. Adaptable and agile, we monitor proposals for new and revised regulations to ensure that our software is compliant, so you don’t have to.

Whether your company needs assistance with designing a compliance strategy or is looking to reduce corporate liability by implementing a compliant data destruction policy, Infobelt, Inc. is your complete Books and Records solution.

The five associations that authored the letter were the Securities Industry & Financial Markets Association (SIFMA), the Financial Services Roundtable (FSR), the Futures Industry Association (FIA), the International Swaps & Derivatives Association (ISDA), and the Financial Services Institute (FSI).

Srini Mannava, John Pinto, and Chris Chavez contributed to this article and would be happy to discuss the information detailed above.

January 2, 2020
Infobelt

Regulatory flux and the path towards continuous compliance

“The cost of non-compliance is 2.71 times higher than the cost of compliance”

CRM for Regulatory Compliance

“Taking a proactive approach to regulatory compliance saves reputation, money and hundreds of man-years”

The Regulatory Compliance Outlook for the 2nd Half of 2021

3 Ways to Get Regulators on Your Side

Understanding and Appropriately Responding to Regulator Changes due to COVID-19

Reducing the Financial Impact of Regulatory Compliance on Your Business

Electronic Recordkeeping for the 21st Century

If you’re interested in reading the regulation in its entirety, click here to view it on Infobelt’s RegLib website.

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