Compliance in a Brave New Regulated World

Education , News

Whilst the Global Financial Crisis occurred over 14 years ago now, the crisis created many expected and unexpected flow-on effects that continue to be felt today.

Many post-crisis solutions were posited by pundits and experts alike – but one clear solution for most major governments was to increase the level of regulation of the financial services industry. The intention of this increased regulation was to minimize the chance of a repeat of the crisis, to protect consumers, and to strengthen the industry against future economic shocks.

Since 2008, regulations have been introduced in the dozens to ensure that financial services companies are conducting their business in a responsible manner. We’ve seen the introduction of laws such as the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Emergency Economic Stabilization Act in the United States, the Capital Requirements Directive and Regulation and Single Supervisory Mechanism Regulation in the European Union, the Basel III package of post-crisis reforms, and a swathe of reforms introduced by the G20.

Meanwhile, in the Asia-Pacific region, where the direct impact of the financial crisis was minimal, the crisis still shone a light on some of the cracks that appeared in the US that could similarly affect Asia-Pacific markets. This spotlight prompted regulators in these regions to proactively safeguard their industries and citizens.

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This boom in regulatory oversight has not been restricted to the financial services industry. It has spread to impact many industries, largely due to the rapid technological advancements of the 21st century, shifts in values, and overarching globalization of industry and supply chains.

According to the Harvard Business Review, the manufacturing industry had an average of 2.4 regulatory changes every day worldwide in 2021,
and this has increased to five per day (and rising) in 2022.

This growth in regulation has made it increasingly challenging for businesses to manage a complex matrix of overlapping, and occasionally contradictory, compliance regimes across markets and jurisdictions. As HBR states, “for global organizations, this pace of [regulatory] change can derail strategic planning, break supply chains, exacerbate distribution challenges, create legal hazards, and threaten reputation and revenue.”

It has therefore become essential for compliance teams to proactively keep up with regulatory body announcements in order to ensure they remain compliant and abreast of the requirements for their business. Effective compliance management in the modern day requires real-time updates of the rules in each market that a business operates in, combined with flexible strategies to address and adapt to the shifting regulations in each market.

Compliance, a smooth solution for a thorny issue

Compliance has always been a thorny matter. Rules are regularly changing, and regulatory bodies often have differing methods for communicating those changes to the industry. Changes in the financial services industry in particular are often overseen by a multitude of regulatory bodies, even in a single jurisdiction.

For instance, in Hong Kong, there are four financial regulators – the Hong Kong Monetary Authority (HKMA), the Insurance Authority (IA), the Mandatory Provident Fund Schemes Authority (MPFA), and the Securities and Futures Commission (SFC) – all issuing their own announcements and regulations around their particular niche of financial services. For banks and other major financial service companies that operate in some or even all these niches, it can become an altogether overwhelming task to monitor all four regulatory bodies and adapt to the ways in which each makes their regulations known to the industry.

One proposed solution is for companies to partner with regulatory experts that have a deep understanding of the nuances of each relevant authority in specific markets. These experts may also offer technology services that provide businesses with a real-time understanding of how regulatory changes are likely to affect their business – and when and how to take action.

In order to effectively mitigate regulatory risk, incorporating digital solutions for compliance matters makes clear business sense. The processes for identifying and tracking new or proposed regulations can now be automated to remove manual processes and minimize delays for compliance teams.

For example, Know Your Customer (KYC), Know Your Business (KYB), and Ultimate Beneficial Owner (UBO) requirements are in place in most jurisdictions for financial service companies. These regulations require companies to conduct thorough searches on all prospective customers to minimize the chance that they are involved in money laundering and other criminal activities. Conducting these checks as a manual search would understandably take a significant amount of time and resources, not to mention slowing down the onboarding process immensely and potentially meaning the loss of a new customer.

As with any gap in a market, innovative businesses have stepped in to provide services to assist companies with meeting their ever-changing and growing compliance requirements. Regulation technology (RegTech) companies act as intermediaries and facilitators of digital services to help businesses utilize and leverage the benefits of technology to make compliance easier and more automated.

Similar to automation in other industries, regulation technology frees up time and money for compliance teams to focus on their core functions rather than conducting labor-intensive checks or manually staying up to date with the ever-changing compliance requirements in their markets.

AsiaVerify – a leading RegTech company in the Asia-Pacific region

AsiaVerify is an expert RegTech company helping businesses operating in the Asia-Pacific region with their regulatory and compliance requirements. We specialize in offering market-leading KYC, KYB, and UBO solutions to assist companies to meet their obligations.

Our unique service offers real-time searches and results for businesses to ensure efficiency and precision. Our technology also facilitates automatic language translation between the local language and English in order to provide the most accurate results and minimize the level of manual intervention required.

AsiaVerify CEO Ficoal Dong and AsiaVerify Head of UK and Europe Joanna Wands will be in attendance at the GRC World Forums’ #RISK 2022 Conference in the UK on 16 and 17 November to discuss the changing regulatory landscape and more compliance topics affecting businesses. Ficoal and Joanna would love to have a chat if you’re attending the conference.

If you’re not attending the conference but would like to see how AsiaVerify can help your business to meet its regulatory and compliance requirements, reach out to us at AsiaVerify to speak to one of our multilingual regulatory experts.

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