UKMay 2 2018

Managing the compliance burden

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Managing the compliance burden
ByAndrew Frost

The regulatory landscape is a constantly evolving environment that cannot be ignored, and it is most likely those executing the day-to-day implementation of the policies who will be more acutely aware of any changes in real time. If organisations want to avoid both the disconnect between policy drafting and execution, and the disconnect between policy and regulation, they would be wise to involve a wider group when drafting policy. Archaic technology and processes also appear to be a real issue for financial services firms. There is no denying that KYC tasks are repetitive in nature and therefore can lead to data inconsistencies, inaccuracies, and a duplication of processes.  

These tasks are also often performed on different systems that inevitably lead to implementation of manual solutions with the purpose of trying to bridge end-to-end operational procedures.

Compliance also requires extensive documentation requests and verification, as well as proof of identity. 

All together, these outdated processes not only frustrate the client (or client to be) but also create an environment prone to high-risk factors.  

These processes can take a considerable amount of time to both fulfil and satisfy regulators’ requirements. 

As a result, the cost of being compliant escalates as financial institutions try to stay ahead of terrorists and fraudsters.

Organisations with a global footprint usually have their policies drafted from headquarters; which can create further problems. Local regulatory nuances are often ignored, becoming problematic further down the line when certain KYC procedures cannot be implemented in offices in certain countries.  

Regulation is a fast-moving area and jurisdictions are constantly updating their mandates and obligations;for any global firm it is imperative that a coherent and well-implemented global KYC and AML frameworks are in place.

Overcoming these challenges is no easy feat. Issues tackling technology can be solved with the introduction of shared ledger facilities although building and the time it takes could prove to be disruptive, at least in the beginning. 


There is no denying that automation can help ensure that financial institutions comply with international regulations. While regulatory technology, or ‘RegTech’, now offers some solutions maximising the potential associated with these solutions within an organisation will very much depend on the skilled use of the technology and specialist knowledge.  

To successfully reap these benefits, organisations must require the correct knowledge, expertise and manual skills to operate them, which is why see an increasing number of firms turning to external service providers.