Financial Industry Governance and Compliance
Sarbanes-Oxley, the USA Patriot Act, Bank Secrecy Acts, Basel II, GLBA, SEC Broker Dealer regulations, EU Directives, and Fair Lending all present a complex web of compliance challenges to financial institutions. "Even where chief risk or compliance officers exist at larger banks, the scope of their responsibility is often remarkably narrow, and many times just involving Fair Lending. Meanwhile SOX and the Patriot Act are divvied up between chief financial officers, chief risk officers, and general counsel," said Michael Sisk, Bank Technology News.
IWith an company-wide view of all governance activities, financial institutions could:
- Improve business process by leveraging the valuable data gleaned about customers for better marketing and pricing of products and services
- Reduce the chance that something could fall through the cracks
- Coordinate system and service purchases to yield significant cost savings
Decision making across financial institutions is currently disjointed. There are many owners, in multiple functional areas. There are multiple layers of coordination as officers struggle to gather and make sense of the data: weekly compliance committee meetings with HR, finance and lending. There are subcommittee meetings for different compliance legislation and regulations, such as the Patriot Act. There are bi-weekly operational committee meetings to discuss risk. Last, there are corporate governance committee meetings that examine regulatory changes and pending legislation.
Larger financial institutions are overpaying for governance, said French Caldwell, vice president research, Gartner Group. "We estimate this approach adds 130 to 150% more to the cost of the compliance effort - and the technology portion costs ten times as much." Everyone is doing his or her own thing. If there were one overall risk program, "overall complexity would be reduced and visibility would be increased."
Implementation Scenario - Banking AML/BSA
Polivec's policy and compliance management solution is flexible enough to respond to change and is tailored to an organization's corporate strategies, business activities, and external environment. It can be implemented on a department level and expanded throughout an organization as needed. The transition away from task-oriented compliance programs to process-oriented compliance programs allows compliance policies to be tested and validated on an ongoing basis. Existing local compliance activities in various business units now become a part of an integrated, global program. This promotes consistency in expectations, documentation, assessments, and reporting.