An ever-evolving regulatory landscape has posed major challenges for financial services firms in recent years. But the move to remote working, prompted by the COVID-19 pandemic, has posed a completely new set of compliance challenges.
Although lockdowns are now easing, financial services businesses have realised that even with their teams largely working remotely they can still work effectively. Barclay’s Chief Executive Jes Staley, for instance, has suggested that flexible working will become a norm for the bank’s staff, while Goldman Sachs allowed staff to return to its London headquarters, but only 600 of its 6,000 strong workforce took up the offer. Therefore, the growing pressures on compliance are unlikely to lessen once COVID-19 passes.
Addressing the remote working regulatory challenge
This pressure on compliance comes mainly from a greater reliance on digital communications. Internal teams will continue to use Slack, Teams or Zoom to communicate, while marketing functions are leveraging new apps, websites or social media streams to communicate with customers. All of this needs to be monitored and stored.
While regulators have recognised the pressure on institutions, they have also made it clear that remote working is not an exemption. Indeed, the UK’s FCA has stated plainly that non-observance will be met with “pace and decisiveness”.
So, how can compliance teams adapt to evolving demands?
Digitalisation offers a solution
The starting point is to consider equipping compliance teams with new digital tools and platforms.
As a proprietor in this space, I know all about the benefits of RegTech. For example, some firms are using Symphony to record messages sent via WhatsApp, while others are turning to SteelEye to assist with their regulatory reporting. Elsewhere, AML teams are increasingly leveraging AI to analyse complex data sets for potentially suspicious activity.
I must stress, though, that sometimes the most overlooked requirements can bring about the most costly punishments.
As regulated businesses, financial services firms have to meet thorough record-keeping requirements. This isn’t just from an accountability perspective but also to meet specific regulations such as Article 16 of MiFID II. Records need to be made of websites and social feeds that are constantly evolving, to ensure all communications made via these mediums are fair, clear and not misleading.
Manually doing this via screenshots is a flimsy and poor way of meeting record-keeping requirements, which worryingly is what some firms still do. Therefore, web archiving has emerged as necessity for these businesses, creating tamperproof, legally admissible and fully interactive archives of their entire digital estates.
As remote working goes on, compliance teams need to stay ahead with the best tools at their disposal. It’s great we’ve seen businesses adapt so intuitively and I’m sure RegTech will become increasingly prevalent in this new way of working, but I sincerely hope businesses don’t overlook the less noisy – but still extremely important – regulatory requirements such as record-keeping.
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