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The tangled web of regulation is hitting the headlines, yet again.
Changes proposed by the Federal Trade Commission (FTC) to the 2003 Safeguards Rule have been met by warnings from the American Financial Services Association (AFSA) that they may contain ‘traps’ for unwary financial institutions attempting to meet both state and federal laws.
How so? Any regulatory initiative that seeks to tighten the data security procedures of US banks and safeguard customer information must be a good thing, right?
Not always, especially when regulatory reform creates disparity between state and federal obligations. In a recent report Celia Winslow, vice president of legal and regulatory affairs at the AFSA, remarked: “Fifty different state data security laws would cause a host of compliance problems. In trying to meet the requirements of different state laws and, potentially, different federal laws, financial institutions could end up with policies that meet the different requirements, but not be ideal for safeguarding consumer information.”
When confusion and complexity reign, and banks get so caught up in trying to satisfy conflicting rules that the initial goal of safeguarding the consumer is compromised, surely this defeats the object?
The challenges are clear:
Thankfully, the rise and rise of Regulatory Technology (RegTech) in recent years has provided a viable and cost-effective solution to untangle regulatory complexity. Fueled by Artificial Intelligence (AI), tedious and error-prone compliance processes can be fully automated, freeing compliance teams to focus on high-risk and value-added tasks. AI has made it possible to capture regulatory data from all regulators, across all jurisdictions, connect it to individual policies, controls and procedures and issue automated alerts when any change in regulation, or transfer of data from one jurisdiction to another, results in heightened compliance risk.
Some would say that RegTech is a viable alternative to manual regulatory change management processes. Most are coming to recognize that it is the only way forward.
Discover how RegTech is solving complex privacy, data and security compliance challenges in the independent Burnmark/CUBE report “RegTech for Information Governance” free download here
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
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