22 January 2018
Reetu Khosla

Reetu Khosla

Reetu Khosla - Pegasystems

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Global Compliance Trends

13 August 2014  |  3604 views  |  0

Three Key Regulatory Trends that Will Affect Your IT Investment Budget for 2015

According to IDC Financial Insights, worldwide spending on risk and compliance technology will reach $79.2 billion in 2015. Recently, the Wall Street Journal reported that global banks, including JP Morgan Chase and Citigroup, have increased compliance staffing, prioritizing compliance as a key initiative given
increasing regulations. Risk management and regulatory compliance are top
agenda items for board and C-level management, making their presence mandatory on every 2015 IT investment budget. Large financial institutions are also ‘de-risking’ and exiting entire businesses and product lines to minimize
exposure and costs. However, as banks implement compliance technology, they
must do so in a way that drives additional business benefit to minimize the
impact on profits. CIOs and CROs should focus on the following key regulatory
trends during their IT investment budget planning for 2015.

    1.      Consumer Protection

Enhanced regulatory focus on consumer and conduct issues are significantly impacting banks. The Dodd-Frank Act, Consumer Financial Protection Bureau (CFPB)-Unfair Deceptive Abusive Acts and Practices (UDAAP), and the UK Financial Conduct Authority (FCA) are examples of agencies and regulations that are enforcing ‘treating customers fairly’. As a result of exposure, severe penalties and costly remediation, banks are implementing technology to manage controls in sales practices, new product onboarding and suitability.

In addition, regulatory bodies are focusing on consumer complaints, using them as a key indicator to ensure consumer protection.  For example, the CFPB has been taking in complaints from consumers since 2011 and has helped provide more than $4.6 billion in relief and refunds to customers harmed by deceptive practices. These regulatory mandates are pushing significant spend by financial institutions to minimize risks and ensure compliance.

    2.       Onboarding, Know Your Customer (KYC), Foreign Account Tax Compliance Act (FATCA) and Suitability

KYC, FATCA, Dodd-Frank, regional risk and Suitability onboarding rules are driving major overhauls of end-to-end onboarding. The goal is not only to meet complex regulatory requirements that are geography, line of business and product-specific, but also improve the customer experience and promote faster onboarding. KYC continues to be a highly manual, time-intensive process that is a major bottleneck in time-to-transact with a customer. It can take 30 – 60 days to onboard an institutional client—and with more KYC and onboarding due diligence rules, time-to-revenue will only increase. FSIs need to look for ways to unify onboarding and KYC systems across multiple complex lines of business to ensure consistency in customer due diligence as well as streamline and reduce onboarding time by as much as 70%.

         3. Sanctions

Many global banks are facing criminal action and have paid or will pay significant fines for sanctions and OFAC violations. In June, BNP Paribas agreed to pay an $8.9 billion fine for criminal sanctions violations.  Because of the increased vigilance, banks are investing heavily in implementing much stricter controls for onboarding and payments screening to gain auditable and streamlined processes that meet global and jurisdictional sanctions regulations.

With more Russian sanctions, banks also must ensure their sanctions technology is flexible enough to manage change. Instead of ‘de-risking’ by divesting or limiting business transactions with Russian nationals, banks can use agile technology to minimize risk and manage new and prioritized sanctions requirements via rules-driven processes. Technology that can “wrap around” existing sanctions detection engines ensures that case management, workflow and rules not only meet the regulatory mandates, but are also intelligent enough to manage operational challenges, such as deciphering value of payment, type and previous history. Many top banks are taking a global approach to sanctions management using technology to not only meet the strict rules and minimize exposure but also drive operational efficiency through faster resolution time that leads to faster payments.

As FSIs start their 2015 planning, regulatory compliance technology spending remains a top agenda item. C-level management and line of business heads should evaluate how they can drive business benefit out of regulatory technology and spend—whether this means meeting onboarding KYC/ due diligence rules globally with faster onboarding and time to revenue or improving the customer experience through complaints management systems. Evaluating compliance technology to understand how it can mitigate risk and deliver meaningful business benefits is the key to maintaining shareholder value, especially with regulatory compliance spend significantly increasing.


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job title Sr. Director Risk, Compliance, and Onboarding
location Boston
member since 2012
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Reetu Khosla is Sr. Director Risk, Compliance, and Onboarding at Pegasystems. She has several years of regulatory experience in the banking and non-banking sectors, specialising in financial crimes, n...

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