We often hear the term regulatory compliance associated with the financial services.
What exactly does it mean? In general, compliance means abiding by the rules such as laws, standards, policies etc. Regulatory Compliance depicts the objective that associations try to accomplish in their endeavors to guarantee that they are aware of and find a way to agree to significant laws, strategies, and guidelines. If the regulatory compliance regulations are violated, it results in legal punishments including federal fines. Regulatory compliance plays a vital role in the regulatory and finance domain.
However, there are some key challenges in regulatory compliance. Ideally a financial institution is relied upon to invest 80 percent of its energy in analytics audit and 20 percent on information gathering.
However, most invest more energy in information assortment. This is on the grounds that regulatory reporting is a secondary work with data enrichment, lineage and reporting which is dealt with manually. frequently the absence of big business wide technique or a budget for reporting system advancements makes the whole procedure complex and challenging.
Some of the other issues related to regulatory compliance are overlapping jurisdictional applications where bank offices in various topographies add to the intricacy of regulatory demands, as they are relied upon to be compliant with the administrative norms set by various guidelines across jurisdiction. Along with this complex risk calculations and scale of regulatory requirements is also a challenge.
Money laundering is a big challenge to regulatory compliance. If a bank is unknowingly involved in money laundering, it is still bound to face the consequences. Data management plays an important part regulatory compliance. Negligence in data management can have major repercussions on the firms. Generally, firms with poor data management systems are forced to improve their systems at the earliest or face legal actions. Also banks generally find it difficult to report according to the set standards. Every region of operation has its own set of reporting standards. This makes it very difficult for the banks to meet these requirements. In order to do this the banks usually invest a huge amount of time.
Thus such challenges in the regulatory compliance hinders the progress of an organisation and if these challenges are not addressed properly then the organisations face serious repercussions.