COMPLIANCE REIMAGINED SEVEN WAYS TO REDUCE THE BURDEN, COST, AND STRESS OF FINANCIAL REGULATORY COMPLIANCE

Transcription

1 COMPLIANCE REIMAGINED SEVEN WAYS TO REDUCE THE BURDEN, COST, AND STRESS OF FINANCIAL REGULATORY COMPLIANCE

2 This article postulates seven ways that a smart compliance approach reduces the burden, cost and stress of compliance risk management for both routine and extraordinary compliance activities. 2

3 SMART COMPLIANCE Smart compliance is a new paradigm for enterprise class compliance risk management. It leverages cognitive models, smart processes, and smart data. These powerful technologies enable intelligent system behaviors, better ways of doing things, performance gains, and experiences for stakeholders that are empowering, helpful, and truly different. How different? As an analogy, think the difference between an old fashioned telephone and a smart phone. We are talking about a very different experience. COGNITIVE MODELS Smart compliance puts expertise about financial industries, regulations, business, compliance policies, controls, reporting and data, into a system, not just in documents and people. Cognitive models encode this knowledge. For each case, smart compliance knows: Which regulations to apply Which controls, assessments, and approvals are needed Which data to integrate and share What surveillance, monitoring and reporting to perform Smart compliance appliance provides facilities to capture new knowledge and upgrade its knowledge base. Also, individuals can teach it new rules, controls, and ways to do things. SMART PROCESSES Smart compliance uses encoded knowledge to automate a large number of operations in the compliance program, such as: Schedule tasks and assign responsibilities for completion and supervision Execution of controls, assessments, approvals and remediation workflows Interfaces and monitoring of execution through gates to existing systems, data, and processes Management of data and audit trails across systems and processes Generation of documentation, explanations, audits, reports, dashboards, data transfers, disclosures and notifications Smart compliance always asks What is a smarter, easier, faster, more useful, and sustainable way to get this done? The smartest process is the one that travels fewest steps, is touched by fewest hands, and does most for the user, with the least effort on the user s part. Smart compliance is like a GPS navigation system for compliance risk management. It takes you home! Surveillance, monitoring, controls, and exception handling adjust automatically to events and changes in context. 3

4 SMART DATA Smart data is new technology for connecting, interrelating, and simplifying access to all types of information. Smart data combines encoded knowledge about regulations, business, policies, compliance procedures, controls, reporting and data with complete history and audit trail of every event, transaction and system behavior to which the compliance organization needs access. Smart compliance is always able to account for what happened, when, where, how, and by whom. Smart data enables: Tracing compliance fully from events to controls, controls to procedures, procedures to policies, and policies to regulatory requirements Reconstructing the life history of any transaction including the provenance, processing steps, and transformations for each data element 7 WAYS TO REDUCE THE BURDEN, COST, AND STRESS OF FINANCIAL REGULATORY COMPLIANCE RISK MANAGEMENT Before Smart Compliance Current Spend (labor, time and cost ) Automate surveillance, monitoring, controls, exceptions ROUTINE COMPLIANCE EVENTS Automate generation of notices, reports, and data extracts Automate data access, enquiries, assessments, investigations Automate manual tasks and what doesn t need looking into EXTRAORDINARY COMPLIANCE EVENTS Respond rapidly to business and regulatory changes Streamline response to regulator exams, sweeps and data requests Respond resiliently to emergencies After Smart Compliance Overall spend reduced by 1/3 SAVING 4

5 SUSTAINABLE PERFORMANCE BREAKTHROUGH Smart compliance is a game changer for performance and sustainability across two broad classes of activity: Routine compliance activities - recurring events, which consume most of the compliance organization s attention Extraordinary compliance activities - low frequency events that can have a big impact on compliance risk if and when they occur ROUTINE COMPLIANCE ACTIVITIES Routine compliance activities recur at regular intervals. These events can happen daily, weekly, monthly, quarterly, annually or other frequencies. Examples of routine compliance activities include: Surveillance of operations, monitoring controls, conducting assessments, handling exceptions Generation of notifications, presentation of disclosures, preparation of reports, and extraction of data Enquiries, investigations, and analyses Routine compliance activities have predefined policies and procedures. They comprise the bulk of the work of a compliance organization, and can consume 80 percent of its labor, time, and budget. Also, resource impacts on business operations, and IT are reasonably predictable for routine events. Individual routine occurrences usually have a limited impact on compliance risk, however, in aggregate, patterns of events can have a substantial impact. Smart compliance substantially reduces the risk, burden, cost, and stress of day-to-day compliance risk management. For example, smart processes: Automate many manual tasks Automate some controls Automate data access and integration across internal and external sources Automate some assessments Automate surveillance and monitor controls Automate handling of some alerts and exceptions Automate some approvals and certifications Automate generation of notifications, disclosures, reports, and data extracts Automate and accelerate enquiries and investigations Automate whatever does not have to be looked into Also, implementation of cognitive models, smart processes, and smart data enables the smart compliance approach to scale flexibly to meet enterprise-class business and regulatory challenges. 5

6 EXTRAORDINARY COMPLIANCE ACTIVITIES Extraordinary compliance activities are one-off, non-routine, unscheduled events the probability of whose occurrence is uncertain. Examples of extraordinary compliance events include: Upgrades to the compliance risk management program necessitated by changes to regulations or changes to the business Regulator instigated examinations, sweeps, data requests, and investigations Emergencies such as a security breach or financial crime Extraordinary compliance events, while low frequency, can consume 20 percent of labor, time, and budget of a compliance organization. On certain days, it can even be much more. Resource impacts on compliance, business operations, and IT organizations can be disruptive and difficult to estimate. The occurrence of extraordinary events can have a big impact on compliance risk. Smart compliance mitigates compliance in several ways: Cognitive models enable a smart compliance organization to respond rapidly to business and regulatory changes. Much faster than currently feasible Cognitive models and smart data enable the smart compliance organization to streamline and accelerate its response to examination questions and regulatory data requirements while decreasing demands on compliance, business, and IT staff Cognitive models, smart processes, and smart data enable the smart compliance organization to mitigate compliance risks and accelerate resilient response to an emergency situation Bottom line What can the financial institution and compliance organization expect from smart compliance? Here is our take: Reduction of compliance burden by 30% Acceleration of enquiries, assessments, and investigations by 30% Reduction of the cost of compliance by 30% Streamlining and acceleration of response to regulator examinations, sweeps, and investigations by 30% Reduction of the time and cost to make business and regulatory changes to the compliance program by 30-50% 6

7 Mallinath Sengupta Chief Executive - Compliance Automation Program Mallinath is the CEO for NextAngles, a CART_UP (Corporate Start UP) unit of Mphasis that is developing a SMART Solution for Regulatory Compliance. He is a senior professional in the IT Industry with more than 28 years of experience.mallinath has performed many different roles including sales, account management, pre-sales, domain/ practice management. 7

8 ABOUT NEXTANGLES COMPLIANCE REIMAGINED NextAngles is an Mphasis venture developing a new breed of disruptive solutions for regulatory compliance and risk management. Our vision is to make compliance easy through a highly automated and knowledge-centric approach that provides a centralised and integrated view of data. The NextAngles solution suite can be applied across diverse risk and compliance areas, such as AML Alert Investigations, KYC, Trade-Based Money Laundering, Financial Crimes Investigation and Liquidity Risk Management, to create a smart compliance experience. This disruptive approach not just reduces compliance burden, but also increases the speed of response to business and regulatory changes significantly. In addition, it scales to meet the most demanding enterprise-class financial regulatory requirements. For more information, contact: nextanglesinfo@mphasis.com US 460 Park Avenue South Suite #1101, New York, NY 10016, USA Tel.: Fax: UK 88 Wood Street London EC2V 7RS, UK Tel.: Fax: VAS 22/07/16 US LETTER BASIL Mphasis. All rights reserved.