Matthew Van Buskirk
If building and maintaining a global compliance program is difficult and stressful for your company, you’re not alone. I often reflect on a story – anecdotally recounted to me – of a top-ten global financial institution facing an impossible situation. They needed to meet a 30-day deadline for SAR filing, but it took more than 45 days to collect information from the company’s international offices. This meant that the compliance team was having to file (and then amend and refile) each report as a matter of course.
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The problems of compliance at scale.
How do things get this way, you ask? It’s easier than you think. Inefficient or issue-prone global compliance is often the simple but unfortunate result of a business practice scaling without a dedicated growth plan. Too often, the rapid speed of expansion forces the compliance function to hurriedly duplicate its existing workflows in order to cover new markets and regulatory requirements. This ad-hoc approach – the equivalent of duct-taping spreadsheets together – provides diminishing returns, as each new responsibility stretches resources thinner and thinner.
So what’s to be done?
Clearly, proper tools represent a powerful antidote to this problem, as they are one of the few solutions capable of making improvements at a global scale. But what distinguishes the tools that are largely hype from those that can provide financial institutions with a fully modern and global-ready tech-stack? My experience, both as a former regulator and as the co-founder of a regtech company, has led me to the conclusion that there are a few important factors that – when included in a potential solution – represent the difference between a “patch fix” and global-ready preparedness.
A modular approach allows for global consistency and local adaptability
The first major challenge facing compliance on the international stage is shifting jurisdictional requirements. Each new market is, in effect, a whole new ball game, with different processes, audit protocols, and regulatory demands.
It’s for this reason that tools offering a modular approach are such a game-changer. In contrast to the ‘one server, one system’ approaches of yesteryear, modern technology is now capable of stitching together different data sources into linked databases and workflows while still maintaining appropriate privacy and permissions controls. This means modular solutions can offer a highly-tailored set of tools to improve workflow elements like case management, investigation work, and reporting on a global scale, while still allowing jurisdiction-specific parts of compliance (such as KYC or Sanctions providers) to stay local. Global efficiencies are realized without neglecting the minutiae of variable local conditions.
Technology opens the door to team collaboration and data transparency
Collaboration and data transparency are two doors that have also recently been opened by technology, but which – at least in the world of compliance – have been slow to realize their full potential. We’re accustomed to thinking of collaboration at the leadership level (between CCOs and MLROs, for example), but cutting-edge tools can now offer the benefits of collaboration to the compliance professionals actually conducting investigations.
This is a seismic shift for compliance departments, as AML and fraud investigators have historically produced high volumes of duplicate or incomplete casework as a result of their inability to easily cross-reference work done by their colleagues. With new tools offering the ability to quickly and easily index subjects, institutions, transactions, and networks across all cases either completed or in-progress, the investigator finds themselves with a powerful new tool to produce better, higher-quality casework with greater efficiency. Similarly, sophisticated criminal activity occurring at the global level is more readily detected when tools are able to instantly connect related cases. Collaborative tools give compliance professionals the ability to highlight and report this more advanced criminal activity to law enforcement, rather than allowing it to go undetected.
A global compliance leader’s peace-of-mind comes from oversight, and modern oversight depends on data science
A simple but effective test for compliance programs looking to gauge the effectiveness of its tech stack is to see how long it takes to answer the question, “how many customers do I have?”
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If your database is robust, well-organized, and – most importantly – queryable, it’s a question that can be answered in a matter of minutes.
If not…well, we’re back to talking about weeks and months again.
Modern datasets synchronize three business aims: they maintain a single source of truth, silo and protect customer personally identifiable information (PII) according to local laws and institutional guidelines, and apply powerful query and analytics tools to make the data useful in real-time. Each of these things can be – and often is – a significant business roadblock, which is why the value of a modern techstack and queryable data can’t be overstated.
For compliance, in particular, a modern database represents that which global leadership needs most: transparency and peace of mind. There is no world in which the CCO for a global financial institution can keep an eye on New York and Singapore simultaneously. But with the ability to quickly draw up, analyze, and assess data from a secure and centralized repository, compliance leadership gain a much more valuable asset: the confidence to know that when an issue arises (no matter which market it’s located in), they have the tools to quickly bring the facts and context to hand.
Meeting global expansion with future-ready toolsets
Market expansion is a core growth strategy for financial products and services. In the world of compliance, each new market entry comes with a corresponding surge in work demand and jurisdictional requirements, which have historically led to overextended resources, productivity decreases, and consistency problems.
New tools, however, open the door to a truly global approach to risk management. But seeking out new tools is a fool’s errand unless you know what aspects of your compliance program are in need of change. Companies looking for a truly global-ready compliance tool set should keep an eye out for solutions offering modular adaptability, real-time collaboration, and a robust, queryable database. These are the functional attributes that will deliver lasting, sustainable value on a global scale.
