MAS enforcement report
The Monetary Authority of Singapore has published its 4th Enforcement Report which covers enforcement actions taken during the period January 2022 to June 2023 for breaches of MAS’ regulatory requirements. The report notes the following statistics for the period:
- 39 criminal convictions, including 13 imprisonments.
- Nearly $13million imposed in civil penalties.
- Nearly $8 million imposed in financial penalties.
Of the 136 cases opened during the period covered by the report, the top three breaches were for insider trading (32 cases); disclosure-related breaches (25) and false trading (22).
The report includes useful case studies across three focus areas: market abuse; financial services misconduct; money laundering. Looking to the future, the report identifies two forthcoming areas of focus: enforcement in the digital asset ecosystem and a continued focus on asset and wealth managers.
Compliance in a digital future
In an article published by the American Bankers Association, author Jo Ann Barefoot explores the future of financial services compliance in a digital world – and with digital-native proponents entering the profession.
This article discusses how the compliance function is undergoing significant transformation driven by digital technology, particularly generative AI like ChatGPT. This transformation is anticipated to accelerate as AI tools reshape compliance challenges and solutions. However, it also raises concerns about AI’s potential to facilitate fraudulent activities.
The rapid advancements in technology, especially AI-powered tools capable of analysing vast amounts of data, present both new risks and opportunities for compliance professionals. Consequently, the article notes, regulators are urging financial institutions to modernise their technology infrastructures to enhance efficiency and reduce errors.
The adoption of regulatory technology (regtech) in compliance programs is expected to lead to lower operating costs, especially benefiting smaller banks and other financial institutions. These technologies, empowered by AI and faster processing speeds, can automate anti-money-laundering monitoring, fair-lending risk identification, and alternative underwriting data usage. That potential cost reduction can help level the playing field, enabling smaller firms to address compliance needs with precision and lower costs.
The article highlights the Bank Secrecy Act and anti-money-laundering efforts as challenging areas where digital innovation can significantly enhance monitoring and detection. It should be expected that the emergence of Regtech firms (leveraging AI tools like machine learning and natural language processing to identify potential financial crimes more effectively) will drastically improve the transaction monitoring process for regulated firms.
The potential of digital-native compliance extends to credit access, allowing lenders to expand the credit pie without sacrificing quality. Digital processes and AI tools can help lenders evaluate creditworthiness using alternative data, thus enabling inclusive lending.
Regulatory agencies are increasingly embracing digital innovation and incorporating AI and data analytics into their efforts to detect and disrupt illicit finance. Hence the article emphasises the need for compliance officers to stay educated about digital-age technology; ensure the C-suite is involved and informed of regtech developments and to collaborate with technology providers to drive innovation within their organisations.
In conclusion, the article envisions “a new renaissance of technology innovation” that could lead to a more efficient and effective compliance process, ultimately benefiting both financial institutions and regulators. It encourages compliance managers to embrace and integrate digital solutions into their compliance strategies.
FINRA September fines summary
FINRA has published its latest disciplinary summary for September 2023 covering a range of enforcement actions. Amongst those mentioned for violations are Merrill Lynch, RBC Capital Markets and Instinet. The briefing also details the numerous individuals fined or barred by the regulator.
A selected summary of key developments for regulated financial institutions
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