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Brexit Impact: A Look at the Next Normal

By Blog

Back in 2016 when the concept of the United Kingdom’s exit from the European Union (“EU”) seemed like a fantastical proposition, the prospect of the referendum’s success let alone its implications seemed like a mystery. The question for financial institutions now becomes how to implement and maintain a newly-domesticated compliance framework in the face of regulatory uncertainty. 

The Story on Domestic Data

The larger focus for financial services will be on sustainability of domestic and international compliance frameworks for areas such as data, sanctions, and overall governance. 

The UK has implemented a host of regulatory expectations in the past few years, from MiFID to the Senior Managers’ Regime. While those regulations will continue, financial services must continue to enmesh international laws with touch and concern to the UK in their programs.

Despite the UK’s exit from the EU, the parameters of the General Data Protection Regulation (“GDPR”) will continue to be enforceable. In fact, GDPR has been a primary area of international enforcement, with two UK-centric breaches in 2020 totaling in USD $56 million in penalties alone. 

CASE STUDY: How a Global Top 50 Bank Pinpointed Its GDPR Obligations Using Ascent


Similarly, despite infrequent enforcement actions for sanctions violations from the UK in the past few years (OFSI issued its first ever sanctions penalty in 2020 since its establishment four years prior), the UK Sanctions and Anti-Money Laundering Act of 2018 will continue to pose challenges for UK banks wishing to keep a foot in the international space.

In late December, the Financial Conduct Authority (“FCA”) issued the final Temporary Transitional Power (TTP) directions. Firms should be well-versed in the TTP directions, as they outline which regulations are expected to be maintained throughout the transaction and which have exemptions until the end of the transition period in March 2022. While these provisions apply to existing entities, the FCA was careful to note that the TTP does not apply to new European Economic Area entities seeking to onshore. 

Business as Usual for AML

As part of the EU, the UK would have historically been adhering to the framework of the EU’s Anti-Money Laundering Directives (“AMLD”). This would have been leveraged to set the framework for an anti-money laundering compliance program, from the “pillars” approach derived from the Financial Action Task Force (FATF) standards, to threshold for transaction monitoring. 

From a practitioner’s perspective, the EU AMLD set basic criteria that were then enhanced or supplemented, as needed, at the country level. In the absence of those directives, the UK will now rely entirely on the Proceeds of Crime Act (“POCA”) and its interpretation by regulators to determine firms’ adherence to AML standards. The FCA has not had a particularly robust enforcement year in terms of AML enforcement, with only two notable penalties issued for compliance-related failures. In fact, the absence of such enforcement actions has been cited in the press as a relative laxity by the regulator. 

Perhaps due to Brexit or exacerbated by it, the FCA has not made clear that AML compliance will be a priority over conduct-related enforcement in the coming year. Given the EU’s spate of Baltic-related fines and penalties, the first AML fine of 2021 may in fact be related to the same.  

The Way Forward

There is, as was expected when Brexit was first announced, a bit of trailblazing to be expected in the next few years. The shifting regulatory expectations around conduct over AML and sanctions enforcements is suggestive, but not dispositive. While the FCA has recently provided a rulebook with post-Brexit expectations, unlike their peers in the US, wavers have been embedded with those expectations, some as far out as 2022.  Perhaps drawing from their peers (subsidiaries and affiliates too) in the US, UK-based banks will need to leverage a far more conservative risk-based approach until the updated regulatory expectations become more certain.  

In the meantime, new technology such as regulatory knowledge automation can help financial firms keep tabs on enforcements, updates, and rule changes as they are issued. Today, many firms continue to try to manage and synthesize this influx of information in the same ways that it always has — by increasing personnel to do the work manually. 

INFOGRAPHIC: Regulatory Knowledge Automation, Explained


But missing even the finest detail within a body of regulation or rule amendment can be disastrous for a firm. Like the proverbial needle in the haystack, any obligation missed among the thousands of lines of regulatory information could have severe consequences come audit time. 

Regulatory knowledge automation uses machine learning (ML) and natural language processing (NLP) to complete this work in mere minutes, at a fraction of the cost, and with greater accuracy than manual efforts.

READ MORE: How to set a foundation for your regulatory compliance framework


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Ascent’s Got You Covered in the United Kingdom

By Blog

Three new U.K. Regulators are now supported in Ascent’s compliance management platform: the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA), and London Clearing House (LCH), specifically LCH SA & LCH Ltd. 

Using proprietary Regulation AI™, Ascent dynamically generates the regulatory obligations and ongoing rule updates that apply specifically to each customer, saving businesses significant time and money in analysing regulation manually. For every regulation in the Ascent system, customers have access to their unique Obligations Register which is specific to their business and is automatically generated by Ascent. Also included are the regulatory rulebooks and other regulator documents including press releases, guidance, enforcement actions and more — all of which are searchable by keyword. 

The most recent additions to Ascent are:

  • Financial Conduct Authority (FCA)

The FCA is a UK regulatory body that is independent from the UK Government, but is accountable to Her Majesty’s Treasury and Parliament. The FCA regulates banks, mutual societies, financial firms, and individual financial advisors, with the power to withdraw registration, to prohibit firms and individuals from participating in regulated activities, to suspend entities, to apply for legal remedies, and to issue warnings and/or bring criminal prosecutions against firms in breach of the FCA’s policies. Ascent launched an official collaboration with the FCA in late 2018 to componentize the FCA Handbooks. This release is the official fulfillment and delivery of that collaborative project. 

  • Prudential Regulation Authority (PRA)

Operating jointly with the FCA, the PRA is the prudential regulator of approximately 1,500 banks, building societies, credit unions, insurers, and major investment firms. The PRA works to promote the safety and soundness of firms they regulate, to contribute to securing an appropriate degree of protection for insurance policyholders, and to facilitate effective market competition. 

  • London Clearing House (LCH) — LCH SA and LCH Ltd.

LCH is a British clearing house that serves international exchanges and over-the-counter (OTC) derivatives, acting as a central counterparty that provides risk management services to Clearing Members. LCH members include financial groups like investment banks, broker-dealers, and international commodity houses. LCH is overseen by the national securities regulator and/or central bank in each jurisdiction from which it operates. With this release, the Rulebooks for LCH SA (the France-registered clearing house) and LCH Ltd. (the UK-registered clearing house) are now available in Ascent.


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The Rise of Regulatory Sandboxes and What They Signal for Financial Firms

By Blog, Featured

The entire industry takes its cues from the regulators. Therefore, we know with certainty that digitalization is not a trend, but a permanent paradigm shift that every firm will need to embrace, or be left behind.” 

The word “sandbox” has over the years experienced an intriguing evolution. The tech world saw the word morph into a term meaning a closed environment for testing digital or web-based projects; now in the same digital universe, the word also refers to a “regulatory sandbox” — an environment for testing new business models insulated from current regulations. 

The first regulatory sandbox was formed in the U.K. in 2014: Project Innovate, which would serve as a model for subsequent sandboxes. In the U.S., Arizona became the first state to sanction a regulatory sandbox, and Illinois is currently considering enacting one. 

Experts have generally viewed regulation and innovation as inherent adversaries. A sandbox can be seen, though, as a sort of compromise where innovative ideas are tested in the absence of outright regulation while still preserving consumer protections. A sandbox helps companies with unique business ideas avoid the trappings of traditional compliance while still adhering to any regulations already in place.

READ ARTICLE: Building Regulation AI: Solving Compliance in the Age of AI


The Origin of GFIN

The Financial Conduct Authority (FCA) in the U.K. had advanced the idea in 2018, along with eleven other regulatory groups, of a global sandbox, a fintech term for an environment designed for testing technological ideas on a global level. The concept became a reality, resulting in the creation of a conglomerate of 38 organizations called the Global Financial Innovation Network (GFIN). The initiative listed its three purposes as follows:

— To give companies an environment conducive to testing international solutions.

— To unite regulators so they could discuss new business models and technologies, as well as provide companies with regulatory information.

 — To provide a venue for policy discussions.

Responses to the initial idea of a global sandbox included a concern that the project be just in its dealings with those who want to test across international borders, along with other issues like blockchain technology, data protection, artificial intelligence, regulation of initial coin offerings (ICOs) and securities.

Responses also included enthusiasm over how quickly news of such technological innovations encryption technology would reach the global marketplace, interest in cooperation among regulators on common issues that companies must face across different jurisdictions, with a focus on the challenges bilateral relationships between companies and regulators face, and interest in providing businesses and regulators an environment where they could discuss policy issues.

“Many regulators around the world are themselves embracing technology, as seen by the global rise of regulatory ‘sandboxes’ and other initiatives like ASIC’s Innovation Hub in Australia,” said Dean Patzer, Ascent’s Director of Solutions Engineering, who previously served as Senior Compliance Officer and then as Capital Markets Vice President at BMO.  “The entire industry takes its cues from the regulators. Therefore, we know with certainty that digitalization is not a trend, but a permanent paradigm shift that every firm will need to embrace, or be left behind.”

The FCA announced in April the proposed creation of a cross-border pilot program to test new technologies under GFIN. Ascent, an AI-driven platform that provides insight to customers on regulatory responsibilities, was one of eight solution providers selected for consideration in the trial program. A pioneer in RegulationAI, Ascent works with regulators the world over, including the U.S., the United Kingdom, Asia and Australia. 

READ ARTICLE: Ascent Selected by GFIN for Regulatory Cross-Border Pilot


Modern challenges require modern tools. Interested in seeing how Ascent can help you automate horizon scanning, change management, and obligations management? 

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Ascent and the UK’s Financial Conduct Authority (FCA) Announce Ongoing Collaboration

By Blog


Ascent announced today that it has formalized an ongoing collaboration with the Financial Conduct Authority (FCA) with the purpose of componentizing the FCA Handbook. These efforts will help financial firms, and other firms subject to the FCA Handbook, more easily find and understand the FCA regulations that apply to them, thereby increasing their ability to comply.

In response to concerns from financial firms about the difficulty in parsing through voluminous regulatory text and extracting their specific obligations — a challenge faced by both businesses and regulators — the FCA sought out innovative RegTech solutions and ultimately connected with Ascent in part due to the startup’s traction in the market with global banking entities. Founded in 2015, Ascent uses natural language processing and machine learning algorithms to convert oceans of regulatory text into workable tasks. With its proprietary combination of automation and domain expertise, Ascent is a first-mover in RegulationAI™.

The volume and complexity of regulatory compliance — especially in heavily regulated industries such as financial services — makes it difficult for compliance teams to keep policies current, manage compliance programs and staff, and mitigate risk. These challenges are further exacerbated by the rise of personal liability and the possibility of massive fines, reputation damage, and even jail time. Coordination between the FCA and Ascent marks an important shift in the compliance industry, demonstrating that regulators and startups can work directly together to address these challenges and increase firms’ ability to comply.

“The reality is that 99% of firms out there are ‘good actors’ — they are making every effort to comply, but the complexity of our current regulatory landscape does not support those efforts,” said Brian Clark, Founder and CEO of Ascent. “By coordinating directly with the FCA and making regulation more accessible and easy to understand, we can increase compliance across the industry, freeing up the FCA to direct critical time and effort towards high-risk issues. This kind of collaboration is a win-win for financial firms and regulators.”

Ascent is actively looking to coordinate with regulators around the globe. Interested parties can email for more information. 

About the FCA

The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. Its role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers. The FCA is the conduct regulator for 58,000 financial services firms and financial markets in the UK and the prudential regulator for over 18,000 of those firms. Learn more at


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