Aug 03

Maintain regulatory compliance in financial services with Ascent

By Ascent Team Solution Highlight

At Ascent, we believe that focus and context are key to building a clear view of regulatory risk. This blog explains how financial services firms can use Ascent to maintain regulatory compliance and get a clearer view of their risk exposure.

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As the old adage goes, knowledge is power. But how do you create knowledge? You could have all of the information in the world at your fingertips, but without context it’s just data points.

In financial compliance, “information” translates to thousands and thousands of pages of regulatory texts, which presents a complicated challenge for risk and compliance teams. More information means less focus, which makes it harder to identify regulatory requirements and determine how they impact the higher levels of business.

This is important because scoping a financial firm’s regulatory universe is not an isolated exercise. The process of identifying which regulations apply to a firm and what actions the firm needs to take to comply is ultimately what gives executive leaders a view into their regulatory risk. If the process is broken, then leadership’s view is clouded. And a clouded view can be damaging, as it’s how leadership teams manage liability and reputation effectively.

At Ascent, we believe that focus and context are key to building a clear view of regulatory risk. That’s why we’ve built a solution that helps firms:

Pinpoint exactly which regulatory requirements apply to their business
Identify how each one applies with granular, up-to-date details
Group obligations to make creating and mapping to policies, procedures, and controls easier

We do this by leveraging Natural Language Processing (NLP) and Machine Learning (ML) technologies to scan the regulatory universe and parse out just the information that matches your business profile (e.g., institution type, business lines, where you operate).

Here’s how Ascent provides the focus you need to identify your firm’s exact regulatory universe and the context to manage it effectively throughout your organization.

Focus on your regulatory universe

The process of reading pages and pages of regulatory texts to figure out which regulatory requirements exist is a time-consuming endeavor in and of itself. But even more tedious is the process of determining exactly which ones apply to your business.

Ascent is an always-on solution that constantly scans the regulators (such as FinCEN) and regulations (such as part 201) that matter to your business and surfaces the exact information that you need to know about as changes arise.

To start, we ask that you simply answer a series of questions about your business, including what financial firm you are, where you operate, and what products or services you offer.

Then, based on your responses, Ascent automatically identifies which specific rules (or sections of a regulation) contain an obligation that is relevant to your business.

At this point, you’ll be able to review your complete obligations register before activating it.

Get context for managing regulatory risk

Once you’ve set up your profile and activated your obligations register, you can click into each obligation to see a deeper level of granularity, such as the date that the obligation will be effective.

regulatory requirement supporting information

Any clarifications or exemptions from the obligation that your firm should consider, and a traceable path to see the rule from which the obligation originated. regulatory requirements clarifications and exemptions

Plus, the other related obligations that derived from the initial rule.

related regulatory requirements

You can also assign the obligation to your teammates, set deadlines to review and act on the obligation, and add notes and files that may be pertinent. current regulatory requirements

Lastly, and most importantly, you can easily tag the obligation to a “theme” or topic that best describes how it applies to your business. This feature helps firms group their obligations in a way that makes execution easier.

While Ascent does have a standard set of themes that includes topics such as Know Your Customer and Truth in Lending, you can also create your own custom set of themes / classifications. Firms tend to use these custom themes to recreate their firm’s unique risk taxonomy within the Ascent platform and then tag each obligation to the taxonomy.

In turn, you’re able to spend more time implementing and executing the policies, procedures, and controls that actually help keep your firm in compliance.

There’s power in Ascent’s regulatory knowledge

Together, these core capabilities create a dynamic blueprint for establishing and maintaining compliance by constantly surfacing your unique regulatory risk exposure—a driver that matters to leadership.

Interested in learning more? Contact us to request a demo or talk to our Sales team.

Jan 03

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Brexit Impact: A Look at the Next Normal

By Ascent Team 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.

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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.

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regulatory knowledge automation