Emerging technologies are complicating compliance for financial services firms. Smarsh’s Robert Cruz, an expert on information governance and regulatory compliance, shares some of the key the challenges they face, as well as a path forward.
For financial firms to stay compliant, they need to meet all the books-and-records and supervisory mandates required by FINRA and the SEC. But the ever-expanding variety of emerging technologies continues to raise the bar for compliance oversight.
For instance, financial crimes can now be masked by conversations that purposely jump across communications platforms, also referred to as “channel hopping.” Likewise, the use of emojis are increasingly carriers of sentiment or emotion, which can easily go undetected with today’s compliance tools. Let’s face it, not many lexicon-based systems will recognize a combination of two chickens, a cowboy hat and a palm tree as a financial risk.
FINRA’s 2019 annual letter states that examiners are focusing on regulatory technology, or regtech, to understand how firms “are using such tools and addressing related risks, challenges or regulatory concerns, including those relating to supervision and governance systems, third-party vendor management, safeguarding customer data and cybersecurity.”
In 2018, FINRA reported $87…
