Compliance is one of the most vital aspects of any business, and simultaneously one of their biggest challenges. Non-compliance has many consequences, ranging from monetary losses to even imprisonment.
In fact, in 2020, three major U.S. banks—Goldman Sachs, Wells Fargo, and JP Morgan Chase—received fines accounting for over half of the $11.39 billion paid by banks globally, showing that even the industry leaders aren’t immune to the dangers of non-compliance.
Keep reading to learn more about compliance and how you ensure the best compliance model for your securities-related business.
What Is Compliance?
In finance, compliance is the enforcement of the laws and regulations in finance and capital markets. It refers to the core responsibility of a financial institution to manage and protect the assets of their clients, as well as their personal information.
The financial compliance of a business adheres to federal, state, and local regulations that define the levels of security around client data. Simply put, it is the rules the financial sector has to follow.
How Can Financial Institutions Effectively Stay Compliant?
The compliance environment is a changing one, and it is more important than ever to optimize your compliance model to ensure the safety of your clients. However, there are some practices you can always employ to maintain compliance.
Know Your Client (KYC)
Know Your Client, or Know Your Customer, is one of the standards of compliance in the investment and financial services industry. It allows financial advisors access to detailed information about the client they work for in order to protect both the clients and advisors. It helps reduce fraud, forgery, and other criminal activities that can occur in the financial system.
There is always an element of risk in any business, and financial institutions are no exception. Comprehensive risk management involves controlling both inherent and residual risks. Inherent risks are those that exist without external influences, while residual risks are what remain after a risk has been handled or controlled.
Some ways to manage risk include:
- Mitigation: Risk mitigation is a common practice in the investment industry, and involves pre-planning by management to reduce the severity or consequences of a risk.
- Acceptance: Risk acceptance involves accepting the risk and working to monitor and review the risk consistently to ensure that acceptance is still the best course of action.
- Avoidance: As the name suggests, risk avoidance involves not engaging with the risk at all.
- Transfer: Risk transfer is when the risk is transferred to a different entity so the consequences are not faced by the business.
Streamline Your Framework
Most banking institutions have some sort of compliance system in place. However, they might not all be as effective as they need to be. By streamlining your regulatory compliance framework, you can ensure that you are making the most of your resources while ensuring that your problems are solved quickly.
Bridge Capital Associates Inc. offers a broker/dealer platform that is simple and convenient. It allows bankers to focus on their clients instead of worrying about compliance.
Get in Touch with Bridge Capital Associates Inc. Today
At Bridge Capital, we have decades of combined experience with investment bankers of all types and sizes. With an extensive history in regulatory compliance, we can make sure that you focus on fulfilling your clients’ needs, while we take care of the rest.
To learn more about how we can help you, contact us today.