Regulatory and compliance changes

•  The world is already at risk, it’s time to focus on strict regulatory measures

By Lalith J. Perera

Global banks will continue to evolve in a complex regulatory framework, embedded with legislation, regulation and codes of practice irrespective of where they operate. The key uncertainties relate to each government and regulators adjust laws, regulations and economic policies in respect of macroeconomic policies adopted.

The nature of impact, changes and challenges are not predictable sometimes due to unbelievable new threats posed. Now these threats become strategic interests to regulators and monitors.

Across the globe, major bankers anticipated having significant impact on changes to capital and liquidity requirements, risk of assets, derivatives and remuneration reforms, loan recovery, resolution plans, and banking structural reforms. The proposed changes could also adversely affect economic growth, the volatility and liquidity of the financial markets and, consequently, the way banks conduct business and manage capital and liquidity resulting impact on financial results.

These shocks by ways of challenges, all banks need to be highly liquid and adequately well capitalised. The good behaviour is to maintain a well run financial system, and many MNC banks are supportive of a strict regulatory and compliance governance that enhances the resilience of the system. Open market regulatory and compliance debates are welcome with consultative processors and attempting towards an improved and workable regulatory governance structure.

Global banks including Sri Lanka are encouraged to international regulators and compliance models and always support changes to laws, regulations and codes of practice that lead strict governance policy and overall stability where the disciplines are to behave and act within a well governed financial system.

The benefits recipients are the valuable investors, customers, suppliers, and stockholders of all segments. To comply with respective laws led to regulations and compliance across macro level precipitation, practically difficult to predict and regulators need to cooperate in response to operational level needs providing training, seminars and workshops, dissemination of information, inquiries into matters, and conduct investigations where appropriate.

New development such as financial crimes needs macro-prudential regulatory compliance to be strengthened. With regard to dispute risk hedging deals typical inefficacies and lack of transparent governance. This leads to regulatory unpleasant investigations, cause-related penalties, sanctions and requirements relating to the conduct of business and other financial crimes negatively affecting not only the chancellor of exchequer’s coffers but severely damaging goodwill of the country.

Global banks reached agreement in 2012 with the US authorities in relation to investigations regarding past inadequate compliance with anti-money laundering and sanctions laws, and have committed to a number of remedial measures under the Deferred Prosecution Agreements.

Leading global banks have no nonsense other than to be directly and actively engaged in newly sectioned laws to ensure that new requirements are effectively implemented to combat financial crimes. Therefore, lesson learnt is to umpire strengthening governance structure with new leadership strategy and enforce highest compliance standards. As a matter of fact now Global banks make considerable investments in strict compliance monitoring and implementation.

What is left for the banking sector to clearly identify illicit funders (e.g., drug traffickers and dealers to name a few) where top MNC bank burnt arms very recently, and select their markets and customers due diligently. Deployment of senior management with extensive legal experience to take full control over regulatory monitoring and compliance and actively engaged with them to help ensure that new requirements can be implemented effectively.

The world is not heading towards new risks, global economic and financial crises were there and right now precipitating in euro continental, US and UK having serious economic downturns, monetary and regulatory policies are already in place but let’s speak heart to heart: who is responsible for implementing these governance measures due diligently?





(The writer is a governance and regulatory researcher.)