Global finance regulations are becoming increasingly fragmented. Regions are stepping back from international standards and building their own, domestic-focused alternatives. For firms that operate internationally, this is adding further complexity to an already-complex regulatory landscape. In this article, we explain how financial institutions can keep on top of existing and emerging obligations via internal communications, centralized knowledge management, AI enablement, performance tracking, and more.
If you thought financial regulations couldn’t get any more complicated, think again.
As geopolitical tensions rise, countries are veering away from international frameworks and adopting a “nationalized” approach to regulatory standards.
For global financial firms, this means greater discrepancies between locations and more opportunities for non-compliance to slip between the cracks. Add emerging AI regulations and cryptoasset regimes into the mix, and the landscape becomes even more complex.
The question is: how do you navigate this uneven terrain?
As with any regulatory shift, preparation is key.
In the following 7 tips, we help your firm overcome regulatory change, enable your teams, and standardize your compliance efforts.
The first step is to increase your investments in political and regulatory monitoring within every country, state, and region you operate in. You may choose to hire external or internal experts for this task.
Regardless of which route you take, ensure these experts are able to share information with their respective location/s as well as with HQ. By compiling all research and advice in one centralized digital workplace, you’re less likely to lose information, duplicate files, or exclude important stakeholders from the conversation.
We’d recommend using a blend of internal communications channels to share these messages:
You may also wish to link to external guidance — including the FCA website, government publications, and thought leadership blogs — to encourage employees to research independently.
There are some regulations that have yet to come into fruition. Take AI as a stark example.
While the European Union is ahead of the curve, having released the first draft of their EU AI Act in 2024, many other regions are still lagging behind. But it won’t stay this way for long. In the USA, AI regulations in the financial sector are slowly filtering through. For example, New York and California are some of the first states to address AI-discrimination and hold AI developers accountable.
All of this to say, the landscape is shifting rapidly. And it’s important to anticipate and plan for these changes.
This requires extensive scenario planning.
In the case of AI, it may be helpful to refer to existing frameworks and plan according to their guidelines. Go through each article and assess your organization’s maturity. Are your locations ready for the potential operational changes involved? For instance, are you able to keep an automated log of your AI systems (as purported in Article 26 of the EU AI Act)?
Knowledge is power. It’s also a fundamental part of maintaining compliance. After all, unless your teams are aware of and understand your regulatory obligations, they’ll never fully adhere to them.
As global regulations fragment, the number of documents and resources you’ll need to distribute will grow. So much so, that localized document folders and email-sharing will no longer be able to keep up.
At this stage, it’s better to invest in a digital workplace solution. With the right platform, you can build, maintain, and distribute every resource with ease, including:
To ensure each location receives the relevant guidance, personalize user experiences with granular permissions settings. This keeps your interface clean and prevents employees from experiencing information overload.
Despite your best efforts to “socialize” policies and regulatory procedures, employees are bound to forget small details. (With so many separate frameworks to consider, it’s not surprising!)
To account for this, ensure your resources are easy to rediscover and interact with.
AI can be a helpful tool for this, especially when it’s built into the fabric of your digital workplace.
You likely already have a set cadence for policy reviews, based on the associated risk and your audit requirements. However, in times of rapid regulatory change, you may need to adjust your approach.
To support more frequent policy audits and reviews, automate the process wherever possible. Assign owners to each document; set firm review dates based around anticipated updates; notify staff with alerts; collaborate on drafts in one digital environment; and automatically log version changes. With an intelligent policy management application, you can eradicate tedious back-and-forth edits and bring transparency, governance, and accountability to the review process.
Once legislation is signed into law and resources have been shared and accepted, it’s up to your employees to keep the momentum going. This is the moment where many compliance teams bite their nails to the quick.
Employees may read every resource and pass their e-learning courses with flying colors, but there’s always room for error. For instance, a tired bank clerk may forget a key Know Your Customer or Anti-Money Laundering check and, as a result, unknowingly approve a fraudulent customer.
To mitigate these risks, build standardized e-forms and workflows using a no-code business process automation platform. With structured form fields and automated routing logic, you can ensure everyone follows the same step-by-step procedure every time. Resulting in fewer errors and instances of non-compliance. Best of all, you can customize these forms to account for regional differences — meaning every location follows the applicable regulatory standards.
To ascertain compliance on an ongoing basis, track compliance metrics across every branch, region, and/or country. These metrics should include; policy acceptance rates; training completions (and test scores); audit data; and process reports (e.g. logs of AML checks, risk assessments, and supplier due diligence forms).
Compile these data sets in location-based dashboards to simplify reporting, improve the quality of your insights, and speed-up decision making. With clear insights at a glance, you can pinpoint where units are struggling — especially after a recent standards rollout — and provide targeted support.
As far as global finance regulations are concerned, the future is uncertain.
Geopolitical tensions and domestic-focused politics are breaking down international collaborations, resulting in greater fragmentation. On top of this, the emergence of new markets, including AI and cryptoasset trading, have signalled the need for additional regulatory frameworks — all for the sake of mitigating risk and attracting foreign investment.
The result of this? A regulatory minefield that’s becoming harder and harder to navigate — particularly for global firms that have more ground to tread.
To get through this landscape unscathed, you must monitor updates at every location, educate your employees, and adapt your operations as quickly as possible.
Claromentis can alleviate some of the challenges involved with this.
Available on-premise and in the cloud, our secure, ISO-certified digital workplace allows you to:
When used to its full potential, our solution brings cohesion, transparency, and efficiency to your financial firm’s operations. Helping you overcome regulatory change, bolster compliance, and deliver consistently superb client services.
Eager to find out more? Book a 1:1 discussion call with one of our regulated industries experts.