Governance, Risk & Compliance

Effect of Russian sanctions on compliance

The Russian sanctions have brought the whole concept of sanction screenings into a world where traditionally people didn’t pay much attention to it. Now they have taken on a whole new complexion with the inclusion of narrative and ultimate beneficial ownership requirements. Are you prepared for the effect on compliance?

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COMMENTARY: Three steps to more resilient risk-management systems – DTCC risk chief

REUTERS/Kevin Lamarque

Of all the changes to global financial markets in recent years, the risk management function has undergone one of the most dramatic transformations in the industry. The discipline is broader, more sophisticated, and more diverse than ever before, encompassing new responsibilities that add operational, systemic, technology, vendor, and physical risk, as well as business continuity management, to the more traditional financial risk categories.

To meet and defend against these new challenges, firms must take certain fundamental steps to gain a more holistic view of the risks they face. (more…)

Do you know your state of readiness for Solvency II?

solvency II

By Conor Coughlan, Global Head, Proposition Marketing, Thomson Reuters

In this fast paced world, where we face what seems to be an ever growing regulatory landslide, not sinking into the earth or being swept away but actually staying on top of all the necessary changes, is a major challenge. Recently you may have noted my focus on Solvency II, which is due to be implemented across the European Union and (EEA) from January 2016 onwards. Don’t be fooled into thinking this is just a matter for European firms because it has many implications for American or Asian insurers who have European subsidiaries!

Described by many as the “Basel for Insurers” Solvency II is a beast of a regulation. It has a complex structure, with a three pillar alignment and its requirement for entirely new or consolidated data sets and reporting models means it’s a ‘game changer’ for the insurance sector and their service providers.

solvency II regulatory reportingWhen we first started tracking Solvency II we were surprised at how revolutionary but warranted the regulation would be.

I was personally surprised at how infrequent insurance firms had to report on their holdings (in the past) and that many did not know what funds they had ultimately invested in.

Equally it was clear that this regulation would not only impact Insurers but also their asset managers and their related asset servicers’ (fund administrators & custodians).

In many ways the entire investment supply chain in the insurance industry now has to change to meet these far reaching regulatory obligations.


SEC’s ‘administrative proceedings’ enforcements dwarf court cases in 2015

REUTERS/Jonathan Ernst

Firms facing enforcement actions by the Securities Exchange Commission have growing reason to worry should such actions take the form of “administrative proceedings” rather than court cases, a tool that critics say limits options for those in the agency’s crosshairs. In first half of 2015, the securities regulator has shown no signs of dampening its increasing reliance on administrative proceedings.

According to public data on the SEC’s site, there have been 447 administrative proceedings through June 23rd of this year, compared with 123 court cases, representing 78 percent of all enforcement actions. The result is in line with the same percentage in 2014, and up from 62 percent in 2013. In 2010, the year the Dodd-Frank reform act was passed, only 56 percent of enforcement actions were filed as administrative proceedings. (more…)

Lessons learned: BHP Billiton fined for providing public officials luxury travel

REUTERS/David Gray

The Securities and Exchange Commission on Wednesday charged global resources company BHP Billiton with violating the Foreign Corrupt Practices Act (FCPA) when it sponsored foreign government officials as guests at the 2008 Summer Olympics in Beijing.

As a result of the SEC’s cease and desist order, BHP Billiton agreed to pay a $25 million penalty to settle the regulator’s charges. BHP is headquartered in the UK and Australia and trades on the New York Stock Exchange via American Deposit Receipts, giving the SEC civil-enforcement jurisdiction in this case. (more…)

Finance, legal professionals question impact of OSC Whistleblower Program on ‘culture of compliance’

Finance, legal professionals question impact of OSC Whistleblower Program on 'culture of compliance'

The Ontario Securities Commission (OSC) recently closed the consultation period on its proposed whistleblower program, but debate over the draft rules appears to be far from over. Finance and legal professionals have raised concerns over the program, particularly the absence of requiring eligible whistleblowers to report misconduct to internal compliance personnel prior to approaching the OSC.

Modeled after the Dodd-Frank Whistleblower Program, the OSC’s Whistleblower Program seeks to encourage individuals with information of financial misconduct at their firms to come forward. (more…)

Former U.S. CFTC chair criticizes Volcker call to merge agency with SEC

Former U.S. CFTC chair criticizes Volcker call to merge agency with SEC

A former head of the Commodity Futures Trading Commission has questioned Paul Volcker’s call to merge U.S. regulatory agencies under the leadership of the Federal Reserve. (more…)

SEC examinations grow aggressive, sometimes intrusive – industry panel

SEC examinations grow aggressive, sometimes intrusive – industry panel

Gone are the kinder, gentler days when it comes to onsite examinations by the Securities Exchange Commission, say senior compliance officers, who portray the agency’s recent behavior as much more aggressive, and at times even intrusive on a firm’s time and resources.

At a New York conference sponsored by the Regulatory Compliance Association this week, industry participants heard of recent examples of SEC exams where compliance officers described strained and tense interactions with the agency’s staff. (more…)

U.S. dollar role in sanctions, AML fight threatened by looming rival payments system

U.S. dollar role in sanctions, AML fight threatened by looming rival payments system

A looming erosion of U.S. dollar dominance in international payments threatens to cripple the worldwide reach of financial sanctions and anti-money laundering controls led by the United States and its allies. This would compel Western financial institutions to improve data and analysis about their customers to guard against tainted money, officials said.

“It’s not if; it’s when,” retired Rear Adm. Chris Parry, a U.K.-based strategic forecaster, told a Thomson Reuters Financial & Risk conference in New York. “Every financial institution needs a strategy to be developed now for the days that are coming when money will be thrown across the wall to you and you have no indication whatsoever of where it’s come from and its provenance.” (more…)

Deferred prosecution agreements: Working with the independent monitor — Part Three

Deferred prosecution agreements: Working with the independent monitor -- Part Three

Independent monitors have become a common feature of settlement agreements when government enforcement authorities agree to defer or forgo the prosecution of a financial firm. The monitor provision brings government oversight into a company’s hallways and raises the stakes for any new lapses. The growing record of experience with independent monitors has given rise to a useful body of knowledge on the dos and don’ts for companies in managing of the relationships.

This final installment of a three-part series on deferred prosecution agreements and non-prosecution agreements (DPAs and NPAs) focuses on the monitor’s role and tips for compliance professionals in working with them. Part One of the series discussed how such agreements have been used and some recent examples of their imposition and extension in duration. Part Two focused on best practices for remediating compliance program gaps or other deficiences outlined in the agreement. (more…)