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Keeping the Records Straight for a Clear Conscience – and Freedom from  Fines

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Have you ever woken in the night fretting, wondering if there’s a gap in your compliance? Even if you’re not a compliance officer, this critical element in the financial sector can be daunting. The aim – reducing the risk and incidence of financial crime – is essential, but it’s easy to accidentally fall foul of the regulations. And one of the easiest ways to make a misstep is with record keeping. Failure can be damaging; it threatens loss of reputation, and increases the likelihood of financial penalty.

Frameworks of Rules to Defeat Webs of Lies

Financial regulations are notoriously intricate and even the most diligent providers can inadvertently fail to comply. Nevertheless, regulators do strive to understand context. Appropriate levels of client scrutiny in Know Your Client (KYC)processes, for example, might vary depending on assessments of risks and vulnerabilities.

But it is widely accepted that many financial crimes are not detected. According to The United Nations Office on Drugs and Crime (UNODC) that could be “between 2 and 5% of global GDP is laundered each year.” Only a small portion of this is prevented, so regulators are keen to ensure that compliance is purposeful and effective. As a consequence, record keeping is a prime target.

The Tip of The Iceberg

Poor and incomplete record keeping makes it difficult to demonstrate compliance. They also raise the question as to whether some records were “lost” in order to hide unlawful activity. Typical examples might be “off-channel communications” such as personal phones used for business calls, especially when using WhatsApp or another encrypted service.

The news desk of the US Securities and Exchange Commission illustrates the problem. One February headline reports, “Sixteen Firms to Pay More Than $81 Million Combined to Settle Charges for Widespread Recordkeeping Failures.” Named businesses include major players in the investments market, such as Northwestern Mutual Investment Services LLC.

Mobile communications are in the spotlight but it’s wrong to assume that other records are less important. Here, to cope with the quantity of information, automation is the key to ensure effectiveness. The best compliance services leverage technology to automate KYC, transaction monitoring, and, crucially, the maintenance of a secure and transparent records. This simplifies compliance and ensures that information is available when required.

Demonstrating a Diligent Approach

One such solution, Compli from Essiell Compli, stands out from the crowd. Compli is designed to address the multiple challenges of financial compliance  – checks for AML, CTF, PEPs and sanctions included. And beyond its capabilities in risk analysis and compliance, Compli excels in accurate and efficient record keeping. This is at the heart of diligent compliance and Compli more than satisfies the need.

Compli automatically generates an audit-ready trail of all compliance activities, and provides a coherent and always-accessible record. This feature addresses a common pitfall among financial institutions: the maintenance of records in a fragmented or inefficient manner. With Compli, the audit trail is no afterthought; it’s a core component. It ensures that compliance actions are fully documented and easily verifiable, on demand.

Above all, Compli functions on the basis that keeping the records straight is not just about avoiding fines; it’s about maintaining a clear conscience and upholding the trust that is the cornerstone of the financial sector worldwide.

By Declan Morton, staff writer at Essiell Compli.


For Reference

Sixteen Firms to Pay More Than $81 Million Combined to Settle Charges for Widespread Recordkeeping Failures, US Securities and Exchange Commission, February 2024

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