AML – CFT – KYC – SAR – STR – IFRS 9 – A Symmetrical Solution

AML – CFT – KYC – SAR – STR – IFRS 9 – A Symmetrical Solution

There always seems to be two views of an issue that determines which solution to select. In the case of regulations, one view is we want something simple, causing the view of the regulation to become myopically seductive. This view is very common to those who are immersed in processes that dictate their every working minute and feel as though there is no time to look deeply at a regulation solution, the simplest solution is the best. As an example, an IFRS 9 solution can be a spreadsheet, although it will lack model richness, dynamic responsiveness, true forward looking planning, and the automated data management necessary for ongoing evaluation of the risk models. This simple view for an IFRS 9 solution differs greatly from a second more provident view, judiciously thought through, understanding the long term effect of this decision:

• The benefits of knowing the probability of default dynamically, prior to approving a loan. Having that answer, dynamically, during the loan process, would create an environment that would accelerate online growth, saving money, while expanding business.
• The benefits of knowing the ECL effecting your provisioning amount, dynamically, prior to approving any large loan, may be vital to your capital requirements.
• Collecting all the data required for the decision factors, dynamically during the loan process, is essential to verify your model, create a justification to regulators and most importantly, will begin the repository of data for all analytics in the future.
• Automating your policies will also increase your service, with timeliness, increase your justification to auditors and promote automatic review of policies, employee performance and required training.

There is more we can say about this thoughtful view of a regulation and the tools needed to answer the regulators and long term impact those tools could have on competing in the online digital world, developing a digital transformation program, reaching out to your community, and empowering your customers. Viewing any issue should be through the consideration of the future; how will it or could it affect your plans.

Strategic Plan

The issue, a new regulation and the solution, can’t be evaluated myopically; there must be an in depth judicious thought process, which will integrate to the strategic plan of the business. Stepping back and considering the depths of the solution and its impact on the requirements of the global financial requirements, as well as the institution. The question is, how does the global financial system requirements impact your institution’s business and what are the conflating datapoints leading to a symmetrical solution?

The global issue is risk management; whether it’s IFRS 9 or AML, CFT, KYC, SAR or STR, and how the private sector and government collaborate on a resolution. The datapoints for the government program are found in data collected by the private sector. The analysis of the data leads to datapoints reflecting trends, digital footprints, patterns, and forward looking predictions through the lens of analytics. Due to the data involved and the scope of the regulatory issue continuously evolving, there is one certainty going forward, technology is a must and will be at the center of the solution.

The larger view of the regulatory issues and how they conflate with the business issues will present itself as a convergence of technological growth. Utilizing the same technical tools to curb the growing cost and management responsibilities of regulations, will also afford them the ability to automate policies, data management and predictive analytics within their business processes. This will actually help the institution to increase business, improve service, reach out to their community, and empower their customers.

Conclusion

Through automation of your business processes and of policies, while auditing transactions and managing data, RiskCALM₄® will facilitate the regulatory compliance. More importantly, it will also create a vehicle by which more automated intelligence can be available within the business processes. The confluence of the technological capabilities supporting the regulatory issues and those supporting the business processes will spread the cost of compliance with the future requirements of the business.