Important compliance factors for banking and capital markets

Compliance is essential when it comes to banking and the capital markets sector. However, it is quite challenging to stay on top of compliance norms and regulations, and abiding by them is even more difficult. Compliance norms set by regulators are mandatory and cannot be ignored, as non-compliance makes for legal hassle later. 

Compliance norms have evolved from legal interpretations to risk assessments and project management. Banks and capital markets firms look to external compliance support because of their growing importance. To ensure customer security and satisfaction, banks must ensure compliance. 

Data safety 

Data safety is an essential factor within banking and capital markets. A bank or capital markets firm is bound to have clients from sectors that have sensitive data. This data could be anything from transactional to financial reports, but under no circumstance would clients want their data to be compromised. There are several data regulations and standards banks and capital markets firms need to adhere to so as to ensure client data is safe.

Data theft is common. Malicious actors try to steal customer information from banks for illegal activities. Unethical hackers may even use advanced technology to steal customer information from banks and capital markets firms. For this reason, regulatory authorities want banks to secure client data and data transmission. Only authorised individuals within the financial institution should be allowed to access sensitive data. This is why organisations in the banking and capital markets sectors install secure data storage and transmission systems. 

Preventing money laundering and tax evasion 

Some use banks to “clean” black money. Similarly, corporate entities could use a capital markets firm to evade taxes. Identifying the client’s intentions could prevent money laundering and tax evasion. Regulatory authorities require banks and capital markets firms to implement strict anti-money laundering policies and take measures against tax evasion. Individuals and companies deploy stronger techniques to detect fraud. It can be difficult for financial institutions to detect fraud proactively, but they could obtain support to do this. 

Communication surveillance 

Employees within a financial institution may be involved in fraudulent activities. The institution would need to monitor chat rooms, digital servers and any other medium of communication within the organisation. Communication surveillance is an essential compliance factor for banks and capital markets firms. Besides communication among employees, financial institutions also monitor communication with customers using legal surveillance systems. 

Financial institutions must also focus on portfolio monitoring, website content and RFPs. Obtaining support would be critical for identifying potential risks. 

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