News in Personal Trading Software & Compliance Monitoring Tools

What’s in the news: the top five compliance articles for Dec. 24 – Jan. 6, 2023

Compliance innovation moves fast, but the news moves faster. To keep you and your team up to speed on the latest happenings and goings-on in the compliance world, we’ve aggregated the top five articles from the past few weeks to provide you with an in-depth look at the regulatory ecosystem.

Stay up-to-date and in the know on everything happening in the compliance world as of Jan. 6, 2023.

Top five compliance articles

Data at rest could be at risk – Author Helen Johnson

According to a recent PwC Pulse Survey, cyberattacks are a top concern for business executives. As more employees work from home on personal internet networks or from public sites at coffee shops, airports and hotels, there is a higher risk of data breaches. Here are a few tips financial firms can implement to protect themselves from cyberattacks:

  • Educate employees on best cybersecurity practices.
  • Ensure there are additional safeguards in place to protect data if there is a breach.
  • Create multilayers of encryptions to thwart malicious attackers. Hackers could eventually decipher the data, but this practice will slow them down.
  • Launch remote lockdowns in cases where a suspected breach has occurred.
  • Have a means of wiping-down stolen or lost hardware. 

Implementing these tactics will require firms to invest their time, energy and money, but that will far outweigh the incredibly costly effects of not preparing ahead of time.

11 regulations that hit the planning industry in 2022 – Author Dan Shaw

With regulators and government and industry officials taking a new look at investment markets amid collapsing prices for stocks, bonds, cryptocurrencies and nearly everything else, 2022 was bound to be a big year for regulation. Here are some of the top regulations which impact financial firms:

  1. The Financial Industry Regulatory Authority’s (FINRA) proposed a rule which would allow brokers’ residential offices to be classified as “non-branch” locations which would be subject to inspection once every three years. The current standard calls for annual inspections.
  2. FINRA is separately proposing a three-year pilot program to permit brokers to try out remote inspections of their branch offices.
  3. The Securities and Exchange Commission (SEC) proposed a rule which would make advisers responsible for ensuring their subcontractors follow the SEC’s fiduciary obligations.
  4. The SEC’s new Marketing Rule for investment advisers became effective. The rule allows investment advisers and investment firms to include testimonials in their marketing materials, albeit they meet a certain set of requirements.
  5. The SEC has shared its plans to overhaul the stock and bond market, its first attempt in more than three decades. Among the changes in more than 1,600 pages of proposed rules is one which would have the SEC adopt a so-called Regulation Best Execution. The rule is meant to ensure brokers are regularly reviewing their trades to make sure they are still getting the best possible deals for their customers.

Lessons in preventing AML failures – Author Jake Plenderleith

Despite the vast amounts of time and expense put toward enhancing financial crime controls, many financial firms continue to be penalized by regulators for violating anti-money laundering (AML) regulations.

One of the most helpful ways firms can avoid AML violations would be automating their firm’s compliance program. Regular, automated monitoring enables firms to spot risks well before violations occur. Additionally, automated solutions tend to have the means of performing the following actions that prove beneficial for firms:

  • Critically analyze information.
  • Spot patterns.
  • Compare data.
  • Scrutinize documents.
  • Detect anomalies.

How to scale and avoid disclosure violations using automation – Author John Gebauer

The growing number of items which compliance teams must monitor has made tracking regulatory compliance disclosures more complicated. As the size of a firm grows, this task becomes even more difficult.

The SEC has shared its plan to propose more regulations which would, in turn, present more disclosure requirements. Therefore, it’s in the best interest of firms to do their part to avoid disclosure violations, and here are a few tips:

  • Know the disclosure requirements which apply to your firm and address them in your firm’s policies and procedures.
  • Consider automating this part of your firm’s compliance program. Automation alleviates the burden of ensuring all individuals’ disclosure brochures are always up-to-date when provided to prospects or clients.

Last year, the SEC proposed 30 regulations, many of which presented more disclosure requirements. As we look to a future with ever-increasing disclosure requirements, the need for simplified and efficient disclosure becomes significantly more important.

What’s coming in 2023? Advisors predict change, not revolution – Author Nathan Place

According to a survey conducted by Arizent, financial advisers expect 2023 to bring with it incremental changes for the industry at large. The study found that many advisers, unsurprisingly, viewed 2022 as a tough year and will be “fine-tuning” as they go into 2023 to meet the challenges presented over the last 12 months.

Interestingly, “cryptocurrency and ESG — a shorthand for investment concerned with environmental, social and corporate governance — were two of the biggest stars of 2022. But in advisors’ crystal balls for 2023, neither product made much of an appearance.

Almost half of advisors — 49% — said they did not consider crypto a suitable investment. For three-quarters of advisors, less than 5% of their clients were invested in crypto last year. For 22%, none of them were. And only 30% of advisors expected more of their clients to buy crypto in 2023 — down from 60% who thought so in 2021.”