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The notification that your financial institution has failed an audit – or worse, has been found to not satisfy the requirements of your regulators – can be a highly stressful event, with the focus of executives on the compliance department, and all hands on deck to satisfy any necessary remediations. However, rather than view this as a time to retreat, financial institutions are realizing that this is an excellent opportunity to focus that attention and demonstrate the value that will be added by investments in new and innovative technology for compliance.

 

Why It's Time to Re-think Compliance

Compliance departments and their associated functions are often seen as cost centers and innovation stiflers. And if an audit is failed or an exam is unsatisfactory, these areas are even further vilified. But by shifting that view, re-thinking compliance as an ally, financial institutions are finding that they can grow far beyond their current curve. That's because modern compliance possesses the knowledge, the tools, and the data that unite to create granular risk assessments across the institution, across the globe, and further forward in time -- exactly the type of risk assessments that individual business units often struggle to create.

 

For example, in money laundering and terrorist financing (ML/TF) detection, it can be easy to think that the implementation of regulations around Know Your Customer, beneficial ownership, and suspicious activity monitoring damage the core business – that these regulations create a barrier in both opening and maintaining accounts. However, from a wider perspective, better ML/TF capabilities and technology empower an institution in two profound ways:

 

Simplifying the documentation burden on potential customers

 

Creating granular and well-founded risk profiles

 

The benefits of reducing the documentation pain point on account establishment are clear: more potential customers than ever before will complete the on-boarding pipeline and establish accounts. The benefits of great risk profiles are more subtle but have incredible impact. When you are confident in your risk assessments, you can better define and set guardrails around your risk tolerance. And when you have well-defined risk tolerance, you can confidently begin to open markets that are closed to competitors that lack these capabilities. 

 

Modernized Compliance Leads to New Markets

In Central America, in Africa, in the Middle East – not fully understanding these markets and the potential customers in these geographies can force you to avoid all business there, for fear of violating money laundering or terrorist financing regulations and incurring massive fines. But, if you do understand the risks, and you can set appropriate guardrails, these huge and underserved markets suddenly become available.
 

Compliance as an Ally

Don’t be left behind in the old adversarial mindset of first line versus second line! Compliance is every financial institution's secret weapon. At Clovis Technologies, we've designed a system to help you implement the right approaches and understand the technology that best suits your needs. Contact us today for more details.