𝐒𝐭𝐫𝐞𝐚𝐦𝐥𝐢𝐧𝐢𝐧𝐠 𝐨𝐟 𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐥 𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐌𝐨𝐧𝐢𝐭𝐨𝐫𝐢𝐧𝐠 𝐅𝐮𝐧𝐜𝐭𝐢𝐨𝐧 – 𝐋𝐞𝐯𝐞𝐫𝐚𝐠𝐢𝐧𝐠 𝐔𝐬𝐞 𝐨𝐟 𝐓𝐞𝐜𝐡𝐧𝐨𝐥𝐨𝐠𝐲
Reserve Bank of India (RBI) has released a circular titled “𝐒𝐭𝐫𝐞𝐚𝐦𝐥𝐢𝐧𝐢𝐧𝐠 𝐨𝐟 𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐥 𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐌𝐨𝐧𝐢𝐭𝐨𝐫𝐢𝐧𝐠 𝐅𝐮𝐧𝐜𝐭𝐢𝐨𝐧 – 𝐋𝐞𝐯𝐞𝐫𝐚𝐠𝐢𝐧𝐠 𝐔𝐬𝐞 𝐨𝐟 𝐓𝐞𝐜𝐡𝐧𝐨𝐥𝐨𝐠𝐲” few months ago, providing several key insights and directives for various financial institutions in the country, as listed below :
𝐀𝐬𝐬𝐞𝐬𝐬𝐦𝐞𝐧𝐭 𝐨𝐟 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐒𝐲𝐬𝐭𝐞𝐦𝐬:
– RBI conducted an assessment of the internal compliance monitoring systems in select Supervised Entities (SEs).
– It was found that SEs use varying levels of automation, from macro-enabled spreadsheets to workflow-based software solutions.
– The review highlighted that many compliance monitoring processes still involve significant manual intervention.
𝐍𝐞𝐞𝐝 𝐟𝐨𝐫 𝐂𝐨𝐦𝐩𝐫𝐞𝐡𝐞𝐧𝐬𝐢𝐯𝐞 𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧𝐬:
– There is a need for SEs to implement comprehensive, integrated, enterprise-wide, and workflow-based solutions/tools to enhance the effectiveness of compliance monitoring.
– Such solutions should facilitate effective communication and collaboration among all stakeholders, including business, compliance, IT teams, and senior management.
𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐬 𝐨𝐟 𝐭𝐡𝐞 𝐏𝐫𝐨𝐩𝐨𝐬𝐞𝐝 𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧𝐬:
– The solutions/tools should include processes for identifying, assessing, monitoring, and managing compliance requirements.
– They should be capable of escalating issues of non-compliance and require recording approval for deviations or delays in compliance submission.
– A unified dashboard view should be provided to senior management to give an overall compliance position of the regulated entity.
𝐈𝐦𝐩𝐥𝐞𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧 𝐓𝐢𝐦𝐞𝐥𝐢𝐧𝐞:
– Regulated Entities (REs) are advised to carry out a comprehensive review of their existing internal compliance tracking and monitoring processes.
– Necessary changes to existing systems or the implementation of new systems should be completed by June 30, 2024.
𝐌𝐨𝐧𝐢𝐭𝐨𝐫𝐢𝐧𝐠 𝐌𝐞𝐜𝐡𝐚𝐧𝐢𝐬𝐦:
An appropriate monitoring mechanism should be put in place to review the progress of the implementation of these new systems or changes.
These directives aim to standardize and improve the internal compliance monitoring functions across various financial institutions by leveraging advanced technological solutions.
The RE, based on the size and complexity of its operations, may decide on the tools/ mechanism it would prefer to deploy for monitoring of compliance and development of the unified dashboard.
Source: https://www.rbi.org.in/
