Effectively Documenting Transactions to Avoid Penalties
Reporters Woodward and Bernstein were famously advised to “Follow the money” as a way to navigate through the complicated web called Watergate. Last week, U.S. regulators fired their latest warning shot across the bow of another transaction-focused business – daily fantasy sports – signaling their expectation that these businesses abide by the same regulations that bind banks, gambling casinos, and (shortly) investment advisory firms. With their international counterparts, U.S. regulators are starting a boa-like squeeze to choke off the placement, layering, and integration of criminally obtained funds.
A central challenge in transforming a ponderous Big Data headache into an agile Big Analysis win is finding a way to scale (often spelled S-U-P-P-O-R-T) Tableau users with the data they seek to visualize. Like most coins, there are two images we can observe – one from the perspective of the data analyst visualizing in Tableau and one from the data manager who structures and provisions data tables worth visualizing. My last post took the former perspective – today, I’ll look at the latter.
Data security, governance, and management are essential elements – non-negotiable elements – in traditional data warehousing or contemporary Big Data initiatives. And, as table stakes, they can effectively limit the degree of freedom for deploying new solutions or tools.
Work in or with technology much and you’re likely to know the impact that the forces of democratization can accomplish. Broadening the effective population that can perform an essential task – without resorting to agency or hand-holding – has been at the heart of most business ‘disruptions’ of the Internet Era. There’s an emerging dynamic in the convergence of Big Data and democratized access to data analytic tools, like Tableau.
Pundits who focus on BI and Big Data consistently estimate that roughly two-thirds of any BI initiative is spent profiling and identifying the data that will be used for analysis. As a recovering data analyst – “Hi, my name is Lee. I’m a statistician” – I appreciate their focus on the most time-consuming element in living the quantitative dream.
But the statistic reminded me of another situation where advances in technology are changing the way things traditionally happen. In educational circles, the latest technology-induced change is termed “flipping the classroom”. Flipping reverses the focus of classroom and out-of-classroom activity – students use technology to master core material before each class and (precious) classroom time is spent applying and discussing what they’ve learned.
If you’re currently waiting for data to analyze or you’re working to find data for a colleague – you’re familiar with one of the productivity challenges associated with getting BI from Big Data. Finding the right information and provisioning it for analysis and decision-making constitutes a real bottleneck for many organizations.
Friction = Pain
Investments in data lakes and data warehouses - absent tools for analysts and data managers to identify and connect to specific, contextually appropriate data elements – create data friction. And the friction causes real pain. In a nutshell, it slows analysis, inhibits complete insight, and produces bottlenecks between BI and IT teams.
My last two posts highlighted both a recent change and a long-standing challenge. That no fewer than ten thousand Investment advisory firms face AML regulation – where the costs of compliance have increased by more than 50% over the last three years – suggests the potential for a messy regulatory train-wreck. Why are costs spiraling out-of-control? And can anything be done about it?
Between 2011 and 2014, banking respondents to KPMG’s Global Anti-Money Laundering Survey reported an average increase in AML compliance costs of 53%. That average exceeded both their 2011 prediction (40%) and the previous (2007-2011) average of 45%. In seven years, institutions seem to have made very modest headway in cost-efficiently complying with regulatory changes. Are there reasons and solutions? Read on.
Digging deeper into the survey, three areas of heaviest AML investment emerge – transaction monitoring systems, Know Your Customer (KYC) systems, and recruitment/retention systems for AML staff. Across all areas of AML investment, fully 28% of respondents predict an increase in compliance costs of more than 25% over the next three years.
SEC-registered investment advisors would have to comply
Banks, mutual fund, insurance and security dealers share an affirmative obligation to comply with anti-laundering regulations by identifying their customers and reporting significant (over $10,000) transactions. In a proposed rule change announced yesterday, Treasury would extend monitoring and reporting requirements to all investment advisors, including hedge fund and private equity advisors, as well. For an estimated 10,900-registered advisory firms, the proposed regulation will mean, at a minimum, two things… read on.