As I’ve mentioned in prior blogs, the biggest use cases we see in Hadoop these days come from the risk and compliance functions of large banks. Initially, many banks and other financial services institutions (FSIs) adopted Hadoop out of sheer necessity despite its early immaturity on the governance front.
To stay in compliance with rapidly expanding international, federal, and local anti-money laundering (AML) regulations and avoid what can be career- and business-ending consequences, companies face the seemingly Herculean task of investigating every suspicious financial transaction, which can number in the tens of thousands every single month.
In the month since FINRA announced total of $17 million in fines against financial adviser Raymond James and its financial services affiliate, two threads have circulated through social media. The first took note that broker-dealers were now squarely in the enforcement sights of regulators. The second focused on the piercing of the corporate veil and the penalties administered to James’ former AML Compliance officer.
According to the latest evidence, The US Treasury estimates that over $300 billion in money laundering flows through casinos annually. The two leading sources of funds, fraud or drug trafficking, account for just over $64 billion alone. Recently, officials at the federal Financial Crimes Enforcement Network (FinCEN) – the agency responsible for monitoring casino operator compliance with the Bank Secrecy Act of 1970- have stepped up their AML compliance rhetoric and activity. And they’re not alone.
Occasioned by the announcement of a consent order with Florida bank Gibraltar Private Bank and Trust, the Office of the Comptroller of the Currency (or, OCC) announced two significant updates to its policies and procedures for calculating civil money penalties for non-compliance or persistent, uncorrected BSA/AML compliance. The OCC took the opportunity to call-out failures in the Gibraltar response to earlier orders - setting clearly tougher expectations for under-performing or unresponsive compliance programs.
The challenges you face as a risk and compliance professional reflect forces beyond your control. You’re between an accelerating expansion in technology – which offers new avenues for misbehavior - and a rising tide of regulatory expectations. It’s a classic problem of supply and demand.
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