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Top 5 Financial Compliance Issues

Financial compliance involves the regulations that govern capital markets and the financial services sector. The enforcement of those regulations is at the heart of financial compliance. In a complex industry, financial compliance evolves with technology and society. It is important to know and keep up with the top challenges you might face when working in this crucial sector of any organization.

Seattle University School of Law’s MLS Program in Compliance and Risk Management prepares students to keep up with an industry that has a constantly expanding list of regulations. Our students gain training that prepares them to take on compliance officer leadership roles and advance their careers. Technology rapidly advances, regulations quickly follow, and compliance adapts. Let’s dive into the top five financial compliance issues facing financial services organizations today.

Top 5 Financial Compliance Issues

1. Cyberattacks 

Only a few decades ago, cyberattacks were inconceivable. Now, the constant changes in technology and the sensitivity of the information that financial institutions contain create vulnerability. Businesses are almost completely digitized, and as a result, it is critical to have stringent policies and well-trained staff to keep up with compliance.

A cyberattack is not only detrimental for any consumers who get affected but costly for the business as well. IBM reported that the average cost of a single data breach in the financial sector is $5.72 million in 2023. As a result, senior management must ensure that the risk management policies in place protect against such attacks.

2. Data Privacy

Data privacy comes with its own set of regulations, risk, and compliance. Personally identifiable information, known as PII, and other sensitive data are the biggest points of consumer protection. Similarly to cyberattacks, a breach in data governance can be costly for any financial services sector. Your geographical location determines the regulations you must adhere to. The United States and the European Union, for example, have different applicable fines, but the bottom line is the same – maintain compliance or suffer severe financial consequences.

3. Digital Transformation

We’ve touched on technology’s rapid advancement. The financial services industry is running to keep up. Digital transformations lead to increased regulations, and a successful data transformation program known across the compliance teams helps. The plan must be able to withstand further scrutiny in order to achieve success.

4. Environmental, Social, and Governance Issues 

Consumers and stakeholders worldwide demand transparency and accountability. Organizations must mitigate any negative effects while optimizing their environmental and social impact. Net-zero targets are the goal, and organizations must find a way to not only hit those goals but keep those invested abreast of their commitments.

5. Compliance Cost

Financial compliance may be expensive, but it is far better than suffering the extreme costs of committing a financial crime. There are ways to cut costs and still fit into the necessary regulatory compliance. Proper technology allows for streamlined regulatory reporting. The same leaps in technology that put organizations at risk can also help keep them secure from financial crises. Dedicated, competent compliance professionals in leadership roles are also critical.

Regulators consistently pressure financial services organizations to be efficient and improve. Leaning on technology and well-trained staff is the answer. Compliance requires knowledge of interrelating factors and quick identification of threats.

Seattle University As Your Key to a Role in Risk and Compliance

The world of financial compliance continues to become more complex. Seattle University School of Law prepares its students to handle the future with confidence and finesse. We train in legal methods, analysis, and communication. We give our students the tools to lead compliance efforts in any organization and industry. 

As a bonus, our program is completely online. This gives our students flexibility as they navigate the balance of their education and other life obligations. Our students have the option to participate in on-campus events through live-streaming and similar technology, but can also complete their entire degree needing only their computer. 

If you’re interested in advancing your career and leadership skills, contact our admissions office today to get started. 

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