Over the past few years, the finance and banking industry has been a major hub of business scams, market declines, and operational disasters. As this concern continues to sustain globally, there has been a sturdy boost in the regulatory examination. As the PwC Global Economic Crime Survey of 2016 claims, one out of five monetary services respondents encounter regulatory enforcement. 

The increase in non-compliance cases and subsequent implementations, for instance, Consumer Protection Act, Dodd-Frank Act, and Anti-Money Laundering, have significantly transformed their examinations. Numerous entities imply rigorous requirements on financial services organizations, particularly those recognized as Systemically Important Financial Institutions (SIFIs). 

Due to these reasons lying behind, the complexity of regulatory exams continues to increase. For that, compliance management has always needed to be on the heels to satisfy the regulatory exam management. The substandard remarks by the regulatory and compliance lawyer can majorly impact the organization’s overall reputation and credibility among investors and clients. Furthermore, the organization may be subjected to heavy penalties. In extreme cases, it may even be prohibited from continued involvement in the industry. 

Financial organizations must elevate the level of effort, ensuring thorough preparation before facing a review by the authoritative regulatory exam management. Financial services organizations confront multiple adversities while taking measures to prepare for compliance evaluations, especially in the conditions of modern regulatory difficulty that characterizes the sector. 

Understanding the Three Phases of Regulatory Exams

Institutions understand that it is important to allot a considerable effort in the preliminary stages of regulatory implementation, which results in a prompt and more accurate assessment. The regulatory examination cycle is divided into three distinct phases to maximize success. 

Pre-Examination Preparation

Examinations carried out by the regulatory and compliance lawyer are consistently and effectively communicated well before the recipient’s notification of assessment. The correspondence allows the financial institution to conclude pre-examination activities like devising an execution strategy and collecting internal documents. Such activities place the organization in an advantageous position when handling regulatory examinations. 

It is imperative to lay out and document an explicit approach to examination before beginning the exhausting testing process. The development of related preparation measures will provide the necessary push for the assessment process to move forward, in addition to benefitting all parties involved by explaining what is anticipated from them during the assessment. 

Establishing a Project Management Office (PMO) and regulatory exam working groups at this juncture should be strongly considered. 

Addressing The Examination Letter

The second phase includes receiving the examination letter and responding to it. The letter specifies the areas, prerequisites, and expectations that require the regulator’s attention. The financial firm can begin to take action to muster up the involved stakeholders and amalgamate the sought-after documentation as well as validate data. 

To ensure a continued effective plan, the first step must entail the formation of a PMO. It is capable of preserving essential procedures, adhering to timeline objectives, and assigning duties and obligations. The organization must analyze and evaluate the examination letter to guarantee that all the requirements and requests are comprehended clearly. 

Stakeholders impacted by the situation should be activated according to documented communication protocols and plans finalized with deadlines assigned and duties delegated to each person. The crucial documents and needed evidence should be collected and checked to guarantee that they are accurate and complete to fulfill the conditions set out by the regulator. The documents are then made ready for submission. 

Field Work

The complexity of organizing and managing a site inspection calls for careful consideration of numerous components. The importance of sticking to principles continues as the Regulatory and Compliance Lawyer commences his evaluation. 

According to the standard process, a representative from the team is appointed to communicate with the regulatory external regulatory exam manager. He will streamline the general meetings, followed by strong communication protocols, data providing, or internal planning. Including a representative from every defense division is essential for a successful and seamless examination. 

Once the fieldwork is done, the Examiner in Charge represents the preliminary results to the upper-level management. In case of any issue, a corrective action plan is devised to address the matter. After that, periodic self-evaluations should be conducted to comply with the upcoming internal audits or other inspections. 

Forging The Technological Advancements In The Finance Industry

The banking and financial firms have overhauled their approach to customer service by utilizing revolutionary technological advancements. In addition, crafting an organized and efficient strategy to govern assessment management with technology can lead to significant advantages. A reliable, technologically-supported procedure facilitates safe and accurate data transfer throughout the entire regulatory examination. It elevates the quality of data by limiting errors and non-compliance opportunities. 

Besides, opting for a leading law firm is another productive step to keep regulatory risks at bay. Many companies provide services for effectual business growth while alleviating the risk of Regulatory Exams. FINRA consulting is one fine example that manages and boosts businesses. 

The Bottom Line

Financial organizations need to view the regulatory exams not merely as a necessary obligation but as a learning possibility. Along with the increase of various frauds and incompetence in management, the financial industry has experienced a growth in controlled activities initiated by the respective personnel and organizations. The three-step phase strategy to go through the process of examination is paramount as well as productive. Technological platforms and consulting opportunities like FINRA Consulting are also a great way forward. 

MAH Advertising PLLC is a notable US-based law firm with global experience that assists financial organizations in their proficient business growth and protects them from any future regulatory risks. To explore further, visit our website.