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Stuart Brock
Stuart Brock is a Director at Seal Software where he helps lead Seal’s financial services programs. Stuart is a licensed attorney who practiced law at a top national firm for some 10 years before moving in-house at Bank of America. During his tenure with Bank of America, Stuart held various roles within the Legal, Compliance & Procurement organizations where his responsibilities included the governance & management of third-party contracts including the maintenance and technology to support the Bank’s arsenal of contract templates for more than 60 countries around the globe.

The Cost of Compliance

Stuart Brock | Oct 11, 2018

In the decade following the global financial crisis, banks have faced a flood of new laws and regulations. The pace of change has been furious. Banks have been forced to hire more and more bodies to manage large, enterprise-wide efforts in an attempt simply to stay ahead of regulatory enforcement actions and the ensuing fines and penalties.    

As a result, banks have spent more than $321 billion[1] on enforcement actions, fines, and settlements since 2008.  This year alone, banks have paid... $1 billion in UDAP penalties... $109.5 million in fines for FX practices... $5.3 million to settle OFAC allegations... $4 million to settle SEC charges[2].  

Banks spend $270 billion per year on compliance. Some 10% percent or more of most banks’ operating costs can be attributed to compliance costs.  Some estimates have regulatory costs doubling by 2022.  

Going forward, banks must develop strategies that cut costs but still allow them to maintain robust compliance programs.  To do this, they are increasingly turning to artificial intelligence and analytics technologies (AI Technologies) to support the ongoing development and deployment of their compliance programs.  These technologies are faster, incredibly cost-effective, and able to support key aspects of a robust compliance program, including:

  • Risk Assessment

Traditionally, risk assessments are conducted by large teams of people scouring business documents to identify compliance obligations.  In a fraction of the time, AI Technologies can identify documents containing relevant compliance obligations where those documents are already stored across the enterprise without the need to collect or migrate the documents to a central repository.  These technologies then facilitate the mapping of those obligations to the appropriate laws, rules, and regulations so that the impacted business units can more fully understand their compliance obligations.  

  • Development and Maintenance of Regulatory Requirements Library

Most enterprise compliance programs consist of some type of library of applicable regulatory requirements and associated governance and controls.  Maintenance of these libraries is largely an exercise requiring manual review and updates on a recurring basis.  Most updates are performed annually given the level of manual resources needed.  AI Technologies can nearly instantly identify library components that require updating whenever there are external or internal changes.  This allows these libraries to be updated in real-time supporting more timely compliance by impacted business units.

  • Responses to Regulators

Banks are often required to provide regulators with data both on an ongoing and ad hoc basis. In some instances, such data must be provided within 48 to 72 hours.  This forces banks to track known data points and anticipate additional data that might be requested by regulators.  In the past, banks struggled to timely provide data for ad hoc requests where that data was not already tracked.  AI Technologies allow banks to address these ad hoc regulatory requests as they are received and within the significantly compressed timelines.  

If you are a bank compliance officer looking to maintain or improve compliance while also controlling costs, where do you start?  You start with Seal Software, the global leader and the platform of choice for enterprise contract analytics for the Financial Services industry. More than a dozen of the world’s most recognized and largest financial services institutions use Seal.  You should too.  

For more information on Seal for Financial Services click here.

Contact Seal today to learn more about how we can help you.