Streamlining the Internal Compliance Monitoring Function with technology

Streamlining the Internal Compliance Monitoring Function with technology

The Reserve Bank of India (RBI) is responsible for issuing guidance and directives to the banking and financial sector institutions in India as the regulatory and supervisory authority.

The RBI has recently assessed the existence and adequacy of the systems implemented by supervised or regulated entities to monitor internal compliance. RBI’s review of the selected entities suggests that the supervised entities use macro-enabled Excel or workflow-based software solutions to monitor compliance, which entails a higher degree of manual intervention.

In line with this assessment, the RBI issued a circular on 31st January 2024, guiding the entities to leverage technology for streamlining the internal compliance monitoring function. The circular addresses the need to implement comprehensive, integrated, enterprise-wide, and workflow-based technology solutions to aid in internal monitoring and compliance with RBI regulations.

The RBI highlights the technology solution to be implemented for internal compliance monitoring must:

  1. Provide effective communication and collaboration opportunities amongst the business, compliance, and IT teams and senior management,
  2. Enable identifying, assessing, monitoring and managing the compliance requirements and identify any non-compliance instances,
  3. System-triggered approval process in case of any compliance delays or deviations,
  4. Offer a unified and insightful dashboard on the compliance position to the senior management.

The systems and tools to be deployed for compliance monitoring must be determined considering the size and complexity of the entity’s operations.

In this regard, the RBI has directed all regulated entities to thoroughly review the existing methodology and implement necessary technology solutions to enhance the quality and effectiveness of the compliance monitoring function.

We are committed to assisting proper enforcement of AML and CFT regulations to regulated entities in India by designing a personalised AML framework – policies, internal controls, and procedures – and ensuring effective implementation of the same.

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