The Reserve Bank of India (RBI) after carried out an assessment for selective Supervised Entities (SEs) has issued an influential direction through a Circular (RBI/2023-24/117) on January 31, 2024 to various financial entities, urging them to enhance their internal compliance monitoring through the use of technology. The circular highlights the need for a more streamlined, comprehensive and efficient approach to magnify the effectiveness Compliances monitoring.
Present Evaluation : In a recent evaluation of certain Supervised Entities (SEs), the RBI noted a range of automation levels, from basic spreadsheets to more advanced compliance solutions. However, a substantial manual component still exists, prompting the RBI to recommend comprehensive and integrated technological tools to improve and strengthen the compliance monitoring process.
Streamlined Guidance for Efficiency: The suggested solution/tool should facilitate effective communication and collaboration among different teams and departments along with Senior Management. It should include processes for identifying, assessing, and managing compliance requirements, as well as mechanisms for escalating non-compliance issues and recording approvals for deviations or delays. Additionally, the tool should offer a unified dashboard view to Senior Management regarding the overall compliance status of the Regulated Entity (RE).
Execution Timelines: Regulated Entities (REs) are advised to conduct an extensive review of the existing internal compliance tracking and monitoring system processes. Required changes or adjustments in the existing tracking or implement new systems by June 30, 2024. They are also encouraged to establish a monitoring mechanism to track the progress of implementation. Financial Institutions are also requested to acknowledge receipt of this directive as they work towards upgrading their compliance monitoring systems.
Need of Compliance Solution
Navigates and ensures Compliances with Applicable Regulations
Streamlines manual processes, improving overall Operational Efficiency
Mitigates Legal and Financial Risks
Organizes and automates tasks, enhancing workflow efficiency
Benefits of Compliance Solution
Conclusion
The Reserve Bank of India (RBI) directs for upgradation in the compliance monitoring framework by using the high technology. The directive underscores the need for financial entities to transition from manual processed to advanced technological tools, fostering effective communication and collaboration. Acknowledging receipt of this directive signifies the commitment of financial entities to implement technological advancements in compliance monitoring for a more robust and responsive financial perspective.
Disclaimer
The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.