Big Deal or Small Deal?
As the leader of a global business delivering solutions to professionals serving a global mandate, Brexit hits my radar screen on a daily basis. There are tactical implications to Brexit like data privacy and data center operations which were relatively easy to resolve in the earlier days of the discussion. Our customer’s questions now lean more toward the professional compliance implications. I am frequently asked: “What does it mean for the compliance industry?” “What are the implications to compliance individuals” and ‘What should we do about it?”
To help answer such questions we have been publishing viewpoints on this issue over the last several months, including “Brexit Risks in the Fight Against Money Laundering” by Hugo. This week we are also publishing a piece by Matthew Redhead, a consultant to RDC and Associate Fellow at the Royal United Service’s Institute’s (RUSI) Financial Crime 2.0 programme, on what he thinks Brexit will mean for financial crime professionals.
Both Hugo and Matthew take pragmatic views on the regulatory front. There’s been a lot of talk in the UK and European media about the UK going on a race to the bottom, setting itself as an offshore tax haven for shady money. We at RDC don’t see that happening. Regardless of who wins the General Election on 12 December, we believe that the UK is likely to want to remain closely aligned to the EU in its financial crime regulations, for a lot of solid reasons. In the last decade or so, both the Conservative and Labour parties have taken a strong anti-financial crime stance and have often been tougher in their domestic laws than necessarily required by EU Anti-Money Laundering Directives. There is no reason to see that changing. Our current point of view is that the UK will continue to desire to be closely linked or even have stronger financial controls as compared to the EU in order to support Global Britain’s position of leadership in financial services.
I suggest, however, that compliance professionals should be sure that they are considering non-regulatory implications to Brexit with as much energy as the prism of regulation. Keeping an eye towards new financial crime and other risks is critical now because whatever form Brexit takes, it is likely to have an impact on wider economic, political – and eventually criminal – environments. Just as true for corporate supply chains as financial institution currency transactions. That means the kinds of financial crime threats and reputational risks your business will face could change too. As the NECP notes, for example, the process of Brexit will probably lead UK firms to engage “with new markets and industry sectors that are commonly affected by corruption…[As a result]..the foreign bribery threat may increase.” Add to that what we have already seen to be true about Brexit which is that the only thing certain is change. Rapidly changing threat environments require a compliance capability to flex when and where needed. Can we adjust our risk priorities and assessments dynamically and quickly with rapid new information and realities? Are the calibrations of controls currently in place sufficient to address the regulatory – and reputational – implications of the changing landscape. My view is that technical solutions, data solutions, and compliance thought leadership must be prepared to dance faster than ever in the coming years. In the area we know a great deal about – screening, we are making sure that high quality, tuneable coverage of sanctions, political exposure, and Adverse Media remain nimble, insightful and efficient. Dancing fast.
I suspect we will continue to talk about Brexit and its implications for some time to come. If you have any thoughts or questions, or you’d like to see how RDC can help you and your business, don’t hesitate to reach out.
Until next time,