The Changing Landscape of Financial Regulation in 2024
As we approach the year 2024, experts from Fenergo, a prominent FinTech firm, are predicting a pivotal year for the financial regulation landscape, according to Fintech Global News. Global penalties for non-compliance are on the rise, surging to an astounding $6.6 billion, representing a 57% increase from the previous year. This increase highlights a proactive approach from regulators, emphasizing the need for financial institutions (FIs) to adapt and conform to the evolving regulatory environment.
The digital assets sector, particularly cryptocurrency firms, faced intensified scrutiny in 2023, with punitive fines skyrocketing from $193 million in 2022 to an astonishing $4.5 billion in 2023. Stella Clarke, Chief Strategy and Marketing Officer at Fenergo, anticipates that 2024 will continue this trend. Regulatory bodies are expected to closely monitor reporting discrepancies to combat financial misconduct and protect investor interests.
2024 is being labeled as the ‘year of regulatory revolution’ by Tracy Moore, Director of Thought Leadership at Fenergo. FIs are gearing up for increased regulatory demands and more stringent compliance requirements. The focus is particularly on beneficial ownership information (BOI), with regulatory entities like the Commodities and Futures Trading Commission (CFTC) and FinCEN finalizing directives and advisory guidelines. This shift signifies a substantial move towards transparency and accountability within the financial sector.
Europe is not lagging behind in regulatory reforms, with substantial changes on the horizon. The impending EU’s single rulebook and recalibrated thresholds for ultimate beneficial ownership checks pose significant challenges for FIs. Rory Doyle, Head of Financial Crime Policy at Fenergo, emphasizes the drastic reduction in the beneficial owner threshold, requiring extensive remediation efforts by European FIs to comply with these stringent regulations.
The narrative of digital transformation is evolving, with smaller FIs gradually taking center stage. The integration of Artificial Intelligence (AI) into this transformation is a topic of great interest. The industry is buzzing with the potential of AI to revolutionize compliance, though its definitive impact remains a subject of anticipation. Cengiz Kiamil, VP of Market Development at Fenergo, underscores the upcoming year as a critical phase to evaluate the tangible returns on investments in AI capabilities.
Amidst these advancements, FIs must also prepare for ongoing geopolitical volatility and an intensifying sanctions regime. Stella Clarke highlights the increasing screening obligations due to geopolitical uncertainties and the consequent surge in sanctions activities. These challenges are expected to intensify in 2024, necessitating robust preparedness from compliance departments across the financial services spectrum.
In the face of these impending regulatory upheavals, 2024 promises significant transformations. The journey may be complex, but with strategic foresight and the right partnerships, FIs can navigate this evolving landscape, ensuring compliance and resilience in the dynamic world of finance.