Earlier this week, FINRA published its 2024 Annual Regulatory Oversight Report, which aims to provide financial firms with key insights and observations from recent activities of FINRA’s regulatory operations. The report serves as a valuable tool for market participants looking to strengthen their compliance programs.
Addressing 26 different topics, the report covers relevant rules, key considerations when building compliance programs, findings and observations from recent enforcement actions, and effective practices that can be leveraged in 2024 to ensure firms are utilizing effective supervisory procedures and controls when meeting their compliance obligations.
This year’s report offers insights into new topic areas that have gained relevancy in recent years, such as crypto assets and the related risks associated with them. Recurring themes like cybersecurity and anti-money laundering (AML) can also be found in the report and include the latest guidance for firms looking to avoid regulatory scrutiny.
While the report is primarily aimed at market participants who are looking to enhance their compliance programs, the report also presents beneficial insights for regulatory technology providers, who can then ensure they are continuously strengthening their products when they align with the latest guidance from regulators. North American regulators have made it clear in recent years that as RegTech offerings continue to evolve, so will their expectations. The solution providers that can address the latest challenges and incorporate the most recent guidance from regulators will find themselves in an advantageous position and in theory, increase their chances of being a preferred vendor for financial firms in 2024.
One area of the report that is of particular interest for a RegTech vendor like SteelEye is the guidance dedicated to books and records requirements. As fines related to record keeping failures and off-channel communications surged in 2022 and 2023, many firms scrambled to ensure that their organization was not next in line for one of the many hefty fines that regulators were handing out. With this in mind, FINRA’s annual report ensures the firms it governs have clear guidance of what is expected of them when it comes to books and records. The section includes a list of relevant regulatory obligations, related considerations, findings from the past, and effective practices to ensure your firm remains compliant.
Whether their focus is on books and records requirements or other areas of the report, one thing is certain for market participants: expectations of regulators are at an all-time high going into 2024. And with advice spelled out as clearly as it is in FINRA’s 2024 Annual Regulatory Oversight Report, they will be less understanding of the firms that fail to update their compliance playbook with the latest guidance.