Compliance – a life raft for FIs in struggle?
Throughout the pandemic, financial institutions have been rolling out solutions to accommodate the newly-found market needs for contactless, faster, more well-rounded products. To ensure this innovation goes hand-in-hand with the red tape, Marius Galdikas, CEO at ConnectPay, urges market players to re-evaluate their current compliance efforts as it is essential for controlling an organization’s exposure to risks and may even prove to be a life raft for some companies currently in a struggle.
Regulatory pressures have been increasing: authorities have implemented new measures concerning anti-money laundering (AML), digital identity, and other key areas, highly relevant to the growing number of online transactions.
Navigating through the changing regulatory landscape is an intricate task in itself, yet it is even harder to accomplish in a market downturn. In the UK alone, a survey revealed that four thousand regulated firms are at a “heightened risk of failure” due to pandemic-induced economic decline; among them, the companies in the payments and e-money sector have the lowest profitability.
M. Galdikas states that although risk management and compliance may not be at the top of the mind for some of these companies due to financial instability, it could mean the difference between being “in” or “out of” business in the near future.
“Understandably, the main focus is directed at sustaining operations in general,” said Galdikas. “That said, regulatory landscape is changing so rapidly that, if the topic is left on the sidelines, it may very well be what knocks a company down just as it is about to get up. It is crucial to balance internal focus between day-to-day and compliance efforts: your clients are a priority, thus if any products are deemed non-compliant, a company won’t be able to offer quality service they are committed to providing.”
ConnectPay has not been taking the topic lightly as well. With a clear focus to strengthen its compliance backbone, recently the company welcomed a new member to the team—Rokas Masiulis, former minister of transport and communications, as well as former minister of energy. Masiulis will be joining the company ranks as an independent board member and will be the new chairman of the risk committee, overseeing AML/CFT prevention, risk management, and compliance policies.
“Regulatory landscape will only continue to increase in complexity and accountability. We are excited to have Mr. Masiulis share his expertise, which will help us in our efforts to find the right synergy between innovation and compliance and, ultimately, drive the company’s growth even further,” explained Galdikas.
In addition to building the company’s internal expert circle, M. Galdikas highlights the importance of independent internal auditing as well, which helps to reassess current process efficiency and to red flag possible discrepancies.
“Internal auditing is quickly becoming more of a necessity than a nice-to-have for regulated companies at any scale,” said Galdikas. “We utilize this approach at ConnectPay as well, seeking to forestall irregularities in compliance policies: this allows us to be better equipped to handle any forthcoming challenges.”
