Need for speed clashes with compliance obligations
The Central Bank's focus is on simplification and effective engagement with firms to ensure regulatory compliance, the seventh annual 2025 ALG corporate crime and regulation summit has heard.
The event attracted over 500 professionals from across corporate Ireland, including in-house legal counsel, compliance leaders, risk managers, and senior executives.
The Croke Parke event (14 October) heard that regulatory compliance must move centre field in business concerns, rather than remain on the sidelines.
Mairead Kirwan of PTSB said that compliance officers should both support and challenge the business in equal measures.
Part of the game
“Compliance shouldn’t be running up and down the sideline; it should be on the pitch, part of the game, influencing it and influencing decisions,” she said.
Such decision-making on implementing regulation will have an impact on customers, investors, and the organisation itself, she said.
Mark Devane of ALG said that what seemed like a never-ending cycle of regulatory change made correct implementation essential.
“Getting that regulatory change project right is essential … and does produce a stronger business,” he said.
“Conversely, getting it wrong can have real costs for the business,” he said.
This could affect customers, or lead to more intensive supervision or enforcement from regulators, he said.
“All of these negatives take up key resources within an organisation and have an added cost,” he said.
Root causes
When an issue arises, regulators also tended to look backwards for the root causes, Devane added.
Darragh Rossi of the Central Bank said that the regulator had built up muscle memory for crisis.
There was a shared responsibility on each party to ensure that change was effectively implemented for the benefit of consumers and investors, he said.
The Central Bank had introduced a framework to ensure that it was supervising and regulating in an evolved and efficient manner, he said.
Businesses should see regulatory change as part of their strategy, and align it to deliver on goals, the event heard.
Gerard Ryan of Acorn Life DAC said that regulatory change projects were time-bound, and that the whole organisation should be brought in, in terms of budgets and resource planning.
“Organisations that plan for that upfront are better able to respond,” he said.
Engagement with the Central Bank at an early stage was very important, he added, and would lead to better understanding.
With the Individual Accountability Framework, there should be clarity of ownership and responsibility, with a single executive taking charge.
The board should take an interest in compliance, and show from the top that this was now part of the business, Gerard Ryan said.
Good communication and staff training were essential, he added, to show that these projects would be embedded in the firm's goals from now on.
Mark Devane said that firms should "put their arms around an issue" when one arose, and show the regulator that there was a real desire for remediation.
Mairead Kirwan said that businesses should think of 'pre-mortems' rather than post-mortems, examining what could go wrong.
“And some of the people might be there to remember the scars and wounds of the past,” she commented.
The ‘Fraud vs Friction’ session at the ALG summit examined the rise of complex frauds such as romance scams, money laundering and identity fraud.
The EU recently estimating a €4.6 billion value for payment frauds, while 56% of consumers in the bloc have experienced financial scams in the past two years.
Conundrum
The conundrum for business was not getting squeezed out the market with old-fashioned offerings, given the pressure to come up with innovative and instant services, said ALG partner Dario Dagostino.
Compliance demands might clash with news of competitors offering speedier services, he said.
The Central Bank now had a ‘trusted flagger’ role in asking online platforms to take down certain criminal content, he added.
A novel scam involved buying expensive goods online, then returning a counterfeit item to the seller, attendees heard.
Britain had brought in mandatory repayment schemes and statistics showed up to 90% of victims getting reimbursed, the summit heard.
It will take more time to see whether fraud is actually declining as a result, however.
Ciara Brady of ALG said that the demand for frictionless financial services was bringing its own challenges.
“The faster the payment, the less time for detecting or preventing fraud,” she said.
Adriana Schick of the US Securities and Exchange Commission (SEC) said that it faced perennial issues of material misstatements or omission by listed companies, and that this could include financial reporting or accounting fraud, insider trading, market abuse, with an evolving trend towards cyber-crime.
Focus
A SEC unit would in future focus on fraudulent use of emergent technology, such as AI and machine learning, she said.
A task force to combat cross-border fraud indicated a broader focus beyond regulated businesses, she said.
Training staff to be less gullible was essential, the event heard.
Máire Reidy, head of legal Europe at Block Inc, explained the anti-money-laundering building blocks – including customer due diligence and transaction monitoring.
The verification of payee (VoP) requirement was a key anti-fraud measure to prevent unauthorised payments, the summit heard.
This summit also heard from Frances Fitzgerald, former Tánaiste and MEP, and Michael McMahon, Professor of Economics at Oxford.