In a recent Conduct Risk Assessment of Telephone and Electronic Communications by the Central Bank of Ireland, significant concerns regarding communications compliance have surfaced, especially in hybrid work environments. RegTech Analyst delved into how offerings such as the Custodia CC1 service can be a solution for these issues.
The assessment conducted by the Central Bank of Ireland, delved into financial institutions’ compliance with the Markets in Financial Instruments Directive (MiFID II), specifically focusing on Article 16(7), which mandates firms to prevent unauthorised communication usage.
The Central Bank emphasised concerns regarding the use of communication devices, particularly in hybrid work settings. Their policy objectives aim to mitigate market abuse risks by monitoring and authorising communication methods while maintaining accurate records to support compliance and dispute resolution.
The assessment revealed significant gaps in financial firms’ adaptation to remote/hybrid working, evident in their unchanged communication policies and procedures.
These shortcomings were paralleled by monitoring and testing methods failing to meet the Central Bank’s standards, resulting in inadequate surveillance of electronic and telephone communications. Despite minimal identified breaches, indicative of deficiencies in monitoring systems, disciplinary procedures displayed inconsistencies.
Conversely, some positive practices observed included comprehensive communication recording, provision of corporate devices, and the maintenance of robust IT infrastructure for effective record-keeping.
To tackle these challenges, financial firms are encouraged to assess and refine their communication policies, controls, and monitoring frameworks tailored to hybrid working environments. Prior authorisation of new communication methods is crucial, and maintaining accurate records remains pivotal in demonstrating compliance and handling disputes effectively.
One such solution that can be used to alleviate these concerns is the Custodia’s CC1 service. The unique product offers comprehensive solutions for capturing, reconciling, and monitoring communications, tailored for both office and remote work settings.
Addressing gaps in monitoring processes, CC1 provides advanced reconciliation and real-time alerts to identify policy violations or suspicious activities promptly. Its integration capabilities with surveillance and analytics partners enhance communication monitoring beyond record-keeping.
Custodia’s CC1 service stands as a solution to address data capture and reconciliation challenges in the evolving hybrid work landscape, enabling firms to mitigate risks effectively and strengthen compliance efforts.
By deploying CC1, firms can effectively mitigate conduct risks, strengthen compliance efforts, and enhance their overall risk management strategies.
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