The New Year in Regulation and Compliance

2 of 4

Lately I’ve been most focused on resolution planning [required by Dodd-Frank]. Guidance was issued in April [by the Federal Reserve and the Federal Deposit Insurance Corp.] for 2014 for plans around interconnectedness. Banks are trying to figure out what to do around that so they can maintain access to data and technology assets in case of a catastrophe. They’re going to have to look at their technology and data infrastructures to comply around operational interconnectedness.

Some banks are going to create additional regional entities to share data assets. Credit Suisse created two subsidiaries, one Swiss and one American, with shared servers. Banks will need to know where their critical data is and who owns the proprietary data. They need to figure out how to map all of the technology and data. Among top-tier banks, that will be a big challenge with organizational silos across borders and across different lines of business.

As resolution plans progress and grow well defined, these issues are going to come out. I don’t think regulators fully understood the complexity of the task outlined in the bill. If you can’t map the technology through the silos in your organization and how they service each other, you’re going to have a difficult time with compliance. Lehman [Brothers] couldn’t unwind because it gave away its technology and data assets. Banks have been doing things a certain way for a long time, and they’re going to have to look at themselves differently now organizationally.

FATCA (the Foreign Account Tax Compliance Act) will also be a big issue in the coming year. Some banks took some time off from dealing with FATCA as the rules were being finalized, but now they have six months to comply with the final deadline by July 1. That isn’t a lot of time for the necessary software development and figuring out where reporting will be going. There are a lot of details that still need to be sifted out.

Unfortunately there has been a trend in the regulatory sphere of regulators not working with each other at times. For instance, there have been competing priorities between US and UK regulators. The April guidance on resolution planning was a joint effort by the Fed and the FDIC, and we’re hoping to see more of that cooperation. That will help banks with the challenge of trying to stay ahead of the regulations.

Michael Bertran, Capco.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

2 of 4