2020 was no ordinary year—a year that impacted our personal lives and turned the global economy upside down.

From a business perspective, one of the major side effects of the pandemic crisis was a massive shift to work from anywhere, driving an exponential surge in communication and collaboration technology adoption. It made Zoom fatigue not only a real phenomenon but also a signature symptom of the lockdown era.

With distributed working now prevailing, it’s no surprise that—especially in regulated environments—senior management concerns around risk, governance and internal controls have come to the fore.

Firms must be prepared to manage new sources of risk in a hybrid working model: just 4% expect their firms to require traders to return to in-house trading desks every day after the pandemic. All of this as they cope with budget and resource constraints, accelerate their moves to digital and the cloud, and stay competitive in the market.

The importance of compliance in overall business strategy has trended upward in recent years. It has now further accelerated, moving the needle toward building a compliance culture and protecting a firm’s reputation instead of purely safeguarding the organization against non-compliance fines and penalties.

Dealing with the COVID-Effect

According to a 2020 global compliance study[i] by Greenwich Associates and Nasdaq that was conducted after the first lockdown, 74% of senior compliance professionals strongly agreed that their firm considered compliance incredibly important, representing an all-time high and a considerable uptick from the previous year.

This significant rise in the importance of compliance, on the sell-side and buy-side alike, is understandable when we look at how businesses were forced to weather the perfect storm by switching to a more dispersed work environment, ensure operational continuity, maintain proper governance, and protect their reputation in a highly volatile market landscape.

Although financial market participants were offered temporary relief of compliance requirements, regulators have not been sitting on their laurels. They imposed $10.4 billion in global fines and penalties on financial firms—up 27% from last year—related to anti-money laundering (AML), know your customer (KYC), data privacy, and MiFID regulations in 2020 based on a recent analysis by Fenergo.[ii]

[i] Greenwich Associates – NASDAQ, Global Compliance Survey, November 2020.

[ii] Fenergo, Up Close and Personal – The Year of Personal Accountability – Global Research Report on Financial Institution and Individual Enforcement Actions in 2020, December 2020.

 

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