At KRM22, we are always looking at how to bring about a world in which organisations operate at their optimal threshold of risk to drive increased returns. In the compliance domain, we are helping firms avoid the activities that resulted in the FCA alone issuing over £190 million of fines in 2020.
Throughout 2021 we have been talking to the community about redefining compliance, initially focusing on what compliance teams mean when they refer to Holistic Surveillance.
Traditionally, firms have seen this term represent the idea of a combined trade and communications surveillance regime. Communications are a natural complement to trade surveillance, providing some context around suspicious trading activity. Looking at a simple insider trading case, the communications could reveal conversations between participants involved in suspicious trades.
In terms of evidence gathering, this does not go far enough, and compliance offices are increasingly looking for their firms to monitor more than trades and communications.
We are hearing from our customers that “Holistic Surveillance” should bring in a third data point, People Surveillance. Looking at our example of insider trading, knowing that the trader under suspicion goes on holiday with those involved in the trading patterns or has recently committed themselves beyond their financial means is a valuable observation. Having extra context about those involved in a case allows the compliance officer to have confidence in their assessment.
The three data points of Trade, Communications and People surveillance are all tracking behavioural aspects of trading. While this tracking allows firms to react to suspicious events, it can be enhanced with proactive institutional monitoring. Externally, knowing what regulatory and legal obligations are essential. Internally, creating the right culture and hiring the right people will help reduce the risk of a case being triggered. By moving from reactive to proactive monitoring, firms can avoid fines and sanctions.
KRM22 was founded on the concept of bringing firms and functionality together under our Global Risk Platform. We have been working on this new concept of Holistic Surveillance with a select group of partners. Over the coming weeks, we will be outlining our vision, culminating in a webinar where we will discuss the future of Holistic Surveillance.
We are excited about discussing these concepts with you. Feel free to contact me with your thoughts on Holistic Surveillance or with any questions you may have (DanL@krm22.com).