Technology risks give compliance professionals sleepless nights

A newly issued study by US regulatory compliance professionals shows that 63 percent say that technology-driven risk is the most important market strength that is likely to cause compliance issues for US financial services firms in 2025.

Other forces cited are global economic instability (58 percent), increased regulatory complexity (48 percent), digital assets and crypt markets (37 percent each) and geopolitical instability (20 percent).

The study by the EFLOW Global Compliance Specialist, out of 300 compliance decision makers on three continents, asked what are the main regulatory challenges that keep them at night. US professionals cite the wing of regulatory changes (43 percent), assessing risk profiles in multiple wealth classes (42 percent) and accurately identifying internal trading and market manipulation (40 percent) as their main choices. These are followed by the integration of trade and electronic communication supervision as part of a holistic strategy and being able to fully understand and explain the production of trade supervision reports – each at 38 percent.

Ben Parker, CEO I EFLOW GLOBAL, says:

US regulators continued to focus on E -Comms supervision failures as a major implementation zone in 2024, while our survey revealed that only 52 percent of the country’s regulatory professionals have only some confidence in their firm’s ability to integrate trade data and ECOMMS as part of a comprehensive trade surveillance approach.

With the volume of global implementation actions that increase by 260 percent throughout the year in 2024, and regulators, aiming at more and more small and medium -sized firms, this should serve as a call call for thousands of financial institutions and commercial firms seeking to proactively improve their compliance operations.

When asked how regulators can better support firms in their efforts to ensure regulatory compliance, 62 percent cite the need for greater transparency about regulatory expectations and implementation action. 48 percent say that closer cooperation between regulators and compliance teams, followed by the greater standardization of international regulatory requirements (45 percent), clear guidelines for minimum standards of essential technology (37 percent) and increased data and technology use to improve market surveillance and greater proactive self-report (30 percent).

The full report is available from the Global EFLOW site.

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