With a GDP of around $21.4 trillion, the US is the largest economy in the world and its financial sector reflects this. As such, the regulatory bodies that create the frameworks that guide and manage this powerful sector have taken years to develop. There exists a mosaic of agencies and organizations that oversee financial markets and companies.
These regulatory bodies are formed by governments or other organizations to ensure that the financial markets and the companies that form part of the general financial ecosystem are fair and function smoothly. The last few years have seen major changes in the way that the US government operates and handles financial sector reforms. The question now, is will a new administration make further waves in a sector that has had to weather so much change over the last few years?
Some Recent History on American Banking Regulations
To set the scene, some recent historic events show how the administration in the US can have a wide and sweeping impact on the finance sector.
In 2008, the world experienced the financial crash. In 2010, to rectify some of the underlying causes of the crash, the Obama administration set in place the Dodd-Frank Act. This added greater controls over the financial sector to help prevent a repeat of the crash. The act was designed to help curb excessive risk-taking in the financial sector; provisions included:
In 2017, shortly after the Panama Papers made the headlines, Obama’s administration included reforms impacting:
Banking Regulations in 2020 and Beyond
The latest election has caused waves the world over. Whilst Biden has been announced as the winner, Trump continues to cause upheaval and uncertainty. But what is likely to happen in terms of banking and financial sector regulations when the new administration takes office?
Preparing for Change with Smart Tech
No industry likes change, and for a heavily regulated sector such as finance, change can be a serious challenge. Any administration change in the US, or indeed in any country, will result in new hoops to jump through. Regulations are often complex and take time, money, and expertise to establish compliance. Any change, good or bad, is a challenge for an FI. However, since the 2008 crash and the 2016 election, there has been the entry to the market of smart technologies that can be applied to complex anti-money laundering checks, including sanction list checks. Intelligent approaches to data capture and analysis have provided tools flexible enough to weather change. Platforms that can provide real-time insight into customers for KYC/CDD purposes, provide the flexible risk-based determination that can meet the new and exacting requirements of the FinCEN rule on beneficial ownership. Blockchain based sanction screening, too, provides automated revisions, reducing the risk of human error and fraud. Blockchain-based sanction list models also offer the type of transparency that the Biden administration may seek.
While we wait to see what, if any, new reforms will be placed at the door of the financial sector, we can at least feel secure in the knowledge that the technology industry continues to innovate around change and ensure the sector has the tools to cope, no matter what regulators throw their way.
Contact us today to speak to one of our financial crime experts.