Financial compliance is a key term now, especially after the global financial crisis starting from 2008, which was largely resulted from the noncompliance of financial institutions. In theory, financial compliance is the set of regulations and legal enforcements which rule the finance and capital markets. The compliance needs range through the complete financial spectrum, from simple investment banking to advanced banking processes.
Scott Tominaga is a renowned financial analyst and investment consultant with many years of industry experience. Discussing financial compliance, Scott again quoted the aftermaths of the global financial crisis, which had put financial compliance back at the center of any financial operations. The regulators and other concerned parties, including lenders and banks, became fully aware of the need for compliance and started following the same.
If there was adequate financial compliance during 2008, it would have been saved the investments, retirement funds, pensions, houses, or many people and could have been decreased the magnitude of the blow. Also, financial compliance has become much important in terms of building the public’s trust in banking providers and capital markets.
Who regulates financial compliance?
As we can assume, financial compliance is a broad-spectrum term. The regulations and compliance measures may vary internationally. Here, we will discuss some of the key regulations in the United States financial compliance system.
- The Federal Reserve
Federal Reserve is the US central bank, which regulates all monetary policies. The Federal Reserve maintains the inflation around 2% and decides how many currencies to print and regulate the rates of federal funds, etc. The Board of Governors manages fed. The regulatory compliances of the Federal Reserve are considered to be paramount, and their decisions and policies can have a massive impact on the economy of the nation.
- SEC (Securities and Exchange Commission)
SEC is another regulatory agency independent of the ruling government, which oversees all the activities of the US Securities market, monitors exchanges, and also enforces the securities law. While monitoring the security exchanges, SEC also looks for the signs of any frontrunning and trading on the public information, the scope for any fraudulence, corporate malfeasance, etc.
- FDIC (Federal Deposit Insurance Corporation)
FDIC offers deposit insurance for banks and thrift institutions of at least $250,000. By ensuring deposit insurance to institutions, FDIC tries to promote and preserve the confidence of the public in the state’s financial system and the banks and institutions regulated by the same. Deposit accounts insured under FDIC are savings accounts, checking accounts, certificates of deposits, etc. There is no insurance for bonds, stocks, or mutual funds.
All the organizations and regulatory bodies strive to ensure compliance for various financial transactions and institutions to ensure a steady economy and assurance for the investors and common public regarding their financial transactions. Scott Tominaga iterates the importance for investors and transactors to check the authorization and compliance measures of any lenders or deposit takers with these bodies in order to make sure that you are not falling prey to any fraudulence or money laundering.
