Issue 41: That First Week Vibe
MBK Search
We connect the best risk, audit, and compliance talent with the world’s leading firms.
Welcome to This Week in GRC, MBK Search's?weekly digest of the news and views in the world of regulation and compliance.
The Opening Bell
And with that, the first work week of 2024 has come to a close. Blink and you might've missed it.
The start of a new year is always a busy time, with new regulations coming into force across the U.S., the UK, and Euro Zone. There will be no shortage of things to cover for This Week in GRC.
With that in mind, we've introduced a couple of small changes to the newsletter for this year. We want to ensure we're covering the stories that matter most to our subscribers without skimping on quality. And we want to be a source of intelligent conversation and ideas too.
We've changed the structure of the newsletter to maximise the quality of our coverage:
We're grateful to the 9,000+ GRC professionals who've subscribed to This Week in GRC, and we're looking forward to serving you throughout 2024.
Amid a torrid 2023, and looming elections, U.S. financial regulators face a tough 2024. MBK Search previews the agenda for regulators over the next year. Read more here.
Webinar: Tuesday 16 January 2024, 12:00 EST
What does the GRC jobs market look like heading into 2024? After a tumultuous 2023, hiring took a nosedive. But with the SEC and other regulators promising a busy new year, will jobs in governance, risk, and compliance be on the ascendent?
Join the MBK Search team as we discuss what the big hiring trends are in the GRC space heading into what will be an important year for the sector.
Binance.US Names New Compliance Chief Amid Parent Penalties
Cryptocurrency exchange Binance.US appointed a new chief compliance officer this week. The move follows record fines levied on parent company Binance for anti-money laundering violations.?
Lesley O'Neill joins Binance.US after recent compliance leadership roles at digital identity firm Prove and professional services giant EY. She replaces former Binance.US compliance head Tammy Weinrib.
Weinrib's resignation coincided with Binance agreeing to pay $4.3 billion in November 2022 after a US investigation uncovered illicit finance enablement failures. Regulators found the unregistered exchange neglected risk controls allowing criminal transactions.?
A Justice Department deal forces parent Binance to install a monitor ensuring complete withdrawal from the US market. But authorities distinguish Binance.US as an independent, regulated alternative founded to serve American customers legally.?
Binance allegedly misled on its non-US claims despite overlap with global users. Investigators concluded Binance.US was largely cover for broader sanctions breaches. But the unit itself remains operational for now.
With its parent effectively banned for Bank Secrecy Act violations, Binance.US stresses surging investment in accountability. O'Neill will oversee key functions like customer due diligence, sanctions/PEP screening, and suspicious activity monitoring.?
Compliance experts consider the appointment a positive governance signal. But continued growth depends on transparent insights into risk management transformations satisfying regulators.
Founders framed Binance.US as a fully regulated brand insulated from controversy. However, the persisting regulatory spotlight places heavy pressure on delivering as promised.
Meanwhile, the parent company shakeup gives compliance chiefs at rivals added leverage for strengthening risk postures. Anti-money laundering reform demands keep building globally across crypto's normalization journey.?
For Binance.US, promoting mature governance is an opportunity distinguishing its commitment. But success requires concrete progress closing vulnerable gaps that enabled illicit activity for years before.
SEC Commissioner Reappointed to New Term?
The Securities and Exchange Commission (SEC) announced this week that Mark Uyeda will continue serving as one of its two Republican commissioners. He was officially sworn in Wednesday to a five-year term after Senate confirmation last month.
Uyeda first became an SEC commissioner in June 2022, filling the vacancy left by Elad Roisman's resignation. His reappointment came via a nomination from President Biden.
At the Democrat-led agency, Uyeda has opposed several major regulations on reporting and operational burdens for public companies. In recent speeches, he argued compliance timing and costs deserved more consideration.??
Uyeda also stated support for constructing a legal framework on chief compliance officer liability. Guidance defining responsibilities versus executive accountability could clarify grey areas that worry industry practitioners.
Overall, however, Uyeda noted appreciation at the honor of continuing his SEC tenure. He has served the agency in various roles since 2006.
The commissioner confirmation fills a seat as Chair Gary Gensler nears potential replacement when his term expires this June. While dissent is common, official decisions require majority commission votes.??
Uyeda provides institutional continuity amid likely 2023 leadership changes. His stances favoring pragmatic rulemaking and liability certainty will remain key voices in framing evolving oversight policy.
Industry groups welcomed the tempering presence. But progressives prefer decisiveness addressing glaring governance gaps allowing corporate harms. Where reform speed, scope and priorities fall remains disputed.
NY Banking Regulator Issues Climate Risk Guidance
New York state's financial overseer published guidance late December 2023 for banks and lenders managing threats from climate change. The document outlines expected risk approaches without hard deadlines.?
The Department of Financial Services (NYDFS) already asked firms in 2020 to detail climate mitigation plans. The new guidance expands regulators' preferred strategies for governance, data analysis, and planning.?
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Banks face twin perils from physical and transitional climate effects. Extreme weather threatens assets directly. Policy shifts covering the associated economic pivot also create uncertainty.
Firms must stress test exposures across portfolios, infrastructure, customers, and beyond. Chronic issues like flooding may force geographic or sector credit reevaluations. Value chain emissions rules could likewise strain industries mid-transition.
The NYDFS wants climate plans reflecting robust risk management principles. That includes board oversight, concrete policies and controls, enhanced data collection, and three-lines-of-defense checks.?
Banks should consider climate impacts alongside other financial vulnerabilities. Strategies should also evolve continuously as predictions and monitoring improve.
By centralizing more granular climate data, models can better quantify risks across time horizons. Firms then deploy targeted mitigations where concentrations appear concerning over years-long transitions.?
Rather than mandate climate program specifics, regulators intend the principles as goalposts for self-driven progress. But the NYDFS will solicit structured feedback from banks in 2024 on adoption challenges.??
Climate policy continues maturing across states as federal action lags. How oversight gets ultimately codified remains undetermined amid disputes over appropriate roles.
For now, New York forges ahead pressing banks to take ownership of resilience strategies. But flexibility allows customization suiting individual risk appetites.
The guidance gives institutions leeway on pacing. But urgency continues building to address financial stability threats from climate shifts growing costlier by the year.
Cryptocurrency Exchange OKX Adopts UK Investor Protection Rules
The crypto trading platform OKX unveiled new compliance measures this week for its UK-based users. The changes intend to satisfy impending local regulations aimed at boosting consumer protections.
Starting January 9th, OKX customers must complete mandatory questionnaires before trading certain tokens. One survey covers understanding risk disclosures, while another evaluates individual appropriateness for volatile crypto investments.
In October 2023, OKX began reducing its token listings in preparation for the updated UK Financial Conduct Authority (FCA) crypto asset regulations also taking effect next week. Rival exchange Binance made similar moves to comply.
The FCA requires robust due diligence by exchanges to validate investor sophistication. Stringent warnings now feature prominently on OKX’s interface as well. Users unable to prove grasps of crypto volatility risks face account restrictions or closure.
Like global counterparts, UK regulators aim to bring crypto norms closer to traditional finance standards. That includes mandated transparency around product dangers to protect retail investors.
OKX fully committed to meeting local compliance regulations despite burdens on expansion. Similar jurisdiction-by-jurisdiction concessions continue posing hurdles as the exchange pursues licenses enabling global offerings.
But critics argue the UK FCA lacks competency properly overseeing exotic crypto markets. And oversight inconsistencies abroad still create opportunities for regulatory arbitrage.
Nonetheless, the staunch warnings represent a milestone in crypto's reputational stabilization. OKX and Binance hope improved governance earns more public trust - and eases the detective stance of wary authorities in the process.
A strong first episode of the Governance Matters Podcast, featuring two topics that will be top of book for many in GRC throughout 2024: Climate and AI
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