Compliance Officers do their job on “paper”. Whilst today this “paper” might be word, excel or email, it’s still far from the perfect tool for the job. Today I am going to tell you about one of Cable’s key product features; the Paper Trail. Hopefully you’ll agree that our Paper Trails are a better kind of paper trail.
The Problems with Manual Assurance
Financial institutions are required to do independent testing of their financial crime controls, to understand if they are working as expected, and are effective. As we have written about before, this is currently almost impossible to know, so it’s no surprise that Compliance Officers face a number of problems today:
- Understanding the true size and impact of any issue is very hard. When did it first arise? How many accounts are impacted? Has the same thing happened before?
- Communication about the remediation of an issue is most often done in Slack, Teams or email, which makes it hard to track, follow, and audit.
- Tracking the outcomes of remediation projects is entirely manual, relying on people to remember which excel file, word document or email the latest communication happened in. And even if you can find the right document, does the outcome impact your overall financial crime risk? Is there future work that needs prioritizing? How is that all tracked?
- Summarizing and reporting on issues and remediations is a memory game. Any management information has to be created separately, and getting the right message in front of stakeholders is very hard.
Introducing Automated Assurance
Cable provides automated financial crime assurance. We do this by taking in customers’ data and monitoring it for Breaches, Failures and Risks.
A Failure is a failure of controls, where those controls go beyond the regulatory requirements.
A Risk is any trend, change or anomaly in the data that could indicate that the financial crime controls are not working as effectively as they could be.
When we identify a Breach, Failure or Risk, we automatically generate a Paper Trail. This is a tool that allows Compliance Officers to take action on the issue, understand the true size of the problem, keep track of all remediation steps, communicate with their teams, and much more.
Our Solution: Removing the Paper from the Trail
Real Time Alerts
Thanks to our automated monitoring activity, we are able to raise issues as soon as Breaches, Failures or Risks are identified. When that happens, a new Paper Trail appears in the “New” section of the Paper Trails page. The first major win for Compliance Officers is that they can get a real time understanding of their financial crime risk.
Complete Information about the Type and Size of the Issue
A Paper Trail shows the type of issue that has occurred, the financial crime framework area it relates to, what exactly has happened, and the number of accounts impacted. You can immediately take action by assigning ownership of the issue to a teammate, and setting a priority.
In addition, all Paper Trails about the same type of Breach, Failure or Risk are linked to each other. From a single Paper Trail, you can immediately navigate to previous Paper Trails of the same time. This is actually such an exciting development that we are going to write a whole separate blog about what we call Repeat Issues!
When a Breach, Failure or Risk occurs, one or more customer accounts will be impacted and action needs to be taken to remediate them.
In a Paper Trail the list of those accounts is easily navigable through an account-status-based filtering system. This list is used to keep track of the review and remediation processes that happen outside Cable. Every account can be moved to different stages (Unreviewed → In Review → Remediated OR No Remediation). Each account’s events timeline, inclusive of the action and the user associated with it, is stored and shown in the account drop down.
Good communication is critical during any remediation activity, and auditability is crucial when it comes to keeping track of and reporting about that activity. The Paper Trail timeline enables you to leave comments and tag people for more effective communication.
Once the Trail is ready to be closed, the user must leave a closing comment and log whether all the accounts have been remediated and if the root cause of the issue has been resolved.
If all accounts have been remediated and the root cause is fixed, closing a Paper Trail is straightforward. When not all the accounts have been remediated, or if the root cause has not been fixed, we inform the user that closing the Trail involves risk accepting that this issue could happen again. In any case, when a Trail is closed, its outcome is stored and displayed as its latest event.
Information about how many issues have been risk accepted, which areas of the financial crime framework are taking on the most risk, and whether risk is being taken on for Breaches or Failures all flows through to the Dashboard. The Dashboard is our automated management information feature, which we’ll write about soon.
Manual assurance is not efficient or effective. By introducing automated assurance, we knew we had to get Compliance Officers out of excel and word, and we think that Paper Trails is a great alternative. Compliance Officers finally have all the information they have previously lacked, but also the tools and tracking needed for better stakeholder communication. Once you start using Cable’s Paper Trails, going back to paper will be very difficult.