In the dynamic and highly regulated financial services industry, ensuring compliance with Significant Influence Function (SIF) attestation requirements is crucial. Chief Risk Officers (CROs) must comprehend the complexities of SIF attestation, the significance of compliance, and the possible repercussions of non-compliance. Furthermore, utilising cutting-edge solutions like FinregE’s digital rule libraries and automated workflows can greatly improve compliance initiatives and reduce market risks. This blog explores these facets, offering CROs insightful analysis and useful tactics.
Understanding SIF Attestation
The purpose of SIF attestation is to guarantee that those with important influence positions in financial institutions are qualified for the roles they hold. A thorough evaluation of the person’s competence, moral character, and financial stability is part of this process.
An individual with a Significant Influence Function (SIF) role in the UK is required by the Prudential Regulation Authority (PRA) to certify in writing each year that the company’s internal models for market risk meet the standards outlined in Part 3 Title IV of the Capital Requirements Regulation (CRR) and any relevant market risk supervisory statements. The PRA’s Supervisory Statement on Market Risk, SS13/13, goes into detail about this expectation.
According to Supervisory Statement SS12/13, the PRA also mandates an annual SIF attestation for counterparty credit risk internal models.
Businesses operating within the European Union are required to make sure that their risk management and governance structures adhere to the provisions of the CRD. Additionally, member states may impose additional local attestation requirements for senior management responsibilities under their national laws.
Senior executive accountability is emphasised by US regulators like the Securities and Exchange Commission (SEC), the Federal Reserve, and the Office of the Comptroller of the Currency (OCC).
Consequences of Non-Compliance
Senior Management Function (SMF) holders are held accountable for making sure their assigned responsibilities are managed efficiently under the Senior Managers and Certification Regime (SMCR), which is enforced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). They risk regulatory penalties, such as fines, exclusion from regulated positions, or incarceration for serious violations, if they don’t fulfil their assigned duties, especially under the Financial Services and Markets Act 2000‘s Duty of Responsibility.
In the United States, senior officer accountability is prioritised by a number of regulatory frameworks, including the Sarbanes-Oxley Act (SOX) and the Federal Reserve’s Enhanced Prudential Standards for large financial institutions. Effective internal controls, risk management, and regulatory compliance are the responsibilities of senior executives. Individual fines, disqualification, or criminal charges could follow failures. Executives are also subject to obligations under the Volcker Rule and other prudential rules, and those who neglect to monitor or guarantee compliance may face enforcement action.
Senior executives must be explicitly accountable for their areas of responsibility under the Banking Executive Accountability Regime (BEAR), which is overseen by the Australian Prudential Regulation Authority (APRA). Institutions are required by BEAR to register responsible parties and make sure that important conduct standards are followed. Penalties, disqualification, or damage to one’s reputation may result from non-compliance.
The Hong Kong Monetary Authority (HKMA) established the Manager-In-Charge (MIC) Regime, which designates particular managerial positions in charge of crucial domains like finance, risk, and compliance. Regulatory action, such as public censure, fines, or prohibition orders, may follow non-compliance with these obligations.
Financial institutions are required to assign senior managers to core management responsibilities under the Guidelines on Individual Accountability and Conduct (IAC), which were introduced by the Monetary Authority of Singapore (MAS). These managers are responsible for compliance, risk management, and following rules and regulations. Non-compliance with assigned duties may result in regulatory sanctions, disqualification, or harm to one’s reputation.
Each regime reflects a global trend towards increased individual liability in financial regulation by emphasising personal accountability, transparency of responsibilities, and clear consequences for failures.
Role of FinregE in streamlining SIF Attestation process
The centralised platform provided by FinregE is intended to streamline and improve the administration of regulatory requirements. It offers a thorough archive of all relevant regulations, guaranteeing senior management and compliance teams have clear accountability. The solution streamlines the entire SIF attestation process by integrating interconnected workflows, allowing businesses to assign responsibility for attestation to the right people and systematically assess regulatory compliance. It creates ready-to-send reports for regulators to verify compliance and allows businesses to efficiently perform attestations against pertinent rules.
FinregE's Automated Workflows: A Game-Changer for SIF Attestation
FinregE offers a comprehensive solution to streamline the SIF attestation process and mitigate associated risks. Their SIF Attestation Workflow feature provides a robust platform for managing the entire attestation lifecycle. Here’s how it works:
- Rule-Based Self-Assessment: Users can initiate and conduct self-assessments on individual or multiple rules sourced from FinregE’s digital rule libraries.
- Firm-Specific Insights: The system allows for the incorporation of firm-specific interpretations, data judgments, and approaches, ensuring attestations are tailored to the institution’s unique context.
- Automated Submission: Self-assessments can be automatically sent to regulators, reducing manual effort and ensuring timely compliance.
- Governance and Approval Framework: The workflow facilitates a structured process for review and approval throughout the attestation journey.
- Collaborative Team Engagement: The platform enables team collaboration by allowing users to invite colleagues to participate in the workflow.
- Task Tracking and Timelines: Detailed timelines for actions, approvals, and renewals help monitor progress and ensure timely completion of tasks.
- Commentary and Review Features: The system tracks changes, provides commenting capabilities, and manages assessments for effective collaboration.
- Interactive Dashboards: CROs can gain insights into workflow progress and compliance status through intuitive dashboards and reporting tools.
- Audit Trail and Version History: A comprehensive audit trail maintains historical records of all actions and edits, ensuring traceability and accountability.
- Gaps and Enhancements Management: The system helps identify, record, and track compliance gaps and areas for improvement.
Leveraging Digital Rule Libraries to Enhance Market Risk Mitigation
FinregE’s Digital Rulebooks complement the attestation workflow by providing a centralized, machine-readable repository of global regulations and laws. This innovative solution offers several benefits for SIF attestation and overall risk management:
- Comprehensive Regulatory Coverage: The library covers rules from multiple jurisdictions, regulators, and reporting templates.
- User-Friendly Compliance Controls: Users can easily mark rules as Applicable, Read, or Operative to manage compliance status.
- Ownership and Accountability: Clear assignment of rule ownership ensures accountability throughout the organization.
- Cross-Referencing Capabilities: The system facilitates cross-referencing of related rules for consistent interpretation and application.
- Integration with Internal Documentation: Firm-specific Document Reference Text can be integrated against rules, bridging the gap between regulatory requirements and internal processes.
- Real-Time Updates: FinregE’s Horizon Scanning module ensures the rule library stays current with the latest regulatory developments.
Mitigating s166 Risks with FinregE's Solutions
By implementing FinregE’s Digital Rulebook Solution and SIF Attestation Workflow, financial institutions can significantly reduce the risk of triggering costly s166 reviews. The platform promotes:
- Strategic Transparency: Enhancing visibility into regulatory compliance processes.
- Real-time Compliance Monitoring: Allowing institutions to stay ahead of regulatory changes.
- Efficient Internal Oversight: Reducing reliance on external interventions.
- Cost Control: Managing regulatory obligations more efficiently to avoid unnecessary s166 interventions.
Conclusion
In an era of increasing regulatory complexity, CROs must leverage advanced technologies to ensure compliance and mitigate market risks. FinregE’s automated workflows and digital rule libraries offer a comprehensive solution for streamlining SIF attestations, enhancing regulatory compliance, and reducing the risk of costly interventions. By adopting these innovative tools, financial institutions can navigate the regulatory landscape with greater confidence, efficiency, and accuracy. Book a Demo today!
