Compliance Breach Fines Down in 2021 for Financial Services but Challenges Remain

Compliance challenges and associated fines impact many financial services institutions every year, even the most mature ones. That’s why I was surprised when I recently saw a report citing that global financial institution penalties actually declined in 2021, with the total number of fines levied against financial institutions globally for compliance breaches at around 175 compared to 760 in the same period in the previous year.

While less fines overall may be great news for the financial services community, it’s also likely that the pandemic caused some regulatory investigations to be hindered by limited on-premises visits in the last two years, which could have artificially deflated 2021 fines. That said, I tend to believe compliance challenges are still very prevalent. Based on anecdotal evidence and interactions with some of the largest financial institutions, it seems many are still far from satisfied with the institutional governance, risk and compliance solutions, and related programs throughout the industry today.

With even a single incident potentially costing an organization millions, having the right evolved compliance approach—including simple fixes that a number of organizations overlook—can significantly mitigate the risk of fines.

A Hyper-Focus on Compliance – 3 Key Approaches for 2022

Without a doubt, compliance efforts at most financial services organizations are vigilant and ongoing, but even then, they can often fall short in critical regulations and standards, like with the Payment Card Industry Data Security Standard (PCI DSS) validation processes. So, what can institutions do to improve their effectiveness? The following three proven approaches are key discussion points to include in regular compliance team planning sessions:

• Have the proper detailed visibility into audit risk vectors in place – Small problems can stay hidden until it’s too late. And when that happens, your auditors may have already imposed costly fines or assigned tedious proof-of-compliance work. By visualizing your applications as a whole, you can quickly find, isolate, and resolve issues before they become bigger, no matter where the problem resides. Ensure you’re covering key compliance logging components via vendor integrations with SIEM vendors or other third-party log aggregators. For example, F5 easily integrates with Splunk’s single-pane-of-glass view.
• Reach out to vendors and partners for support – Many are familiar with symbolism regarding the strength of a single arrow vs. a bundle of arrows, popularized by many cultures including the Iroquois North American Indian tribes. Essentially, it illustrates the concept of “better together.” Regarding compliance, the right support/expertise from vendors and partners can guide you to create the critical standards and procedures required to best prepare your organization for audits of all types. They can even often be by your side during auditor meetings to help drive compliance topics deeper.
• Deploy out of the box, compliance-ready solutions – Auditors expect a higher degree of cyber maturity from financial services institutions. Checking the compliance boxes is often not enough. The right vendor has solutions that are purpose-built to drive a high level of cyber maturity in your organization, impressing the auditors, and therefore minimizing the friction and stress caused by audits.

Following the three approaches above can maximize your compliance efforts and have serious impacts on your institution’s bottom line, including mitigating your risk of costly fines and failed compliance audits, which can lead to six months of remediation work, added expense, and another audit. Trusted vendors like F5 who have a proven track record in streamlining the audit process for financial services institutions can help.

To learn more, explore F5’s Banking and Financial Services compliance solutions or contact your F5 representative.

(Authored by: Rick Jorolemon, Solutions Engineer, Financial Services, F5)