HSF’s 12-month outlook has predicted that 2017 will be the year that global regulators lean on artificial intelligence and biometric tools to strengthen enforcement powers.
According to HSF's Australian head of disputes Luke Hastings (pictured), artificial intelligence and biometric processes will significantly improve the capability of authorities to collect, analyse and respond to data.
He believes that the regulators’ ability to predict and detect anomalies in the financial space will also benefit from these new technologies.
“Regulators will demand more information and move closer to real-time surveillance. [They] have been playing catch-up with technology advancements but this will change in 2017,” Mr Hastings said.
He suggested that more stringent compliance standards will mean increased burdens for businesses, with the situation expected to affect companies worldwide.
In particular, cross-border operations can expect challenges dealing with the different investigation and enforcement approaches in each jurisdiction, Mr Hastings said. He used the example of breach reporting penalties, and how the standards of the Australian Securities and Investments Commission (ASIC) differ from the more stringent bar set by the equivalent authority in Hong Kong.
Global regulatory discrepancies will also be swayed by the entry of US President-elect Donald Trump onto the world stage, according to Mr Hastings.
“We expect to see a further divergence in strategy between US regulators and their global counterparts,” he said.
He explained that the new focus on deregulation in the US and the possibility of commercial and investment banking separation with the reintroduction of the Glass-Steagall Act are likely to result in greater regulatory disharmony around the world.
The report also warned that ASIC will turn its focus to company culture, with HSF partner Andrew Eastwood saying the body will look to culture as “an early warning sign for potential misconduct”.
“There is some political impetus for poor corporate culture to be prosecuted,” Mr Hastings said.
This is expected to be the case, even though there have been some moves away from introducing direct enforcement action for ‘bad culture’ in companies, he said.
“ASIC is expected to seek a significant increase in its enforcement abilities and the penalties it has available. We predict the regulator will succeed in its push for an increase in penalties in 2017.
“In addition, we expect ASIC will seek to significantly widen breach reporting obligations,” Mr Hastings said.
HSF released Financial Services Regulation Insights – 2017 Outlook last week.