Redefining Compliance: A Blueprint for Success in a Dynamic Regulatory Landscape

By Gia Milo-Slagle, Director of Product Management at StarCompliance

Key Takeaways:

• In 2024, financial institutions faced unprecedented regulatory scrutiny, with over 120 enforcement actions from major agencies, underscoring the urgency for robust compliance measures.
• The sector is grappling with complex challenges such as insider trading risks, evolving cryptocurrency regulations, and rigorous employee oversight.
• Proactive compliance strategies that integrate advanced RegTech solutions and cultivate a culture of adherence are key to transforming risk management into a competitive advantage.
• Future-proofing compliance through continuous technological innovation, policy updates, and employee training is essential for navigating an ever-evolving regulatory landscape.

The financial services sector is navigating a whirlwind of regulatory transformations, placing institutions under unprecedented regulatory scrutiny. In 2024 alone, the industry’s four top watchdogs — the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Consumer Financial Protection Bureau — issued over 120 enforcement actions, lawsuits, and complaints against banks of all sizes. The OCC, for instance, took 36 formal enforcement actions, more than triple its activity in 2023. These figures underscore the urgency for financial institutions to rethink their approach to compliance.

With penalties ranging from costly fines to irreparable reputational damage, the stakes have never been higher. The key to staying ahead lies in modern, innovative compliance strategies that go beyond simply meeting regulatory mandates. By leveraging advanced tools and fostering a culture of adherence, financial institutions can transform compliance from a reactive necessity into a competitive advantage.

Key Regulatory Challenges for Financial Institutions

Financial institutions today face a maze of regulatory requirements, each carrying significant operational and reputational risks. Among the most pressing issues are insider trading risks, evolving compliance standards for cryptocurrency trading, and the persistent challenge of supervising employee activities. These complexities demand not only adherence to existing rules, but also vigilance in adapting to new regulatory pressures.

A recent case underscores the consequences of compliance failures. In October 2024, ViewTrade Securities faced a $40,000 fine from FINRA for inadequate supervision of its employees’ external brokerage accounts. The firm’s failure to maintain proper oversight, as mandated by FINRA’s Rule 3110(d), exposed critical gaps in its compliance program. This oversight included missed opportunities to detect trades that might violate insider trading and anti-manipulation rules, serving as a reminder of the critical value of robust supervisory systems.

Beyond individual cases, financial institutions must contend with a dynamic regulatory environment that often lags behind technological and market innovations. This creates a dual challenge: remaining compliant with current standards while preparing for emerging risks. Addressing these issues requires institutions to reimagine compliance as a strategic priority, not just a regulatory obligation.

Proactive Compliance: Staying Ahead of Regulatory Pressures

Staying ahead of regulatory challenges requires a proactive, forward-thinking approach that integrates technology, training, and strategic oversight. Modern compliance strategies rely on advanced tools and systems that help organizations preempt risks and ensure adherence to complex regulations.

One such approach involves leveraging regulatory technology (RegTech) solutions to streamline compliance processes. These tools automate tasks like monitoring employee trading activities, reviewing account statements, and flagging potentially risky behaviors through data analytics. For instance, specialized conflicts of interest platforms simplify supervision by automating the collection and review of account activity, detecting concerning patterns, and maintaining a robust audit trail for regulators. This reduces the likelihood of violations while freeing up resources to focus on strategic initiatives.

A strong compliance strategy also hinges on fostering a culture of adherence within the organization. Regular training and education ensure that employees understand critical policies, such as those governing Material Nonpublic Information (MNPI). Compliance teams must also provide clear guidelines for disclosures, including the proper use of social media and communication channels. By doing so, they mitigate risks while empowering employees to act responsibly.

Ultimately, proactive compliance transforms risk management from a reactive function to a competitive advantage. It allows financial institutions to navigate today’s complex regulatory environment confidently, reducing exposure to costly fines and reputational damage while staying agile in the face of change.

Future-Proofing Compliance Programs

As the regulatory landscape continues to shift, financial institutions must prepare for emerging challenges by adopting strategies that facilitate long-term resilience. Future-proofing compliance programs requires a keen focus on technological innovation, policy updates, and continuous education.

One of the most pressing trends is the regulation of cryptocurrency trading. With the EU’s MiCA regulation taking effect in December 2024, firms must implement systems to manage conflicts of interest and ensure compliance with emerging standards. Cryptocurrency trading oversight, once a niche concern, is now a critical component of regulatory strategy.

Another transformative force is artificial intelligence. AI-driven compliance tools can analyze vast datasets, identify risky behaviors, and automate repetitive tasks, allowing compliance teams to focus on strategic oversight. However, the adoption of AI must be paired with robust guardrails to prevent bias and maintain transparency. Building these safeguards will be a key priority for compliance leaders in the coming years.

To stay ahead, institutions should regularly update policies and training to address new risks. Ensuring that employees are educated on social media disclosure rules and other emerging compliance requirements is essential. Integrating compliance technology offers an additional layer of preparedness by streamlining operations and providing real-time insights into potential violations.

By embracing these strategies, financial institutions can build compliance programs that not only meet today’s demands, but also adapt seamlessly to tomorrow’s challenges. Future-proofing compliance is more than a necessity — it is an opportunity to reinforce trust and sustain competitive advantage.

Building a Competitive Edge Through Compliance

In an era of heightened regulatory scrutiny, compliance is no longer just a cost of doing business — it is a vital driver of success. Financial institutions that invest in proactive compliance strategies can reduce risks, enhance operational efficiency, and position themselves as trusted leaders in the market.

Modern compliance programs go beyond meeting regulatory requirements; they deliver actionable insights that help firms stay agile and competitive. From leveraging cutting-edge technology like RegTech solutions to fostering a culture of adherence through training and education, these initiatives enable organizations to navigate complexities with confidence. By staying ahead of trends like cryptocurrency regulation and AI-driven compliance, institutions can future-proof their operations and strengthen their market position.

The time to act is now. Financial institutions that prioritize innovation in compliance will not only meet regulatory demands, but also unlock opportunities for growth and differentiation in a rapidly changing environment.
As Director of Product Management at StarCompliance, Gia Milo-Slagle brings over 25 years of expertise in workforce management and optimization. She has a strong track record of leading U.S. and international development teams to create innovative, user-friendly solutions that enhance workforce efficiency and autonomy. Gia joined Star at the end of 2024 after a distinguished career spanning healthcare, workforce technology, and human efficacy. Most recently, she served as Senior Director of Product Management at HealthStream. She has also held leadership roles at Change Healthcare and McKesson, where she spent 28 years driving the development of workforce software solutions.