Keeping up with banking regulatory updates is a high-impact activity for financial institutions as regulatory altering operations require a high number of human and economic resources, on one hand, and they are also high time-consuming. The expression “regulatory alerting” concerns all those operations related to the collection and analysis of the updates issued by the regulators on the financial laws, in order to assess their impact and consequently decide if and how to intervene. In recent years we have thoroughly analyzed banking compliance workflows, aiming to reconstruct a generalized and standardized process - which is available on this dedicated page of our website - representing the updating and regulatory analysis activities carried out by financial institutions. These latter, due to the huge amount of changes made to regulations, require the support of innovative technological tools capable of automating all those steps of the compliance processes that do not require human analytical and decision-making skills. And this is the goal of Daitomic, the RegTech solution that offers compliance professionals automatic and real-time regulatory updates.
In our recent blog posts we have presented different use cases on how Daitomic can concretely help compliance professionals. From ESG objectives to the “Quick fix” to MiFID II, from the changes to the CFSP relating to sanctions against Russia up to the recent update of CRD IV. Focusing on the Italian regulatory landscape, however, it is impossible not to dedicate an article to the 39th update to the Supervisory Provisions for banks - the “famous” Circular 285/2013 -, published by the Bank of Italy in recent weeks. This document has introduced important changes following the innovations brought at European level by the Directive (EU) 2019/878 (the so-called CRD V) and mainly related to two areas: the regulation of financial holding companies or mixed financial holding companies and the powers of intervention of the supervisory authorities in the context of the Second Pillar. As already specified about the update of CRD IV, the acronym “CRD” stands for Capital Requirements Directives, designating the European Directives that regulate the prudential regulations for banks and investment firms. Going instead into the merits of the 39th update of the Supervisory Provisions for banks (Circular no. 285/2013) issued by the Bank of Italy, there are two groups of provisions that have been modified, namely:
With respect to the first area (financial holding companies or mixed financial holding companies), CRD V has introduced new rules that regulate the methods of authorization and exemption from assuming the role of parent company of a banking group of the companies in question and ensure the coordination with the other authorization procedures envisaged by the sector regulations. In addition to this, the 39th update of Circular 285 also regulates, through the reference to the regulations of the parent company, the authorization procedures applicable to both financial holding companies and mixed financial holding companies other than the parent company (art. 69.1 TUB), and those at the top of foreign groups (art. 69.2 TUB). With respect to the second area (powers of intervention of the supervisory authorities in the context of the second Pillar), however, the cases in which the Bank of Italy can impose Second Pillar measures have been expanded. In particular, the BankIT document introduces a clear distinction between components of the Second Pillar capital demand estimated from an ordinary perspective and those determined from a stress perspective, in addition to the right to foresee the request for additional capital due to a risk of excessive financial leverage, in ordinary and stressful conditions. In short, the changes made by the 39th update of Circular 285 are several and highly impactful on financial institutions in the Italian banking scene.
This is why the analysis of the regulatory perimeter concerning the Supervisory Provisions for banks requires an enormous effort by financial institutions. But how can this impact analysis be carried out accurately and quickly? The answer is called Daitomic, the Aptus.AI's RegTech solution that uses Artificial Intelligence to automate some specific steps of the compliance processes - presented on this dedicated page - thanks to a standard, electronic and machine readable version of banking regulations. The latter sets the ground for an automated analysis on legal data, so as to offer compliance professionals the opportunity to focus on the decision-making and strategic aspects of their profession. How? First of all, Daitomic offers an interactive navigation of the regulations with the possibility to compare the different versions of them, in order to identify the changes introduced by any regulatory update.
Not only. Daitomic is also capable of preparing a first impact analysis on the perimeter identified by the regulations of interest, thanks to the automatic extraction of regulatory obligations and penalties relating to the regulatory update.
Finally, Daitomic also offers the possibility of connecting and cross-referencing the automatically extracted obligations with the impacted internal processes and policies, thus allowing to prepare a first impact analysis with an automated procedure. With this functionality, Daitomic completes also the last step among the most time and resource consuming ones in financial compliance processes, allowing humans to carry out the activity in which they are truly essential and that no technology can ever do for them: making the right decisions and developing proactive strategies. Are you curious to see Daitomic at work? Book a demo with a click below!