Banks in Ireland fall short on internal audit, central bank says | EU finance ministers dismiss single "bad bank" idea | French election worries spark euro volatility
April 18, 2017
IIA Financial Services SmartBrief
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Internal Audit Watch
FINRA looks to consolidate registration rules, revise exam
The Financial Industry Regulatory Authority is seeking approval from the Securities and Exchange Commission to consolidate registration rules and revise the exam for representative-level qualification. The proposal aims to streamline National Association of Securities Dealers rules regarding "permissive" registration of internal audit employees and others not involved actively in a firm's securities or investment banking business.
Lexology/Latham & Watkins (4/3) 
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Banks in Ireland fall short on internal audit, central bank says
Shortcomings in internal audit processes have worsened problems with internal controls on reporting at banks operating in Ireland, the country's central bank said.
Financial Times (tiered subscription model) (4/12) 
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Navigating disruption through Internal Audit
48% of stakeholders want Internal Audit to reach trusted advisor status for the business—however Internal Audit appears to be losing ground in trying to keep pace with stakeholder expectations. Stakeholders, however, remain committed to wanting Internal Audit to play a greater, value-added role. How can your IA organization position itself for success?
Download PwC's 2017 State of the Internal Audit Profession
Risk Management
EU finance ministers dismiss single "bad bank" idea
EU finance ministers vetoed the idea of creating a unified EU "bad bank" to help lenders get rid of nonperforming loans, saying the distressed assets should be dealt with on a country-specific basis. The ministers instead backed the idea of creating a national asset management company that would help countries set up secondary markets for nonperforming loans.
Reuters (4/7),  Politico Pro (subscription required) (4/7) 
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French election worries spark euro volatility
The euro is encountering its strongest period of volatility since the Brexit vote, with investors anxious over the possibility of a populist victory in the forthcoming French presidential election.
Financial Times (tiered subscription model) (4/16) 
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HKEx derivatives platform to get Nasdaq upgrade
Nasdaq has extended a technology partnership with Hong Kong Exchanges and Clearing for five years and has agreed to upgrade HKEx's technology for derivatives trading and clearing next year. The upgrade includes central-counterparty clearing enhancements and addresses requirements for risk management and stress testing.
The Trade (UK) (4/11) 
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Are your risk assessments evolving with the pace of change?
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Regulation & Compliance
Sell side isn't ready for MiFID II changes, experts say
A number of asset managers and analysts say the broker-dealer sector has yet to make firm plans for pricing and reporting research fees, which they will be required to do when the revised Markets in Financial Instruments Directive takes effect in January. "This is truly a shift from an old paradigm to a new paradigm," said Julian Allen-Ellis, head of the MiFID steering committee at AFME.
Institutional Investor online (4/13) 
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Possibility of unregulated trading networks prompts concerns
European Parliament lawmakers have written to European Commission Vice President Valdis Dombrovskis, calling for a deeper probe into whether high-frequency-trading firms and banks could create unregulated trading venues under the revised Markets in Financial Instruments Directive.
Financial News (UK) (tiered subscription model) (4/12) 
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Prepare for Heightened Standards in Internal Audit
The 2017 Financial Services Exchange, Sept. 18-19 in DC, will bring together industry leaders, practitioners, and senior regulators across the financial services industry for a unique blend of interactive facilitated and informative educational sessions, stimulating dialogue, and valuable practice sharing. Register early and save.
Fraud & Ethics
FINRA overhauls rules on abuse of vulnerable clients
The Financial Industry Regulatory Authority has revised guidelines for sanctioning advisers, giving more attention to possible exploitation of clients through undue influence. Future FINRA disciplinary proceedings will be required to establish whether "vulnerable individuals or individuals with diminished capacity" were financially exploited.
ThinkAdvisor (free registration) (4/10),  InvestmentNews (tiered subscription model) (4/10) 
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FSAC eWorkshop: Fraud Auditing for Internal Auditors
Learn the basics of fraud auditing, including monitoring activities, understanding the nature of fraud and how it occurs, and, internal audit's role in detecting fraud and its common red flags. April 26-28. Earn 6 CPE credits. Register today.
Banks test biometrics for in-person verification
Human eye
(Ian Waldie/Getty Images)
Banks including USAA, Wells Fargo and JPMorgan Chase are experimenting with biometrics, including thumb, voice, iris and facial scans, for customer verification at a branch or an ATM. "In the next few years, biometrics will become mainstream for authentication and fraud detection in terms of servicing our customers," said Ryan Crowley, JPMorgan's head of branch innovation. (free content) (4/12) 
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SWIFT developing screening service to flag suspicious payments
The Society for Worldwide Interbank Financial Telecommunication is working to develop a payment screening service for deployment in 2018 after the $81 million Bangladesh heist. The service will increase cybersecurity by allowing banks to indicate suspicious payments, identify anomalies and provide real-time alerts.
Bloomberg (4/11) 
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Gauging Your Function
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IIA News
Risk cultures/culture audits
Audits of culture are rare in banking and insurance. When asked in a Financial Services Audit Center quick poll whether their stakeholders encourage culture audits, more than half said yes. Less than half, however, said they audit culture in their organizations. Download the poll results.
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Centralized testing functions
Brian Portman, EY principal, discusses the trend around centralized testing groups emerging among financial institutions and their relationship with internal audit. Hear about potential efficiencies, benefits and challenges. Watch the video.
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I do not live for what the world thinks of me, but for what I think of myself.
Jack London,
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About the IIA Financial Services Audit Center (FSAC)
FSAC is an IIA specialty center for audit professionals in the banking, asset management, and insurance sectors. FSAC advances the professional practice of auditing in the financial services industry through thought leadership, education and training events, professional guidance, and advocacy. Learn more about FSAC and how you can add the center to your IIA membership.
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