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What Piece of Legislation Significantly Changed Your Financial Workflow?

What Piece of Legislation Significantly Changed Your Financial Workflow?

In the ever-evolving landscape of financial regulation, we've tapped into the expertise of industry leaders, including a Founder & CEO, to understand the legislative changes that have reshaped their workflows. Alongside their professional insights, we include additional answers that further illustrate the wide-ranging impact of such regulations. From the complexities of adapting to Dodd-Frank mortgage rules to the intricacies of understanding FATCA compliance, discover how financial experts are navigating and adapting to these significant changes.

  • Adapting to Dodd-Frank Mortgage Rules
  • Navigating Regulation Best Interest
  • Complying with Sarbanes-Oxley Act
  • Adjusting to GDPR Data Privacy
  • Implementing Basel III Capital Standards
  • Embracing PSD2 and Open Banking
  • Understanding FATCA Compliance

Adapting to Dodd-Frank Mortgage Rules

The Dodd-Frank Wall Street Reform and Consumer Protection Act is a pivotal piece of financial legislation that has profoundly impacted my workflow. This was enacted in response to the 2008 financial crisis and aimed to prevent another collapse by implementing stricter regulations on the financial industry.

One major change that I had to adapt to was the new mortgage lending rules under this act. Prior to Dodd-Frank, lenders were able to offer subprime mortgages with little regard for borrowers' ability to repay. This led to many people taking out loans they couldn't afford and ultimately defaulting, which contributed to the housing market crash.

For example, when working with a client who is applying for a mortgage, I now have to make sure they have all the necessary documents before submitting their loan application. This includes pay stubs, tax returns, bank statements, and more. It has also become more important for me to communicate effectively with lenders and stay on top of any changes or updates in the lending process.

Keith Sant
Keith SantFounder & CEO, Kind House Buyers

Navigating Regulation Best Interest

Regulation Best Interest (Reg BI) is one piece of financial legislation/regulation that changed my workflow. This came about in June 2020 and added a fiduciary duty to all scenarios of working with clients. Reg BI imposes a best-interest standard and also requires a consideration of costs.

Because it has four component obligations: care, disclosure, conflict of interest, and compliance, it has significantly changed the amount of paperwork that now needs to be provided to all clients before doing business with them. This created a bit more work on the front end to develop the additional disclosures and information that needed to be sent to clients, but once added to the e-sign component, it has become the new way of doing business.

Karen KoenigPrincipal/CEO, KK Financial Solutions

Complying with Sarbanes-Oxley Act

The Sarbanes-Oxley Act introduced sweeping changes that heightened the requirements for financial reporting among corporations. This law was enacted to protect investors by improving the accuracy and reliability of corporate disclosures. It necessitates strict financial record keeping and mandates executives to certify the accuracy of financial statements.

The act also established penalties for fraudulent financial activity. The impact on corporate governance and the added layer of transparency has significantly altered the way companies manage their financial reporting. Ensure your company adheres to these standards for a trustworthy financial environment.

Adjusting to GDPR Data Privacy

The General Data Protection Regulation, commonly known as GDPR, changed the landscape of personal data usage by organizations. This legislation put the power back into the hands of the individual, giving them control over who can collect and process their personal information. Businesses had to adapt their operations to maintain compliance, effectively managing and securing customer data, and gaining explicit consent for its use.

The operational adjustments necessary to comply with GDPR can be seen in nearly every industry that handles personal data. This legislation set a new global standard for data privacy; consider reviewing your data privacy practices to meet these requirements.

Implementing Basel III Capital Standards

Basel III significantly altered the financial scene by introducing robust capital requirements for banks. They are now required to hold a certain level of reserve capital to safeguard against economic downturns and financial crises. This creates a more stable banking system by ensuring that banks can absorb shocks arising from financial and economic stress.

The focus on risk management and adequate capitalization has contributed to a significant restructuring of the banking sector. It's crucial for financial institutions to maintain these standards to promote a solid and stable banking foundation.

Embracing PSD2 and Open Banking

The Payment Services Directive 2 (PSD2) has been a catalyst for innovation in the banking sector, ushering in the era of open banking. By enabling third-party providers to access financial information, it has paved the way for a diverse range of financial services and products. Consumers can now enjoy greater control and flexibility over their financial data, leading to tailored banking experiences.

This directive has prompted significant shifts towards a more integrated and efficient financial ecosystem. Embrace the opportunities that open banking has to offer by exploring new financial management tools and services.

Understanding FATCA Compliance

The Foreign Account Tax Compliance Act (FATCA) plays a crucial role in the international effort to combat tax evasion. By requiring foreign financial institutions to report information on assets held by U.S. taxpayers, FATCA strengthens the integrity of the global financial system.

It also necessitates certain individuals to report their foreign financial accounts and offshore assets. This has led to an increase in transparency and information sharing between countries. If you hold foreign financial assets, it may be wise to seek professional guidance to ensure compliance with FATCA regulations.

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