Smartphone usage is on the rise with an estimated 2.5 billion users around the world and 230 million in the United States alone. This high statistic unfortunately poses a great threat to compliance because it leaves financial institutions and individuals vulnerable to fraud, money laundering, bribery, and terrorism.
With these vulnerabilities, companies face risks in a variety of ways because of the large data content that the systems provide. Although this technology allows for furthered communication and interaction on the global stage, smartphone applications and other communication technologies allow for major compliance risks as well such as privacy and protection of information. For example, if an employee of a financial institution used their personal phone for work purposes or their company phone for personal use, private information could be leaked, allowing for risk.
Many applications, or super-apps, are used in China and other technology centered countries to create a one-stop-shop app that allows for many features to be bundled into one application rather than using multiple apps. Despite the convenience of super-apps, they generate issues of privacy and protection of information and payments which ultimately raises risks and leads to unsecure networks because all of the information is in one place making it more easily accessible.
To combat the risks associated with super-apps, the US Foreign Corrupt Practices Act (FCPA) was revised and a new program was initiated that will promote transparency and accountability for financial institutions. The enhancements made to the FCPA were permanently enacted in November 2017 with its main goal being the prevention of bribery and financial crime, while also giving incentives through rewards for companies to be honest about their transactions and report any FCPA misconduct. Once the policy is enforced, it will be important for companies to ensure that they do not exceed limitations on boundaries while implementing new rules.
Furthermore, technology is not an enemy but rather it could be helpful in creating new compliance tools. These managerial tools can be described as regulators because of their ability to oversee all of the laws in a code. This allows for an increase in visibility of risks and compliance technology can supervise all business activities and transactions. Technology provides automation, leaving little to no room for human error. Additionally, by automating compliance tools and due diligence systems, business activity and compliance regulation are intertwined and each process compliments each other. Because of the qualitative improvement, significant costs are decreased because less error is made.
Technology is a friend to compliance, but it must be monitored to ensure that the technological engagement is not misused.
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