Advancing internal/intragroup agreements to the same level of rigor as external third party partnerships

Advancing internal/intragroup agreements to the same level of rigor as external third party partnerships

Q1: John, thank you for taking the time to speak with us. Please can you tell our readers a little bit about yourself, your professional experience, and your current focus?

It is a pleasure to participate in this program and share ideas and concepts with fellow thought leaders.

I have been in the FI industry for more than 40 years and had the opportunity to work for great organizations and manage both domestic and international programs covering AML, KYC, Anti-Fraud; Investigations & Forensics and Vendor & Third Party Risk.

I recently joined the Neo Group Inc. team where we provide a full range of Sourcing Advisory support to buy side companies covering Global Talent, Automation/RPA, Analytics, Process Optimization, Governance and Risk Monitoring.

Q2: You will be delivering a presentation based around advancing internal/intragroup agreements to the same level of rigor as external third party partnerships. Why is this necessary for banks to do, and why has this become an important talking point?

In addition to meeting the requirements of our regulatory partners in the areas of Living Wills and cross Legal Entity sourcing, it is critical to ensure our risk governance covers the entire, end to end sourcing chain. It is not uncommon for a single external Third Party relationship to involve downstream support to numerous bank units and businesses in multiple jurisdictions. All of which may be required to meet local “outsourcing” guidelines and protocols.

Q3: What challenges should banks be aware of when advancing internal/intragroup agreements?

While there are many control requirements to be addressed, the first step is a clear understanding of the data sets involved and confirmation from both the sending and receiving unit’s Compliance, Legal and Data Privacy managers that all laws and regulations have been reviewed and the sourcing is permissible.

Q4: Why is internal transfer pricing and ensuring fair pricing for services a key talking point?

In the US as well as other jurisdictions regulators require the banks to ensure that the pricing structure does not improperly benefit/penalize one legal entity over another.

Q5: Another important area within third party risk management is the concept of sourcing. What are your views on this and how can companies best make a decision when sourcing vendors?

Sourcing involves much more than merely moving to a jurisdiction with lower labor and operating costs. Once a decision is made to source a service or process and Legal & Compliance approval has been obtained there are many considerations:

  • Detailed analysis of using internal vs. external service providers
  • Should a captive be created or expanded?
  • Risk assessments including Concentration Risk, Readiness Risk, Retained Organization Risk and Living Wills requirements to name a few.

Q6: What forthcoming challenges must professionals concerned with vendor, third party, and supplier risk be aware of over the next 6-12 months?

The rapid expansion of AI, Machine Learning, Block Chain and RPA will require enhanced and expeditious governance and oversight programs and capabilities to match the volume and speed of transactions.

We also asked John several informal questions…

If you did not pursue your current career path, what do you believe your alternative career path would have been?

While my real desire was to play second base for the Yankees, stepping back into reality I would have pursued Law Enforcement or Education.

We would like to know on average how many emails do you receive in one day?

It depended on the role and over the years was anywhere from 50 to 300…..I am old enough to remember life before email…..my first investigation report involved a typewriter, carbon paper and white out.

What is your favourite meal and drink?

Chilean Sea Bass, collard greens and Portuguese Red Wine

How would you rate your memory? (1-10, with 10 being Excellent)

Probably an 8, however according to my wife and children it is a 2 at best.

If you were on an island and could only bring three things, what would you bring?

I assume you mean in addition to a boat? A Swiss Army Knife, salt water conversion kit and bible.