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Governance, Risk, and Compliance Handbook: Technology, Finance, Environmental, and International Guidance and Best Practices by Anthony Tarantino

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CHAPTER 41

FINANCIAL SERVICES REGULATION AND CORPORATE GOVERNANCE

Dennis Cox

41.1 THE HISTORY OF FINANCIAL SERVICES REGULATION

41.2 INTERNATIONAL REGULATION

41.3 WHAT IS THE POINT OF REGULATORY CAPITAL?

41.4 HOW MUCH REGULATORY CAPITAL IS REQUIRED?

41.5 OTHER FINANCIAL REGULATION

41.6 MONEY LAUNDERING DETERRENCE

41.7 BANKING AND THE ENVIRONMENT

41.8 THE FUTURE OF BANKING REGULATION

41.1 THE HISTORY OF FINANCIAL SERVICES REGULATION

The financial services industry has been at the center of regulation for centuries. Given this level of experience in compliance and regulation, it would be nice to be able to say that regulation was generally well thought through and fit for purpose. Unfortunately, this is generally not the case.

Regulation within financial services is generally the result of a knee-jerk reaction to an acknowledged problem that is perceived to be facing the industry. There are generally two forms of financial regulation; that enforced by legal sanction and that imposed with the general support of the regulated, but without sanction—the so-called self-regulation option.

What tends to happen is that the industry perceives some kind of issue and then works as a group to design some form of voluntary standard that the market is willing to accept. This normally works fine until such time as something goes wrong; then the legislature tends to think that legislation is the only reliable option. So we tend to get these irrational movements in financial regulation, often designed ...

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