The Issue: Although the Bank for International Settlements (BIS)' New Basel Accord (Basel II) focuses mostly on internationally operating banks, the principles it contains are applicable to all banks, with varying degrees of complexity and sophistication. The three main components of the Accord include enhanced disclosure, minimum capital requirements and calculation methodologies, and a supervisory review process. These also have implications as banks struggle to achieve and maintain compliance with U.S. and international financial regulations and market requirements.

RFG Recommends: Although full compliance is not mandated until 2006, to adequately address Basel II issues, IT must begin to implement systems now if the lowest reserve rate is to be achieved. IT executives should also perform a risk assessment on their current infrastructure, and formulate a strategy for compliance that takes a holistic approach to enterprise processes and procedures. Furthermore, IT executives hesitating over implementing systems now should consider the competitive advantages to be leveraged through early compliance, as such systems will need to demonstrate a history of risk monitoring in a regulatory regime.

RFG has closely followed national and international regulations, and has helped IT executives formulate effective strategies to deal with compliance and avoid penalties. RFG has also consulted with IT executives to formulate effective policies to ensure compliance within the enterprise. Contact RFG for more information via e-mail at info@rfgoline.com or call RFG at (203) 291-6900 for information.

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