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On the CAE Agenda Q1/Q2, 2025 - Banking

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The role and focus of internal audit (IA) in banking are ever-evolving. This installment of the KPMG On the CAE Agenda series provides quick insights into what IA leaders within the banking industry may be hearing, doing, and discussing with their stakeholders across the core elements of their business agendas during the first half of 2025.

Dive into our thinking:

On the CAE Agenda Q1/Q2, 2025 - Banking

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Hot topics in IA and key focus areas for banking

  • Socio-economic environment: Inflation, competition, lack of unemployment, economic uncertainty, and geopolitical instability ongoing
  • Labor strategy, talent, and retention: Challenges in finding and retaining the right talent in key areas, operational culture change, specialized capabilities (e.g., auditing complex AI models), and potential adjustments to the overall operating model (e.g., centers of excellence)
  • Board & Audit Committee reporting: Providing real time feedback regarding effectiveness of current risk management processes including KRIs and issues resolution
  • Financial crimes: Increased focus on compliance audits around Anti-Money Laundering (AML)/Bank Secrecy Act (BSA) laws and the sanctions programs administered by the Office of Foreign Assets Control (OFAC) and other bodies.
  • Digital platforms & AI: Adoption/use of AI technologies in IA including a data-driven enterprise and IA risk assessment

    Top 5 Matters requiring IA ‘Validation’ type activities

    Financial Crimes

    Consumer Protection

    AI

    Enterprise and Operational Risk Management

    Liquidity, Recovery and Resolution

    Spotlight on:

    New administration: Regulatory insights and IA considerations

    Agency Shifts Regulatory Divergence Critical security

    Agency Shifts

    Agency Shifts

    IA should continuously evaluate the impact from changes and anticipated additional changes in regulatory agency leadership (e.g., recently announced FRB supervision, acting SEC Chairman). It is expected to likely to lead to a variety of shifts, notably including a(n) increasing focus on bolstering cryptocurrency/digital assets markets; lessening intensity of supervision/enforcement (over time).

    Regulatory Divergence

    Regulatory Divergence

    Although the banking industry will continue to be heavily regulated given its critical role in the economy, IA should monitor their banks investments in proposal/re-proposal and/or final rulemakings that are currently in process or subject to legal stay and therefore unlikely to advance. Key areas of potential change in focus will include the impact & timing of the potential de-regulatory agenda, risk complacency, and de-banking while safeguarding fair access.

    Critical security

    Critical security

    IA should consider the new administrations focus on areas of critical security and the impact to their risk assessment and audit plan including cyber & information protection, financial & operational resiliency, expansion of AI applications, and financial crimes.

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    Meet our team

    Image of Michael A. Smith
    Michael A. Smith
    Partner and US Internal Audit Solution Leader
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    Image of Anand Desai
    Anand Desai
    Principal, Advisory, Line of Business, Financial Services, KPMG US
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    Image of Brian P Higgins
    Brian P Higgins
    Principal, Internal Audit and Controls
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    Image of Michael A. Smith
    Michael A. Smith
    Partner and US Internal Audit Solution Leader
    Read bio
    Image of Anand Desai
    Anand Desai
    Principal, Advisory, Line of Business, Financial Services, KPMG US
    Read bio
    Image of Brian P Higgins
    Brian P Higgins
    Principal, Internal Audit and Controls
    Read bio

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