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U.S. vs Europe: Navigating Regulatory Expectations Across Borders
The global financial ecosystem is increasingly interconnected, but the regulatory frameworks that govern it often aren’t. When firms operate across both U.S. and European markets, the challenge becomes less about the rules themselves and more about the differences in approach, enforcement, and interpretation. Having consulted with organizations navigating both worlds, I’ve come to appreciate how nuanced cross-border compliance can be—and how it can be turned into a competitive advantage when handled thoughtfully.
Let’s start with what they have in common. Both the U.S. and Europe demand rigorous controls around risk management, data privacy, anti-money laundering (AML), and operational resilience. But the way these themes are implemented and enforced can vary dramatically.
1. Regulatory Philosophy: Rules-Based vs Principles-Based
In the U.S., regulatory agencies like the Office of the Comptroller of the Currency (OCC), Federal Reserve Board (FRB), and Securities and Exchange Commission (SEC) adopt a rules-based approach. Regulations are specific, and deviations come with clearly defined penalties.
Contrast this with Europe, where regulators like the European Central Bank (ECB) and Financial Conduct Authority (FCA) operate on a principles-based model. Under frameworks like MiFID II and CRD IV, firms are expected to meet broad outcomes, but how they do so is left to interpretation.
Lesson: In one engagement, I advised a Caribbean bank expanding into Europe. They were used to U.S.-style playbooks and sought detailed checklists. But in London, they had to adapt—demonstrating how their controls aligned with the Senior Managers and Certification Regime (SMCR) and FCA’s Treating Customers Fairly principles. We built governance dashboards using ServiceNow GRC to map control effectiveness to regulatory outcomes, providing the transparency the FCA valued.
2. Data Privacy: GDPR vs U.S. Patchwork
In Europe, data privacy is governed by General Data Protection Regulation (GDPR), a sweeping regulation that applies across EU member states. In contrast, the U.S. has a fragmented framework, with laws like CCPA (California), GLBA, and HIPAA applying based on jurisdiction and industry.
Lesson: A U.S.-based fintech client of mine, with operations in Paris and Berlin, had to completely revamp their customer onboarding workflows. We implemented OneTrust for consent tracking and automated Subject Access Requests (SARs) using Salesforce Service Cloud, reducing risk and increasing customer trust.
3. Anti-Money Laundering (AML): Scope and Reporting
Both regimes require strong AML programs, but the enforcement is more aggressive in the U.S., particularly under FinCEN and the Bank Secrecy Act (BSA). Europe aligns through 4AMLD and 5AMLD, but reporting thresholds and enforcement rigor can differ.
Lesson: While consulting for a bank operating under both regimes, we used Actimize AML to streamline transaction monitoring and SAS AML for intelligent alert prioritization. We adjusted rulesets regionally and created a crosswalk between Suspicious Activity Report (SAR) requirements in the U.S. and STRs in the EU.
4. Operational Resilience and Recovery Planning
U.S. regulators now expect banks to integrate Operational Resilience into their Recovery & Resolution Planning (RRP) processes—especially under OCC Bulletin 2019-64 and FRB expectations. Europe mandates resilience under DORA (Digital Operational Resilience Act) and EBA Guidelines on ICT and security risk.
Lesson: At a prior institution, we centralized BCP and resilience planning across regions using Fusion Framework System. It helped standardize risk appetite statements, impact tolerance thresholds, and crisis playbooks. This not only ensured compliance but created a proactive resilience culture across both jurisdictions.
5. Best Practices: Bridging the Divide
Here’s what we’ve learned from working on both sides of the pond:
- Harmonize Where You Can: Use tools like MetricStream, Archer, or LogicManager to unify risk taxonomies and reporting standards.
- Customize Where You Must: Accept that some requirements can’t be harmonized. Build region-specific controls where needed.
- Invest in RegTech: Automate regulatory horizon scanning with tools like Thomson Reuters Regulatory Intelligence or Wolters Kluwer OneSumX.
- Cultural Adaptability Matters: The success of any framework lies in how well it’s embraced. Train teams on both U.S. and EU expectations, not just the rules but the “why” behind them.
Final Thoughts
Navigating regulatory expectations across U.S. and European borders isn’t about choosing sides—it’s about understanding both. The best firms use these differences as opportunities to elevate their governance, sharpen their risk posture, and foster international credibility.
And if you’re still building those bridges? Don’t worry. We all start somewhere.
About the Author
Laksh Vaswani is a global financial services executive and regulatory advisor who has helped institutions navigate complex regulatory environments across the U.S., Europe, and the Caribbean. A best-selling author and International Achievers Award winner, Laksh specializes in operational transformation, risk governance, and cross-border compliance. Connect with him on LinkedIn or visit www.lakshvaswani.com for insights and advisory services.
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