On October 16, the U.S. Securities and Exchange Commission’s (SEC) Division of Examinations announced its 2024 examination priorities.
The focus of the upcoming reviews will be significant risk factors related to information security and operational resiliency. In addition, the regulator is set to scrutinize crypto assets and emerging financial technology. Also on the probe list is regulation systems compliance and integrity, in line with the increasing global emphasis on ensuring financial regulations compliance. Additionally, anti-money laundering practices will also be under the scanner, as part of the Commission’s efforts to clamp down on illegal transfers and maintain the integrity of financial systems.
Interestingly, the expected emphasis on environmental, social, and governance (ESG) factors in the examination priorities was notably absent. This exclusion has raised questions among legal professionals and corporate leaders alike, especially considering the mounting importance of ESG factors in investors’ decision-making patterns and global regulatory trends.
The upcoming examination priorities serve as a clear indication of the SEC’s regulatory focus areas for 2024. It underscores the importance of information security and resilience amidst the rapid growth of digital finance. Meanwhile, the explicit mention of crypto assets highlights the regulator’s acknowledgement of the rising influence of digital assets in the finance sector and its commitment to establishing a legal framework for its operation.
The absence of ESG from the priorities list suggests a possible divergence from the international trend of progressively integrating ESG factors into business practices, regulations, and financial reporting. It is yet to be seen how this decision will influence the U.S. financial markets and global ESG regulatory practices.