In today’s rapidly shifting regulatory landscape, firms are under mounting pressure to shift from reactive to proactive compliance. The days of treating compliance as a tick-box exercise are over. Increasingly, enforcement agencies demand that firms embed compliance into the fabric of operations—making traceability and connected controls central to staying ahead of risk and regulation.
According to Corlytics, traceability has emerged as a critical pillar in this transition. At its core, traceability allows firms to understand not only what action was taken, but also how, when, and why. It provides a foundation for regulatory trust by enabling organisations to demonstrate how controls are linked to regulatory obligations. With intelligent mapping, real-time updates, and structured workflows, firms can build dynamic compliance architectures that evolve in sync with regulatory change.
When traceability is embedded in the control environment, key audit questions become much easier to answer. Firms can quickly identify what controls were in place, whether they were preventive or detective, manual or automated, who was responsible, and whether those controls were kept current with regulation. Without this clarity, organisations risk non-compliance and reduced visibility into operational decision-making.
Despite best efforts, audit trail weaknesses still plague many firms. Manual processes and undocumented institutional knowledge—especially among long-tenured staff—can lead to gaps that weaken audit responses and increase vulnerability during staff turnover or system changes. Regulators, including the SEC and DOJ, now expect robust, adaptable programmes. Controls are no longer mere safeguards—they must serve as visible frameworks of integrity, transparency and accountability across financial crime, cyber, AI governance and ESG domains.
To be effective, controls must be mapped directly to the regulations they support, implemented through standardised workflows, and supported by monitoring tools that record decisions in real time. This approach also strengthens the link between policies and controls. For example, a policy on data encryption might be executed through both data-at-rest and data-in-transit encryption controls. Fragmented, siloed control frameworks reduce effectiveness—requiring consolidation and alignment to eliminate redundancies and enable multi-purpose compliance.
Well-structured controls are the operational backbone of traceable compliance. They help firms reconstruct decisions, respond confidently to regulatory reviews and build a culture of accountability. A firm leveraging connected control environments—complete with automation, alerts, and centralised data—can flag breaches as they occur and drastically cut the cost of audits.
However, traceable frameworks must remain agile. Controls are not “set and forget”; they must be tested, monitored, and updated to stay aligned with regulation. Without this, firms may face serious consequences. Meta Platforms Ireland, for example, was fined €251m for GDPR failures. Block, Inc. received a $175m fine in January 2025 for insufficient fraud protection in Cash App due to poor compliance frameworks. Likewise, Metro Bank was fined £16.68m in November 2024 for inadequate AML controls, and Starling Bank faced a £28.96m penalty over compliance breaches just a month earlier.
More recently, in March 2025, the FCA fined the London Metal Exchange £9.24m for control failings during extreme market volatility—its first action against a Recognised Investment Exchange. These enforcement actions highlight the dangers of control environments that are either too rigid or too disconnected to respond effectively.
The root of many of these failings lies in the gap between technology and governance. European and UK regulators speaking at the Pay360 conference warned of control designs that fail to align with operational risk. Compliance Corylated echoed these concerns, noting that automation alone often fails to deliver effective financial crime prevention.
As Carolin Gardner of the EBA pointed out, “Technology alone is not a system of control.” Tools must be part of a governed, structured framework that delivers measurable outcomes. A connected control setup integrates automated safeguards—like access limits—with human oversight, creating a reliable, auditable system where every step is traceable.
Ultimately, successful compliance isn’t about tech alone. It’s about the integration of people, business processes and technology. Only by treating controls as essential infrastructure—not back-office burdens—can firms build the trust and transparency regulators expect. In a world where enforcement is intensifying, those firms that embrace traceable compliance will lead the way.
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