For Release on Delivery
Expected at
2:00 p.m. EDT
on Tuesday
March 6, 2001
FINANCIAL SERVICES
REGULATORS
Better Information Sharing
Could Reduce Fraud
Statement of Richard J. Hillman
Director, Financial Markets and
Community Investment
Testimony
Before the Subcommittee on Oversight and Investigations
and the Subcommittee on Financial Institutions and
Consumer Credit, Committee on Financial Services
House of Representatives
United States General Accounting Office
GAO
GAO-01-478T
GAO-01-478T
Summary
Financial Services Regulators: Better
Information Sharing Could Reduce Fraud
Page 1
GAO has long held the view that financial regulators can benefit from
greater information sharing. We have previously reported on the potential
for rogues, as highlighted by Martin Frankel's alleged activities, to migrate
between different financial services industries. In addition, a more
integrated financial services industry as envisioned by the passage of the
Gramm-Leach-Bliley Act highlights the need for strong information-sharing
capabilities among financial services regulators.
This statement focuses on: (1) systems used by financial regulators for
tracking regulatory history data, (2) regulatory history data needed to help
prevent rogue migration and limit fraud, (3) criminal history data needs
among financial regulators, and (4) challenges and considerations for
implementing an information-sharing system among financial regulators.
Systems used by financial regulators for tracking regulatory history
data are operated and maintained separately in the insurance, securities,
futures, and banking industries. Each industry operates systems and
databases that provide background information on individuals and
entities, consumer complaints, and disciplinary records within that
industry. Within the insurance, securities, and futures industries, this
information is largely centralized. In contrast, such systems and databases
are decentralized among regulators within the banking industry.
Regulatory history data needed to help prevent