Heads Up with Mike Nonaka at Covington & Burling
February 23, 2023, Global Banking Regulation Review
Global Banking Regulation Review conducted a Q&A profile with Mike Nonaka highlighting his financial services regulatory career. The conversation touched upon topics such as Artificial Intelligence, ESG, understanding what matters to regulators, and the importance of having a holistic understanding of the international financial services ecosystem.
When asked what makes Covington's financial regulatory team stand out from his peers, Mike states, "I would describe our practice as a one-stop shop: we are truly a full-service financial services practice. What I mean by that is, if you look at the regulatory practice, we have people who focus on both prudential banking supervision but also consumer financial services compliance. We have deep benches in both, including former regulators in both areas who know what it's like to have been at the [Office of the Comptroller of the Currency] OCC or the [Consumer Financial Protection Bureau] CFPB, and who understand the way that those agencies make decisions. There are few competitors who offer both of those types of regulatory advice."
"But then in addition to just prudential and consumer, we also have strong practices in important areas like anti money laundering and sanctions, privacy, and many other regulatory areas that are critical for the way that banks offer products and services. And then of course we have standout transactional, litigation, and white-collar practices that work collaboratively and seamlessly across practice areas and with a global footprint. So I when I say full-service, I really do mean that it is very difficult to find a regulatory area where we can’t provide advice to a financial institution."
He continued, “But understanding the law’s not enough. You also have to understand what is currently driving banking policy – that is, what really matters to the regulators, and to be able to think from their perspective as to, 'What is important? What will push the agency forward?' So, the ability to think, not only from your client’s perspective, but other stakeholders’ perspectives, are important traits to be successful in advising clients in the financial regulatory space.”
In addition, Mike provided his thoughts about some of the most pressing issues impacting the financial services landscape.
Regarding banking and artificial intelligence, Mike states, "I think banks will be super careful about introducing AI for regulatory compliance reasons: there are use cases for AI on anti-money laundering, compliance, and being able to connect transactions and being able to generate financial intelligence and reporting. That will continue to evolve and become more and more sophisticated. It also will extend to other compliance areas."
As for ESG, Mike believes, "There's a lot of need for advice around climate at the moment in terms of the SEC rulemaking, but also what the banking regulators are doing from a prudential perspective. There's an increasing need for advice in the rapidly changing climate regulatory scheme."
"I think there's also a need for advice on different social initiatives – the “S” side of ESG. There is an increasing volume of disagreement, a real partisanship, over how to look at these types of issues and the role that climate should play in financial advice and decision making. A lot of the work we've been doing with large financial institutions in connection with ESG is helping them navigate what has evolved into a partisan issue."
Click here to read the full Q&A.
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