The Canadian Regulatory Investment Organization (CIRO) has unveiled its 2025 Annual Compliance Report, and one thing is clear – it is looking ahead to keep pace with the rapid evolution of technology and the fast-paced nature of digital innovation.
The report highlights key areas that demand the attention of investment and mutual fund dealers, including cybersecurity, third-party risk, and social media. Firms must recognize the shifting nature of these risks and take the necessary steps to strengthen their compliance frameworks accordingly.
Controls for cybersecurity
Cybersecurity is no longer just an IT issue, it is a core business risk area that can directly impact operations, clients, market stability, and a firm’s reputation. CIRO’s 2025 report highlights the rise in cybersecurity incidents, particularly those linked to third-party service providers. To mitigate these risks, CIRO advises firms to:
- Assess and enhance controls: Regularly evaluate and strengthen measures to protect both client data and the firm’s critical systems
- Comprehensive training: Equip all personnel with the knowledge and skills to identify and respond to cybersecurity threats effectively
In addressing these concerns, firms can significantly reduce the likelihood of falling prey to the more sophisticated breaches we are increasingly witness to. Firms will find themselves vulnerable to a range of risks and subsequent regulatory penalties if they do not implement these protocols.
Thorough management of third-party risks
The interconnectedness of the current financial ecosystem means that third-party service providers play a vital role in daily operations. However, firms relying on an increasingly complex web of services and providers introduces potential risks. CIRO outlines firms must conduct:
- Due diligence: Carry out thorough evaluations of third-party vendors before engagement to ensure they meet the firm’s security and compliance standards
- Ongoing monitoring: Regularly review and assess the performance and risk profiles of third-party providers to promptly identify and address emerging issues
Through implementing these practices, firms can manage third-party risks effectively, guaranteeing external partnerships do not compromise client trust or operational integrity.
Spotlighting social media
Social media has become an indispensable tool for client engagement and marketing for many firms. However, regulators have increasingly set out new expectations around its compliant use. CIRO has recommended that firms treat social media with the same compliance rigor as traditional communications channels:
- Create clear policies: Define guidelines for social media use in business contexts, ensuring that all communications adhere to regulatory standards
- Archiving and recordkeeping: Retain records of all client communications conducted via social media platforms to comply with regulatory obligations
- Regular training: Educate employees on the appropriate use of social media, emphasizing the importance of compliance and the potential risks of misuse
By following these guidelines, firms can leverage the benefits of social media while protecting the interests of their clientele, social media users, and their own reputation.
Meeting recordkeeping obligations
In its report, CIRO highlighted the need for comprehensive documentation to maintain detailed records of all business exchanges, financial affairs, transactions, and communications. Alongside this, firms must implement policies to ensure data is stored securely and is easily accessible and retrievable upon request from regulatory bodies, especially as data completeness is becoming a growing expectation from regulators.
CIRO is perhaps following suit from its U.S. counterpart, the Securities and Exchange Commission (SEC), in that it places value and importance on effective recordkeeping. Both bodies are zeroing in on cybersecurity vulnerabilities, and digital communication risks. North American firms must seek to align their compliance strategies to meet expectations on both sides of the border.
