Definition ∞ Supervisory Deficiencies refer to inadequacies or weaknesses identified in the oversight and control mechanisms of financial institutions or regulated entities. These shortcomings can pertain to internal controls, risk management frameworks, compliance procedures, or reporting systems. Such deficiencies often lead to regulatory actions, fines, or operational disruptions. They indicate a failure to meet established regulatory expectations or best practices.
Context ∞ News frequently reports on supervisory deficiencies identified by financial regulators in both traditional and digital asset sectors. In the crypto space, these deficiencies often relate to inadequate anti-money laundering (AML) controls, insufficient cybersecurity measures, or a lack of clear governance structures. Addressing supervisory deficiencies is critical for firms to maintain their licenses, avoid penalties, and build trust with clients and regulators.
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