#regtechanalysis

Smith believes regtech companies like hers provide a less trumpeted but equally important benefit to the industry: trust-building.

“Customer expectation is growing in reaction to what has gone on in the past. People are going to expect far more transparency in their financial dealings with companies. There will come a point where people will expect to have a copy of the conversation they’ve had, and we can do that.”

The pace of change and the bewildering amount of regulation globally is only going to increase. There are 90 regulators worldwide issuing more and more rules, presenting businesses with new challenges on a regular basis.

“The regulatory landscape is changing all the time,” says Anderson. “In the US it’s slowing down, here we’ve just had GDPR, then there’s a lot of complexity on a geopolitical level, and around the corner with Brexit. If you look at a major bank that’s trading in the UK and the EU, there’s a presumed layer of complexity that we might need to adhere to dual or parallel regulation.”

https://www.theguardian.com/legal-horizons/2018/nov/15/the-regtech-boom-how-the-financial-crash-spawned-a-new-industry-in-the-city

Datarama is also part of the global RegTech 100 for the second year running.

Singapore regtech platform Datarama won the RegTech Award for Best Anti-Money Laundering Solution at the Regulation Asia Awards.

The announcement comes as Datarama was also named in the global RegTech 100 for the second year in a row, an annual list of 100 of the world’s most innovative RegTech companies.

“Datarama was the winner for its technology-enabled interactive mapping and cross-checking tool, which gathers data from specialised media, deep web sources and official records to visualise key relationships, unearth obscure information and highlight hidden associations, thereby helping firms to fast-track KYC, due diligence and deal identification,” Regulation Asia’s Award announcement said.

The award recognises firms that are playing a leading role in developing emerging technologies to meet regulatory requirements.

“We developed our regtech platform with the objective to leverage big data and technology to revolutionise the compliance and due diligence space. These awards are a recognition of our achievement in making due diligence and compliance in cheaper, faster and more efficient,” commented Raphael Bouzy, CEO & co-founder, Datarama.

Datarama was recently chosen by Oracle to share its expertise on regtech as part of last week’s Singapore Fintech Festival, the world’s largest FinTech event. Over 30,000 delegates attended the event organised by The Monetary Authority of Singapore (MAS) in partnership with The Association of Banks in Singapore.

The RegTech Association (RTA) has announced the appointment of a new CEO and two board members: leading advocacy expert, Deborah Young as CEO; Commonwealth Bank’s (CBA) Head of Governance & Assurance, Jasper Poos as Director and serial RegTech entrepreneur, Harold Lucero as Director.

The RTA brings regulators and regulated entities together to improve efficiency, productivity and safety of business and financial systems - through the adoption of RegTech. These three new appointments will help the RTA deliver on its mission of building higher performing, ethical and compliant businesses through RegTech innovation and investment.

Commenting on the three appointments RTA Chairman, Julian Fenwick said: “We are very pleased to announce these new appointments. We are cognisant of the need to ensure that our board has representation from both RegTechs and Regulated entities, and these new board members provide just that. Our new CEO and board appointments bring together a range of balanced perspectives to help the association accelerate the adoption of RegTech in Australia.”

Deborah Young brings over 20 years of financial services advocacy experience and assumes the role of CEO from her previous position as the General Manager of the RTA. She has a track record in building industry engagement programs from the ground up, including accreditation programs, Environmental Social and Governance (ESG) and diversity initiatives in venture capital/private equity, insurance and superannuation.

Deborah Young said: “It is an honour to be confirmed as the RegTech Association’s first CEO. The growth and awareness of the association’s work continues to build, and I am very excited to be able to lead in the implementation of the next phase of the strategy. We have already begun the roll out of our RegTech AML Boot Camps which underline our values to educate, connect and collaborate. I’d like to thank the board for this opportunity and look forward to working with all members in pursuing our goals.”

RTA Chairman, Julian Fenwick added, “It is especially pleasing to announce Deborah Young as the RegTech Association’s first CEO. Deborah’s passion and expertise in mobilising and operationalising industry-wide impact initiatives made her the clear and logical choice to take the association forward through its next phase. We are excited to work with Deborah and look forward to having her leadership in driving the organisation into the future."

Jasper Poos brings a wealth of global compliance experience both from the regulated entity and regulator perspective. He has been involved in the RegTech Association in an advisory capacity since its foundation in 2017. He is currently Head of Governance and Assurance for CBA in a role that covers operational risk and compliance across the bank’s institutional banking and markets business.

Global professional services firm, PwC has acquired KYC-Pro, a regtech solution, from boutique financial services compliance firm, FSCom Limited, for an undisclosed amount.

The move comes as part of PwC’s plans to bolster and expand its regulatory compliance offering. Research shows that by 2020, European banks will spend more than EUR1 billion annually on their KYC management.

KYC-Pro enables customers to access to over 127 million companies worldwide, conduct individual AML checks across more than 20 countries, and cross reference potential customers against international PEPs and Sanctions lists. It also boasts meticulously designed APIs and a user-friendly dashboard which improve the customer experience.

Unlike most RegTech solutions, KYC-Pro has been developed by compliance experts. Combining FSCom’s deep knowledge of financial services regulation with the best databases and intuitive technology, KYC-Pro ensures customers meet their regulatory requirements in the most effective way possible.

FSCom has developed a reputation for delivering unrivalled compliance advisory services to financial services companies across the UK and Ireland, particularly those operating in the payment services and e-money sector.

Regulatory technology has the potential to continually monitor transactional activity and persons, provide close to real-time insights and raise red flags, and identify aberrations that human beings with their better sense of intuition can then use to follow up. Automated analysis plus human judgment can help a regulated business get a clearer picture of risks facing them and recalibrate immediately — rather than simply taking the remedial action after the enforcement occurs.

Firms should have detection controls in place that alert the compliance department when certain types of trades are being executed, or even better (especially for certain types of trades and for certain traders under heightened supervision), that prevent certain trades from occurring, period.

Prevention is critical, and another key method is through education. Regular training — a form of regtech in itself — should refer to the possible consequences of trading techniques that favor certain investors and fraudulently manipulate outcomes for the firm and for employees themselves, which can be persuasive.

Any brokers that firms believe to be higher risk should be placed into an effective heightened supervision plan, including more frequent contact with the broker, more frequent review of the broker’s communications with customers, and more frequent monitoring or inspection of the broker’s branch office. The same goes for risky clients and vendors, if they are even on-boarded at all.

It is imperative that the firm document all of these heightened review measures.

https://www.reuters.com/article/bc-finreg-regtech-challenges/finras-regtech-report-shows-uses-and-challenges-of-new-technology-idUSKCN1M72F8

A real look inside a bank's compliance office?

The point of regulation is to help protect society from the excesses of the free market. But when done badly, it can be burdensome, create perverse incentives and stifle innovation. Given that the advantages for the economy of having a clean and efficient regulatory environment are manifold, it is unsurprising yet reassuring that the FCA has been increasingly interested in regtech.

‘We started our work three years ago. There was this regtech term being bounded around, but when we first got involved in the market we didn't really know what it meant,’ says Nick Cook, the FCA's Head of RegTech & Advanced Analytics.

He says that now the regulator tries to play three key roles within the developing regtech sector.

The first is as a vocal participant in the market, publishing calls for input and meeting with companies and accelerator programmes to work out the ways in which the technology can be used to meet the needs of regulated firms - this involved a call for input from industry stakeholders in 2015.

The second role is as ‘a convener of new solutions’ through the hosting of tech sprints and sandboxes.

Finally the FCA is an ambassador of regtech through experimentation, research and development of its own. The regulator is piloting a series of tests to develop ‘machine executional reporting’ – in layman’s terms, writing law as code - and also looking at how machine learning technology and natural language processing technology can be implemented in the regulatory process.

'It's pretty fair to say that we, like pretty much every other regulator in the world, are still at an early phase of building this out,’ admits Cook. ‘A lot of it is still in labs and the experimental phase, but we see a myriad of potential use cases.’

This innovative attitude has had huge benefits for the UK’s place in global regtech space.

IdentityMind Global has announced the launch of its IdentityMind Webstore, an online RegTech marketplace that enables firms to integrate regulatory compliance functions directly into their solutions.

The Webstore is self-serve, allowing customers to select a “plugin,” test out a free demo and prepay with a credit card (virtual currencies and other payment methods will soon be available). The store’s plugins are easily customizable, all-inclusive RegTech solutions covering the key anti-money laundering functions (AML): know your customer (KYC), sanctions screening and transaction monitoring.

“In an industry first (demonstrating how IdentityMind continues to drive product and industry innovation), we’re excited to announce that the IdentityMind Webstore is open for business,” said Jose Caldera, chief products officer of IdentityMind, in a press release. “The IdentityMind Webstore is the perfect channel for small and medium-sized [FinTech firms], marketplaces, virtual currency exchanges, small lenders and person-to-person payment (P2P) firms to enhance their platforms.”

The IdentityMind Webstore gives small and medium-sized organizations access to necessary compliance functions that are otherwise expensive and difficult for them to implement.

The transition to cloud-based compliance is a crucial precursor to other Regtech approaches, such as AI or Big Data. Unless businesses effectively plan the correct cloud deployments, they will struggle to utilize the advanced technologies required to meet future compliance challenges.

A new study from Juniper Research has found that spending on Regtech platforms will exceed US$115 billion by 2023, up from an estimated US$18 billion in 2018. The research found that increased regulatory pressures, as demonstrated by the recent GDPR (General Data Protection Regulation) implementation, are driving businesses towards Regtech to meet greater compliance challenges.

According to the research, any heavily regulated business sector not prioritizing Regtech adoption would risk damaging fines from failing to keep pace with regulatory changes.

The report also highlighted that the sharp increase in Regtech spending (an average of 45% per annum between 2018 and 2023) was far higher than that for compliance spend as a whole (17%), reflecting the rapid migration of spend to Regtech from traditional methods.

The research, Regtech: Cost Savings, Technological Impact & Vendor Analysis 2018-2023, found that KYC checks for anti-money laundering are ripe for disruption by AI systems, due to the inefficiency of traditional, paper-based systems.

Juniper forecasts that across banking and property sales, annual gross cost savings from AI introduction for KYC will exceed $700 million by 2023, a nine-fold increase over 2018.

“AI-powered ID solutions are uniquely suited to reducing the resources needed to verify identity. By integrating the correct KYC tools into cloud-based systems, financial institutions can dramatically reduce their compliance burden,” said Research author Nick Maynard.