Regulatory technology, or ‘regtech’, has a vital role to play in the global fight against financial crime, according to non-profit risk-management awareness group the Institute of International Finance (IIF).
In a new report, the organisation points out two areas of weakness in the global supervisory network:
– global anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations have not fully removed ambiguities by leaving significant room for interpretation. That has led to fragmentation among jurisdictions and conflicting sets of requirements.
Regtech solutions, the report notes, could plug those gaps and ambiguities. This will provide stakeholders with enhanced supervisory clout, enabling them to detect and tackle criminality more effectively.
The report also notes that, with those added resources, organisations will have greater confidence that they are meeting their Know Your Customer (KYC) obligations.
Interestingly, the report highlights how key vetting challenges could be overcome with the aid of specific types of regtech, directly matching needs to solutions – such as:
The report offers stakeholders six recommendations that, according to IIF senior policy adviser Matthew Ekberg, “focus on improving the regulatory landscape for AML/CFT compliance and promoting enhanced information sharing across the financial system”. They are:
IIF associate policy adviser Bart van Liebergen – who authored the report – said: “Financial institutions play an important role in the process of identifying and reporting suspicious activities to national law enforcement agencies.
“Regtech solutions promise to dramatically improve the ability, speed and efficiency of financial institutions in analysing and sharing data for detecting and reporting financial crime.”