THE EMERGENCE OF AI REGTECH SOLUTIONS FOR AML AND SANCTIONS COMPLIANCE
Innovations in financial technology (FinTech) are rapidly changing the global banking system, not only from the consumer perspective but also in ways that are hidden from view. While FinTech startups and existing technology firms work to improve how consumers interact with the financial system, banks themselves are pouring billions of dollars into developing faster and more efficient methods for meeting their regulatory compliance obligations. In a post-crisis environment which has seen significant new regulations and restrictions placed on activities and operations, as well as record-breaking enforcement penalty amounts, reducing the cost of regulatory compliance is an attractive means of increasing margins.
Regulation technology (RegTech) is the branch of FinTech that focuses on improving financial services providers’ compliance and internal control systems. Among other things, RegTech applications automate risk management processes, facilitate regulatory reporting, prevent fraud, enable companies to stay abreast of regulatory changes around the world and support strategic planning.
RegTech, as a field, is not new. Banks and other financial service companies were early adopters of computers and business process automation. But the RegTech applications being developed in connection with the recent wave of FinTech are utilising the latest computer science breakthroughs, such as Big Data analytics, cloud computing and machine learning. Since 2010, the pace of innovation has accelerated rapidly, paving the way for RegTech systems to incorporate artificial intelligence (AI).
Apr-Jun 2017 Issue
White & Case LLP