AML Strategies with RegTech and human expertise
James Saunders, co-founder and CTO at RelyComply

Tightening up Anti-Money Laundering (AML) and counter-terrorist financing (CFT) processes while keeping budgets under control is a significant challenge for every financial institution (FI) today. The right regulatory technology (RegTech) can help FIs stay cost-efficiently compliant with local and global regulations.

Given the onset of more sophisticated criminal patterns and stricter regulation, the RegTech market is expected to grow from around $15.8billion today to $70 billion by 2032. It’s the right time to implement these technology solutions. Here are 10 essential things for FIs to consider on their RegTech and compliance journey.

1.There’s no need to start from scratch

    Legacy systems struggle to keep up with today’s data volumes and evolving regulatory requirements. RegTech can be safely slotted into successful existing procedures and back-office systems to close the gaps without a complete IT revamp. Using API-first integrations, RegTech can be deployed to smooth compliance without compromising the quality of customer or third-party data.

    2.Automation reduces compliance costs

    Compliance involves many moving parts in terms of processes and systems. RegTech solutions can help streamline the complexity and cut back expenditures by automating essential AML tasks. They also help reduce the costs of human effort and error by allowing FIs to focus on low-risk alerts.

    3.Tech brings teams together

    Better compliance relies on teams streamlining their collective actions. AML calls for a central interface to monitor, raise and address risk alerts. RegTech brings each part of the regulatory management process into a single workflow. Solutions can be set up without coding to suit non-technical teams.

    4.RegTech is flexible

    Various jurisdictions push for transparency and comprehensive reporting (FinCEN or the FCA, for instance), and auditors must be assured that companies are taking AML/CFT seriously. RegTech adapts to suit risk appetite and complexity. It can also be scaled up or down in relation to compliance team size, allowing FIs to adhere to regulations at home or across borders flexibly.

    5. Make the simple switch to risk-based solutions

    RegTech can help FIs shift from traditional rules-based assessments to those that respond directly to risks as and when they happen. Using underlying automation, RegTech works in the background to surface alerts that require further attention, reducing the time compliance teams traditionally expended on low-risk actions or false positives.

    6.Get fit for the future with RegTech

    RegTech can be built with the future in mind, seeking to understand money launderers’ ways to predict patterns of suspicious behaviour. This is key in a world where new risks are emerging—for example, cryptocurrencies and other digital assets. Only platforms that can adapt to future risk will ensure that FIs’ AML compliance can remain proactive.

    7.Go one step further using data

    Housing data in a RegTech platform makes it simpler for analysts to collect data from trusted sources and report it to the correct authorities with complete transparency. For FIs that have to oversee thousands, if not millions, of transactions, real-time monitoring must be left to technology; AI, for instance, is becoming popular to process vast data streams in seconds that no human analyst could manage (while giving them the time back to prioritise bettering their technical AML processes).

    8.Keep customer privacy and data security front-of-mind

    Data security, privacy, and transparency laws have multiplied recently, including the EU’s MiFID II, GDPR and worldwide equivalents. RegTechs must ensure that sensitive data gathered through Know Your Customer, Know Your Business (KYC/KYB) and AML is stored and presented securely to relevant authorities while adhering to these laws.

    9.RegTech should collaborate with humans

    RegTech is only half the battle against financial crime. Better workflows, accurate data analysis, and contextualised algorithms improve search and reporting and establish audit trails, but the ability to provide evidence for an FI team’s decision-making is paramount. A combination of people and platforms is powerful for establishing consistent operations.

    10.Compliance is about culture

      Everyone in a regulated business should understand their role in compliance. Compiling internal processes, shared learning, and providing external auditors with tracked metrics are sure ways for compliance professionals to use RegTech to maintain a much-needed focus on the regulatory needs required of a financial company.

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