In the aftermath of the 2008 financial crash, banks facing more stringent regulation began to embrace Regulatory Technology — also known as RegTech.
They realised that software solutions especially designed to automate compliance and analyse data to improve risk assessment were long overdue.
But tech solutions for finance have evolved alongside coordinated efforts to combat sophisticated criminality and spread to disparate sectors subject to a range of regulatory regimes.
With that in mind, here are four current applications for RegTech.
1) Financial Crime
This year has seen the introduction of swathes of legislation aimed at combating money laundering and other forms of financial crime. Besides that, there is this aml programme that will share everything you need to know about money laundering.
At the end of 2016, the Financial Conduct Authority (FCA) introduced new requirements for firms to report annually on customers’ countries of residence, those classed as Politically Exposed Persons and customer relationships terminated because of financial impropriety.
And the Criminal Finances Act 2017 further empowered the Serious fraud Office, HMRC, the FCA and Immigration Officers to coordinate investigations of ‘unexplained wealth’ and seize assets that can’t legitimately be accounted for.
The EU also introduced the Fourth Money Laundering Directive aimed at preventing criminal funds funding terrorism in its jurisdiction.
A number of tech firms have developed anti-money laundering solutions to help organisations cope with increasingly complex compliance requirements and the increasingly lazer-like focus of regulators means this is a growth niche.
2) Health and Safety
Non-compliance with Health and Safety regulations can cost lives, cause serious injuries and result in offending business owners being jailed.
The risks of operating heavy lifting equipment are just one example — there are stringent regulations imposed on firms who own and operate this type of kit.
So, inspection and compliance software is welcomed by large organisations who want to keep track of certification across several sites and arrange automated alerts for internal inspections.
And managing compliance across different territories without reams of paperwork puts an end to time-consuming administrative acrobatics for these operators.
3) IT security
Cybercrime is hitting the headlines increasingly frequently — it seems that no private organisation or public body is safe from hackers.
And these attacks constitute risks to the personal data of individual customers as well as to organisational assets, so robust security systems are vital.
Many firms are signing up to digitalised cybersecurity services that take care of risk management and compliance across their entire digital estates and adapt to constantly evolving cybercriminal tactics and strategies.
4) Data protection and privacy
Collecting customer information if the lifeblood of many companies.
But if it isn’t done in accordance with data protection regulations it poses serious risks to customer safety and result in fines of considerable magnitude — up to 20 million Euros or 4 per cent of group worldwide turnover under the incoming GDPR regime.
But data protection is an expert skillset that’s often lacking in many organisations — so some are turning to RegTech software that ensures compliance with appropriate legislation for all data collected, controlled and processed.
These four applications for RegTech provide evidence of its current reach, but as regulation increases to cope with doing digital business across borders its footprint will loom even larger.
Do you use RegTech? Share your stories in the comments section.