Euroclear and Microsoft Partner to Enhance Capital Markets Infrastructure

Euroclear has entered a seven-year partnership with Microsoft to modernize its technology infrastructure and develop new digital and data-driven capabilities for financial market participants. The collaboration will focus on leveraging cloud computing, artificial intelligence (AI), and advanced analytics to enhance Euroclear’s role as a key financial market infrastructure provider.

The initiative is designed to foster greater efficiency in capital markets by shifting towards an ecosystem-driven model. Microsoft’s cloud solutions, including Azure and AI-powered tools, will support Euroclear in developing a more flexible and scalable platform for data sharing, customer engagement, and market infrastructure resilience.

A Shift Toward Data-Enabled Market Infrastructure

The collaboration aims to enhance Euroclear’s ability to process and share financial data securely while strengthening operational resilience. The initial phase of the partnership will focus on:

• Financial data sharing: Developing a secure platform to enable controlled data collaboration across financial institutions.
• Enhancements to Euroclear FundsPlace®: Improving the client experience with AI-driven insights and more efficient fund processing.
• Customer engagement modernization: Establishing a unified platform for streamlined interactions across Euroclear’s business lines.
• Strengthening market infrastructure: Building a more resilient financial infrastructure with integrated security and compliance features.

“Technology is rapidly transforming financial market infrastructures,” said Valérie Urbain, CEO of Euroclear. “Harnessing the latest developments in cloud, AI, and analytics is a critical enabler of Euroclear’s strategy and a driver of innovation and new business without compromising resilience. Microsoft’s technology leadership and understanding of financial markets make it an ideal strategic partner for the next stage in our journey. This mutually beneficial relationship greatly accelerates our ambitions and should bring us much closer to clients.”

Microsoft will provide cloud-based scalability and automation tools to support Euroclear’s operational resilience, including disaster recovery and business continuity solutions. “Our partnership with Euroclear combines their extensive financial ecosystem—connecting more than 2,000 financial institutions—with the trust and scalability of the Microsoft Cloud including Microsoft Azure, Microsoft Copilot, Azure AI, Microsoft Fabric and Microsoft Teams,” said Ralph Haupter, President, EMEA at Microsoft. “Together, we are enabling a shift from traditional sequential workflows to an ecosystem-centric capital markets model. This transformation will empower financial institutions to reimagine how they interact, analyse data and deliver insights to end users, driving efficiency and innovation across the industry.”

The partnership is guided by senior executives from both companies, ensuring alignment between technology and business objectives. As the collaboration evolves, new digital and data initiatives will be explored to further enhance market efficiency and financial services innovation.

Sumsub Releases AI-Powered AML Screening Enhancements

Full-cycle verification vendor Sumsub, recently released new AI-driven enhancements to its AML screening and case management capabilities, aiming to help compliance teams reduce manual workload and improve the accuracy of risk detection. The updates address a critical challenge in financial crime compliance—the growing volume of false positives that consume valuable time and resources.

Regulatory bodies worldwide continue to tighten anti-money laundering (AML) requirements, pushing firms to adopt more automated, intelligent solutions. Traditional screening methods often generate excessive alerts, leading to inefficiencies in case resolution. Sumsub’s AI-driven approach seeks to mitigate this by filtering out low-risk alerts, allowing compliance teams to focus on high-priority cases without compromising accuracy.

“Compliance teams face immense pressure to detect financial crime while managing an overwhelming number of alerts. Traditional AML screening can be like searching for a needle in a haystack – compliance teams spend countless hours sifting through false positives to find real risks. Our AI acts like a powerful magnet, helping to filter out irrelevant alerts and strengthen our solution,” explains Vyacheslav Zholudev, co-founder and CTO of Sumsub.

The enhanced AML screening solution introduces several key capabilities:

• AI-Driven Alert Prioritization: Advanced machine learning algorithms analyse patterns and past decisions to differentiate between genuine risks and false positives, minimizing unnecessary manual review.
• Centralized Case Management: A unified platform streamlines investigation workflows, facilitating task assignments, collaboration, and real-time updates.
• Automated SAR/STR Reporting: Compliance teams can generate Suspicious Activity Reports (SARs) or Suspicious Transaction Reports (STRs) with minimal manual input, ensuring regulatory compliance.
• Real-Time Transaction Monitoring: A comprehensive dashboard provides insights into transactions, helping teams track potential fraud patterns and make data-driven decisions.
• Improved Team Collaboration: Integrated tools allow for efficient case tracking, notes, and communication among compliance officers, ensuring a more streamlined approach to financial crime prevention.

As firms grapple with evolving regulatory requirements and increasingly sophisticated financial crime typologies, AI-powered compliance solutions are becoming essential. Sumsub’s latest enhancements reflect a broader industry shift toward automation and data-driven decision-making, equipping compliance teams with tools to operate more efficiently in a fast-changing regulatory landscape.

Fenergo and PwC Partner to Enhance Financial Crime Compliance and Efficiency

A new collaboration between Fenergo and PwC aims to help financial institutions streamline financial crime compliance, improve operational efficiency, and navigate evolving regulatory demands. By combining PwC’s expertise in financial crime and regulatory compliance with Fenergo’s AI-driven client lifecycle management (CLM) and Know Your Customer (KYC) technology, the partnership is set to accelerate digital transformation in the sector. 

Financial institutions face increasing pressure to enhance financial crime risk management while maintaining efficiency. The partnership integrates Fenergo’s AI-powered CLM solutions with PwC’s advisory and implementation capabilities, supporting firms in scaling their compliance operations and optimizing processes. 

Mark Hunter, Partner at PwC, highlighted the importance of the collaboration: “Fenergo’s AI-powered platform is uniquely positioned to serve mid-market to large multinational organizations, offering the scale, flexibility, and advanced capabilities needed to manage complex regulatory environments and high volumes of transactions across global operations. This collaboration is enabling us to deliver even greater value and sustained outcomes to our clients. Clients choose PwC to drive growth, transform and create value – and that includes interventions with technology. Our approach focuses on how Fenergo’s software can add value to our clients’ organisations holistically. Our teams across our global practice have experience implementing Fenergo solutions at scale, and across multiple jurisdictions. We’ve invested in our own multi-disciplinary teams, who are now Fenergo-certified and have specialist functional capabilities and technical expertise to configure the Fenergo platform.” 

PwC’s role extends beyond implementation, with services such as target operating model design, customer experience mapping, and business change management. By leveraging PwC’s expertise, financial institutions can achieve a smoother integration of Fenergo’s technology into their existing frameworks. 

Matt Edwards, Global VP Partnerships and Alliances at Fenergo, emphasized the strategic advantage: “The synergy between Fenergo and PwC creates a powerful value proposition for financial institutions seeking to streamline financial crime operations and increase efficiencies in the face of accelerated regulatory change. The collaboration enables Fenergo to tap into PwC’s industry leading consultancy and implementation services to deliver an optimum target operating model for CLM. The result is a premium solution which empowers financial institutions to efficiently mitigate financial crime risk while driving growth and efficiency gains.” 

With financial institutions under growing scrutiny to enhance compliance while maintaining a seamless client experience, this partnership provides a structured approach to modernizing financial crime operations. The collaboration underscores a broader industry shift towards integrating advanced technology with deep regulatory expertise to drive sustainable compliance solutions. 

New Cyber and Emerging Technologies Unit at SEC

The Securities and Exchange Commission (SEC) has established the Cyber and Emerging Technologies Unit (CETU) to address cyber-related misconduct and safeguard retail investors in the evolving tech landscape. This new unit, led by Laura D’Allaird, succeeds the former Crypto Assets and Cyber Unit and comprises around 30 fraud specialists and attorneys from various SEC offices. 

Acting Chairman Mark T. Uyeda emphasized that CETU’s formation aims to protect investors while promoting innovation. He noted that the unit will “root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies.” 

CETU’s priorities include addressing fraud involving emerging technologies like artificial intelligence and machine learning, misuse of social media and the dark web for fraudulent activities, unauthorized acquisition of non-public information through hacking, takeovers of retail brokerage accounts, fraud related to blockchain and crypto assets, ensuring regulated entities comply with cybersecurity regulations, and monitoring public companies’ disclosures concerning cybersecurity. 

This initiative reflects the SEC’s commitment to adapting its enforcement strategies to the rapidly changing technological environment, aiming to foster a secure and transparent market for investors and innovators alike. 

UK Penalties for AML Regulatory Breaches More Than Double 2023 – Fenergo Research

According to a new analysis by Client Lifecycle Management and perpetual KYC solution provider Fenergo, financial institutions in the UK have experienced a sharp increase in the total value of AML-related fines despite a drop in the number of enforcement actions.

In 2024, the Financial Conduct Authority (FCA) issued three significant fines totalling $64.74 million, up from $25.2 million in 2023. While the overall number of AML penalties from the FCA has declined by 80% since 2022, the total value of fines has risen notably. Notable cases include Metro Bank ($21.8 million) and Starling Bank ($38.4 million), with an additional $4.5 million fine against CB Payments, part of the Coinbase Group, for weaknesses in financial crime control frameworks.

Fenergo’s data highlights mixed trends on a global scale. Although the total value of AML-related penalties worldwide dropped by 30% to $4.6 billion (from $6.5 billion in 2023), banks faced a 522% increase in fines, amounting to $3.65 billion. Penalties specifically tied to transaction monitoring breaches surged by 100% year-over-year to $3.3 billion.

Beyond AML, Fenergo’s research also points to growing enforcement actions related to environmental, social, and governance (ESG) practices. Global ESG-related fines nearly doubled, reaching $37.7 million in 2024, while in the United States, these fines rose by 13%, totalling $21.5 million.

Reflecting on these developments, Rory Doyle, Director of Regulatory Affairs at Fenergo, notes, “The surge in penalties for AML violations in banking in the UK and around the world underscores the relentless pace at which financial crime evolves, and the growing expectations placed on financial institutions by regulators. While progress is being made, the data serves as a clear reminder that compliance must continually adapt to meet new challenges.”

Key findings from 2024 global regulatory fines include:

• Banks accounted for 80% of all fines, totalling $3.65 billion. TD Bank became the largest U.S. institution to plead guilty to Bank Secrecy Act (BSA) violations.
• Digital asset platforms were fined $762.9 million.
• Payments firms faced $54.8 million in penalties.
• Buy-side firms received $52.85 million in fines.
• Private banks were fined $48.2 million.

Doyle emphasizes the importance of proactive measures and technology adoption: : “In today’s environment, staying ahead isn’t just about monetary loss and avoiding fines — it’s about building trust, safeguarding stakeholders and maintaining operational resilience. As the financial landscape becomes increasingly complex, leveraging advanced technologies and fostering a culture of proactive compliance will be key to addressing regulatory demands and mitigating risk. This is particularly evident in the UK, where politically exposed person (PEP) risk assessments have grown increasingly complex compared to those in other jurisdictions.”

SEC Launches Crypto Task Force to Provide Clarity on Regulatory Framework

Acting U.S. Securities and Exchange Commission (SEC) Chairman Mark T. Uyeda has launched a new crypto task force aimed at establishing a comprehensive and transparent regulatory framework for digital assets. Commissioner Hester Peirce will lead the initiative, with Richard Gabbert, Senior Advisor to the Acting Chairman serving as the task force Chief of Staff, and Taylor Asher, Senior Policy Advisor to the Acting Chairman, assuming the role of Chief Policy Advisor.

The task force will work across SEC divisions and engage with stakeholders to define clear regulatory parameters for crypto assets. Historically, the SEC’s approach to crypto regulation has been largely enforcement-driven, often leading to uncertainty for industry participants. The initiative seeks to address challenges related to compliance, registration, and disclosure by offering practical solutions and clearer guidelines.

“I look forward to the efforts of Commissioner Peirce to lead regulatory policy on crypto, which involves multiple SEC divisions and offices,” said Acting Chairman Uyeda.

Commissioner Peirce emphasized the importance of broad stakeholder engagement, stating, “This undertaking will take time, patience, and much hard work. It will succeed only if the Task Force has input from a wide range of investors, industry participants, academics, and other interested parties. We look forward to working hand-in-hand with the public to foster a regulatory environment that protects investors, facilitates capital formation, fosters market integrity, and supports innovation.”

In addition to developing regulatory clarity, the task force will collaborate with other federal and international regulatory bodies, such as the Commodity Futures Trading Commission (CFTC), to ensure a coordinated approach. The initiative will also provide technical assistance to Congress as it considers updates to existing legislation.

Public engagement will be a cornerstone of the task force’s efforts, with future roundtables planned to facilitate dialogue. In the interim, stakeholders are encouraged to share their insights via Crypto@sec.gov.

2024 Nasdaq Compliance Survey Reveals Top Compliance Challenges and Investment Priorities

Nasdaq’s Global Survey Highlights AI, Cloud, and Data Quality as Key Drivers in Compliance Evolution

The financial services sector is navigating an increasingly complex regulatory and operational landscape, as highlighted in Nasdaq’s ninth Annual Global Compliance Survey. The survey, conducted among 94 compliance professionals from the sell-side, buy-side, and financial market infrastructure sectors, underscores a notable shift in compliance strategies driven by advancements in technology and data integration.

Technological Transformation in Compliance

With heightened regulatory scrutiny and the persistent challenge of financial crime, firms are leveraging technologies like artificial intelligence (AI) and cloud computing to stay ahead. A significant 35% of survey respondents expect AI to drive the most substantial changes in compliance processes over the next year—a stark increase from 9% last year and 0% the year before.

This pivot reflects a move away from basic workflow automation to more sophisticated, data-driven approaches. Firms are investing in tools to integrate disparate data sources, enhance cross-product surveillance, and improve data quality. These advancements aim to address ongoing challenges like false positives in automated systems, which, according to nearly 90% of respondents, remain a major issue. “False positives drain resources and delay critical decision-making,” noted Ed Probst, Senior Vice President of Regulatory Technology at Nasdaq. “The promise of AI lies in its ability to refine alert systems and prioritize genuine threats.”

Data-Centric Strategies and Workforce Evolution

Organizations are also redirecting investments to strengthen data management and analytical capabilities. Over the next two years, 12% of firms plan to hire data scientists, and 13% intend to bolster their teams with additional support staff. This shift highlights the growing importance of advanced data analytics in maintaining robust compliance systems.

However, the survey reveals a need for a more cohesive approach to integrating AI and analytics strategies. “The rapid deployment of algorithms must align with broader data management frameworks to deliver meaningful insights,” commented an industry expert.

The trend is mirrored across financial organizations, where investments in data infrastructure and predictive analytics are becoming integral to both risk management and operational efficiency.

The Expanding Role of Compliance Teams

Surveillance and compliance teams continue to play a strategic role in corporate decision-making. More than three-quarters of respondents agreed that these functions maintain a “seat at the table,” reflecting their critical role in fostering ethical business practices and safeguarding reputational integrity.

Despite a slowing growth rate in regulatory spending, over 40% of firms reported increased compliance budgets this year. The allocation of funds increasingly favors advanced analytics over traditional monitoring tools, indicating a strategic pivot towards future-proof compliance infrastructures.

Looking Ahead

Nasdaq’s findings underscore the importance of technology-driven solutions in tackling the evolving challenges of compliance. As firms navigate this dynamic environment, investments in data quality, AI, and skilled talent will be pivotal in building agile and resilient compliance frameworks.

“Compliance is no longer just about adhering to rules,” added Probst. “It’s about leveraging technology to anticipate and adapt to risks in a rapidly changing world.”

This shift signals a broader transformation within the financial services industry, where the integration of advanced technology with strategic governance is becoming a cornerstone of effective compliance.

Regnology Acquires VERMEG’s Agile Division, Expanding Global Leadership in Regulatory Reporting

Regnology has acquired Agile, the regulatory reporting division of VERMEG, in a move that underscores the growing trend of consolidation in the RegTech industry. This strategic acquisition strengthens Regnology’s capabilities in delivering end-to-end regulatory reporting solutions, while enabling VERMEG to focus on its core strengths in Collateral Management and Insurance.

Agile, a SaaS-based platform originally part of VERMEG’s Lombard Risk portfolio, serves over 150 banks worldwide across key regions, including the UK, Europe, North America, and Asia Pacific. Known for its modular, scalable solutions that cover the entire regulatory reporting process—from data ingestion to report submission—Agile will now be integrated into Regnology’s platform. This combination will enhance Regnology’s ability to address the increasing demands for automation, granular data management, and efficient regulatory compliance.

For VERMEG, the divestment aligns with a strategy to consolidate its leadership in Collateral Management and Insurance. “By joining forces with Regnology, Agile gains access to a broader platform and new opportunities for growth,” said Badreddine Ouali, Founder and Co-CEO of VERMEG. “This allows us to concentrate on delivering exceptional value in our core areas, ensuring long-term success for both companies and their teams.”

Building a Global Footprint in Regulatory Reporting

The acquisition also bolsters Regnology’s global presence, complementing its recent purchase of CG3-1, a firm known for its regulatory calculations in the U.S. broker-dealer market. The move is expected to enhance Regnology’s offerings for broker-dealers by integrating expertise in regulatory capital, customer reserve, and portfolio margin requirements.

Together, these moves enable Regnology to serve a wider range of financial institutions—from Tier 1 banks to community banks—and strengthen its reach in Asia Pacific, with clients in Hong Kong, Singapore, and Australia including a number of regulators.

“This marks a pivotal moment for Regnology,” said Rob Mackay, CEO of Regnology. “Our expanded footprint allows us to connect regulators and financial institutions worldwide, transforming legacy reporting processes into scalable, efficient networks. By investing in technology and talent, we aim to help industry stakeholders navigate the complex regulatory landscape with confidence.”

Nordic Capital, a key investor in Regnology, highlighted the strategic significance of the acquisition. “This milestone reflects the need for forward-looking solutions that prioritize efficiency and stability,” a spokesperson noted, adding that the deal advances Regnology’s position as a global leader in regulatory reporting.

ACA Group Expands Broker-Dealer Compliance Support with FINOP Consulting Acquisition

In a strategic move to deepen its support for broker-dealer clients, ACA Group has acquired FINOP Consulting, an outsourcing firm specializing in financial and operational compliance for broker-dealers. Led by industry veteran and FINOP founder Dan Beaton, the acquisition enables ACA to expand its capacity in financial operations (FinOps) services, particularly for clients needing precise alignment with SEC and FINRA requirements in areas such as recordkeeping, accounting, and reporting. 

This acquisition feeds into ACA’s broader compliance platform, ACA Signature, which delivers scalable support for financial operations. By acting as a licensed Series 27 and Series 28 principal, ACA provides expertise in maintaining accurate records, preparing financial filings, and ensuring overall regulatory compliance. 

Patrick Olson, CEO at ACA Group, views this move as critical for broker-dealers facing increasing regulatory demands: “This acquisition allows us to provide a more complete solution to broker-dealers, who are under immense pressure to maintain compliance in a rapidly evolving regulatory landscape”.  

Beaton, now ACA’s Director, echoes this sentiment, noting, “Our collaboration with ACA means broker-dealers gain access to comprehensive GRC services at a time when regulatory pressures are only growing. Together, we’re equipped to navigate these complexities for our clients.” 

ACA’s FinOps offerings provide broker-dealers with key benefits, including the ability to stay compliant with evolving regulations, allowing them to focus on core business objectives without the burden of daily regulatory tasks. Additionally, by outsourcing, firms can reduce full-time employee (FTE) costs. ACA’s use of advanced financial tools further supports clients by optimizing reporting processes and ensuring data accuracy. 

This latest acquisition continues ACA’s tradition of evolving to meet industry needs. Specific financial terms were not disclosed.

DTCC’s Enhanced VaR Calculator for Potential Cross-Margin Reductions

The Depository Trust & Clearing Corporation (DTCC) has updated its Value at Risk (VaR) calculator to include cross-margining and repo transaction functionalities, aimed at improving firms’ risk management capabilities ahead of expanded U.S. Treasury clearing requirements expected in 2025 and 2026. These enhancements, introduced through the Fixed Income Clearing Corporation’s (FICC) Government Securities Division (GSD), offer users more nuanced tools for evaluating margin requirements and cross-margining benefits. 

The enhanced calculator allows users to gauge potential cross-margin reductions at FICC based on sample portfolios that include both GSD cash positions and CME Group futures. According to Tim Hulse, Managing Director of Financial Risk & Governance at DTCC, these updates are part of a broader effort to “support greater transparency for market participants,” aligning with DTCC’s focus on enhancing understanding and management of margin obligations in a rapidly evolving market. 

This development comes as FICC’s GSD experiences record volumes, clearing an average of $8.8 trillion daily as of October 2024. The new capabilities are seen as a valuable tool for firms navigating this high-volume environment, allowing for optimized capital efficiency through consolidated margin management and reducing potential excess liquidity needs. 

The cross-margining functionality, specifically, empowers firms to explore margin savings across combined GSD and futures positions, presenting an opportunity for capital efficiencies that may mitigate the need for liquidation in volatile markets. These tools thus provide market participants with an accessible means to assess and respond to risk and margin requirements, in preparation for the anticipated regulatory changes. 

As Laura Klimpel, Managing Director, Head of DTCC’s Fixed Income and Financing Solutions, notes, “FICC continues to evolve with the markets to support industry needs.” This expansion of the VaR calculator underscores DTCC’s commitment to delivering tools that not only bolster transparency but also support firms’ operational readiness for future market and regulatory shifts.