Fighting financial crime is imperative and is best achieved by having impenetrable client onboarding, anti-money laundering (AML) and Know your Customer (KYC) processes in place. At some firms, first generation systems are struggling to cope with the volume of data that needs to be processed quickly and efficiently to ensure accurate entity data and effective exceptions management, begging the question of whether regtech has a part to play in securing the underlying systems of financial crime prevention.
Ahead of a panel discussion on this very topic at this Thursday’s A-Team Group RegTech Summit in London, we talked to panel participant Targ Patience, group chief compliance officer at the Gibraltar Stock Exchange, about his views on regulatory challenge and regtech potential.
Q: What does regtech mean to you and why are you excited about it?
A: Regtech provides smart solutions to complex problems, giving the industry an opportunity to become more responsive and efficient. The G20 reforms were intended to create more transparent, fair, accountable and stable global markets, but the execution of those reforms has left a lot to be desired – the process has been mired in antiquated, often conflicting approaches to lots of legacy processes and systems. Regtech provides an exciting opportunity to marry those principles of transparency, fairness, accountability and stability with the astonishing capabilities of cutting-edge and emerging technology.
Q: What is your biggest regulatory challenge?
A: Identifying sources of funds or wealth from clients in the crypto space is a big challenge.
Q: Why is it such a challenge?
A: Many individuals have achieved legitimate profits in the crypto markets – some really substantial – but this legitimacy can be hard to validate or verify using traditional methods.
Q: What role do regtech providers have to play in helping to solve this challenge?
A: The challenge can only be solved by regtech. We are working with a number of providers that can undertake powerful, real-time forensic analysis of blockchains in order to identify any illicit or suspect sources of crypto wealth. That’s the benefit of an immutable record – you just need the right tools to leverage the unparalleled transparency of blockchains. This, combined with stringent policies and thresholds, allows us to put in controls and identify potential money laundering or terrorist financing.
Q: What regtech solutions are you using or planning to implement?
A: As a progressive and technology-driven group of businesses, we work closely with many regtech providers. This includes, but is in no way limited to, Heliocor, Thomson Reuters, Chainalysis, Keesing and Cynopsis.
Q: What other cool or interesting regtech firms have you seen out there?
A: Both JWG and Cube are doing interesting and valuable work on the regulatory analysis and change management front. I’m really impressed with Ariadne and its innovative considerations of the complexities of Senior Management and Certification Regime (SMCR) best practices. Both CrossVerify and KABN are doing interesting things in the KYC space. But generally, the entire industry seems to be bristling with great ideas, talent and innovation right now.