Navigating The Complexity of Ownership From The Lens of Sanction By Extension

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Lapses in UBO Identification, Sanctions Compliance, and Corporate data

Tuesday, 30th April. 13:00 - 14:00 London Time (GMT+1)


Mark Bain


Louie Vargas


Michael Harris


05 April, 2024

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Compliance is no longer easy, and it is becoming challenging for businesses and financial firms to deal with constantly evolving regulations. Hence, RegTech has now emerged on the face of the earth, helping companies comply with strict regulations in various sectors. RegTech (Regulatory Technology) primarily serves enterprises, including the banking and finance sector, and improves their strategies while empowering them in the world of regulatory compliance. Let’s discover what RegTech actually is and how it is transforming the world of digital businesses.

What is RegTech?

Regulatory Technology (RegTech) is a rising platform that combines the world of regulations and technology. Regulations are now more complex than ever in various industries, including financial enterprises, real estate, communication, and the energy sector. Hence, it facilitates businesses’ compliance with constantly evolving global regulations along with the constant monitoring of users and companies. 

As challenges in the business horizon continue to rise, enterprises are facing more difficulty in combating illicit financial activities such as money laundering and corruption. In addition, organizations are charged with hefty fines because of non-compliance. Consequently, RegTech companies facilitate businesses, particularly financial institutions, by offering solutions that help them ensure adherence to regulations. Furthermore, Regulatory Technology has now become a game-changer to ensure enhanced risk management among businesses.

History of Regulatory Technology

The financial crisis in 2008 surged regulations in the economic sector. In addition, an extensive use of advanced technology was also observed among businesses. This breakthrough in the world of technology turned out to be a primary reason behind the emergence of more FinTech organizations. To address the increasing reliance on technology in this sector, coupled with the need for more regulatory measures and laws, regulatory technology has emerged as a solution.

In 2018, deregulation in the US, specifically the unwinding of Dodd-Frank rules, slowed down regtech financing deals. However, the need for compliance automation is still strong.

How Does Regulatory Technology Work?

The growth of businesses with transforming digital ecosystems comes with significant challenges. However, some of the most common difficulties are cyber hacks, data theft, non-compliance, money laundering, and other fraudulent activities. This surge in threats now raises the demand for extensive cybersecurity measures. Hence, effective RegTech plays a crucial role in complying with standard regulations at the national and international levels. The FATF recommendations, Bank Secretary Act, Patriotic Act, and EU AML Directives, in this regard, issue strict regulations to ensure financial transparency in the business ecosystem worldwide. Here’s how RegTech compliance helps companies stay protected:

Real-Time Inspection

FinTech RegTech ensures the real-time monitoring of online transactions to identify irregularities or abnormalities in the digital financial ecosystem. In case fraudulent activities are identified, an outlier is sent to the company for further analysis. However, a quick identification of potential security or financial threats allows businesses to prevent losses and minimize the risk and cost associated with information theft or monetary setbacks.

Most of the RegTech sector operates by utilizing cloud computing technology for huge data sharing. Hence, companies can employ this low-cost technology and seamlessly collaborate with other entities.

Digital Transformation

Dealing with extensive data often gets challenging for businesses since it’s costly, time-consuming, and complex. In the world of Regulatory Technology, a firm can collect complex data from banks and financial institutions to analyze previous regulatory failures and predict future failures.

Nevertheless, RegTech saves a business both time and cost by integrating the right analytic tools while helping it comply with regulatory compliance. Hence, organizations can conveniently adapt to evolving digital transformations while minimizing the risk associated with fraudulent partnerships.

4 Categories of RegTech

Advantages of RegTech

  • Comprehensiveness and Accuracy

Businesses operating on traditional processes face more gaps to ensure compliance as the chance of human errors is always high. Nevertheless, strategic implementation of RegTech helps companies meet this challenge while ensuring comprehensiveness and accuracy.

  • Enhanced Efficiency

As regulations continue to evolve, it is almost impossible for organizations to ensure compliance with regulations without utilizing technology. Regulatory Technology holds the capacity to process a high volume of information at unimaginable speeds and quickly analyze raw lawful text while extracting valuable foresight. 

  • Better Risk Management

RegTech tools help companies protect themselves against severe challenges and threats such as cyber-attacks, financial fraud, data breaches, and market abuse. In fact, this effective regulatory compliance technology has an effective monitoring system and can issue an alert for any suspicious activity.

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