Regtech enhanced version of Fintech !!!

Regtech” is defined as addressing regulatory requirement through technology to ensure regulatory compliance are met by Bank, Financial Institutions, Insurance companies, Central Banks and other market participants. Regtech are new startup technology companies competing with Fintech companies to ensure regulatory compliance issue are addressed via help of technology like AI and ML .

Many Bank / Financial Institutions / companies faces regulatory fines for not meeting the regulatory standards as prescribed by the regulator bodies. To name few regulatory fines which was imposed on the financial sector is mentioned below for your easy reference

1. Regulators fine U.S. Bank more than $600M for AML errors
Source: https://www.americanbanker.com/news/regulators-fine-us-bank-more-than-600m-for-aml-errors

2. U.S. regulators fine China's ICBC $6.1 mln for oversight failures
Source : https://www.reuters.com/article/usa-icbc-finra/us-regulators-fine-chinas-icbc-61-mln-for-oversight-failures-idUSL2N1SN130

3. US regulators to hit Wells Fargo with $1bn fine
Source : https://www.ft.com/content/eac21a6c-441b-11e8-803a-295c97e6fd0b


There are  regulatory bodies who provides compliance and regulatory information which has to adhered by bank across Financial industry in EU and US . To Name few regulatory agency they are

1. European Central Bank(ECB), 
2. European Bank authority(EBA),
3. Bank of England(BOE),
4. Securities & Exchange Commission (SEC) ,
5. Federal Reserve System (FED),
6. Commodity Futures Trading Commission (CFTC)

Major part of regulatory compliance lapses takes places in the following area,

1. FATCA / CRS.
2. KYC(Know Your Customer) / AML (Anti Money Laundering)
3. Lack of system integration with core banking system and payment system, Due to which Forex irregularities takes place.

Regtech companies play a key role in addressing the regulatory issue faced by the financial institutions. These Regtech company closely work with financial institutions, central banks, governing agency , to understand the regulation which are available and has to be adhered as per the rule and regulation.


Through help of technology, Regtech companies develop solution to adhere to the regulation law provided by the central bank and governing agency. For Example there are regulatory lapses in the following area due to digitalization of financial industry such as online hacking, data breaches, money laundering and other fraudulent activities.



Few Regtech solution and their solution are provided  for your easy reference.


1. The Foreign Account Tax Compliance Act (FATCA)/ Common Reporting Standard (CRS) solution. Thomson Reuters have built a solution on FATCA /CRS named ONESOURCE™. This solution helps bank / FI to simplify tax compliance process and remove the burden of formulating and implementing new compliance policies. To know more about the solution please refer the below Source: https://tax.thomsonreuters.com/fatca-crs/what-is-crs-fatca/



2. Know your customer (KYC) / Anit Money Laundering (AML). These are two main focus areas where bank would like to implement Regtech solution to avoid money laundering , onboarding customer check with validation in system and scan through all blacklist customer real time and alerting the bank before onboarding the customer . Identitymindglobal has developed solution on KYC / AML compliance to check various combination of customer onboarding process supported by a global online identity verification service that allows you to verify customer data using multiple KYC onboarding tests, build and risk score digital identities to ensure anti-money laundering (AML) compliance, combined with new account fraud prevention. To know more about the solution please refer the below Source: https://identitymindglobal.com/kyc/


3. Compliance for Blockchain network. In Digital Fintech world, blockchain solution are used extensively for the transaction processing related to bitcoin, crypto currency , Smart contracts, and bank trade finance transactions , cheque transactions across the world. This Blockchain solution helps bank to keep data in hyper ledger fabric which is decentralized in nature and data are scattered in the network to ensure, data can’t be hacked unless there is access key information (Public / Private). There are blockchain data miners who try to access information on the block chain network and hacks the information for their purpose. Chainalysis is a Regtech solution provider who provided end to end investigation and Compliance software for the block chain network. To know more about the solution please refer the below Source: https://www.chainalysis.com/