Module III·Article IV·~1 min read
RegTech: Technologies for Regulatory Compliance
Fintech and Digital Finance
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What is RegTech
RegTech (Regulatory Technology) refers to technologies that enable the fulfillment of regulatory requirements more efficiently and cheaply. The increasing regulatory burden (AML, GDPR, Basel III) creates enormous demand.
Global spending on compliance: $270 billion per year (2022). Large banks spend 15–20% of operating expenses on compliance.
Key Areas of RegTech
KYC/AML automation: identity verification (eKYC) via AI (document recognition, liveness check, biometrics). Providers: Jumio, Onfido, Sumsub. KYC speed: 30 minutes → 2 minutes with automation.
Transaction Monitoring: ML models detect suspicious transactions (fraud patterns, structuring, laundering). Reducing false positives is a key task.
Reporting automation: regulatory reporting (CB, FATF, SEC) requires data aggregation from numerous systems. Axiom SL, Wolters Kluwer OneSumX.
Trade Surveillance: monitoring trades for market manipulation and insider trading. Observing hundreds of thousands of deals per second.
Practical Example: Digital Client Onboarding
Traditional bank onboarding: visit a branch, 20 documents, 2 weeks. Digital onboarding: upload passport, selfie with liveness → AI checks document, matches biometrics → check against databases (PEP, sanctions) → account opening in 10 minutes.
KYB (Know Your Business): for B2B — verification of legal entity, beneficial owners, ownership chain. Especially important when working with companies from high-risk jurisdictions.
Practical Assignment
A neobank is launching in the UAE. The regulator (CBUAE or DFSA) requires: (1) identity verification for each client (passport + proof of address), (2) screening against sanction lists, (3) transaction monitoring. Choose a RegTech stack: which providers, how to integrate, what is the cost.
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