IA Fintech Member Insights: Clausematch 

 

Good morning! 

I hope you had a great weekend!

Well, after a relatively quiet start to the year, the RegTech industry appears to be heating up, with a number of big funding deals completed in the last week. Below, you’ll find all the latest industry developments, including a look at an Irish RegTech firm that has just raised $80 million in funding.

Operational resilience is another focus of this week’s report. According to one industry expert, regulators are keeping an eye on how banks manage their cybersecurity and technology risk, and 2020 will be the year that financial institutions are held accountable for failing to ensure their businesses can withstand disruptive events.

You’ll also find news and developments in relation to UK regulation after Brexit, FinTech, crypto regulation, and AML.

Read on to find out more. ☕

Have a great week!

Evgeny

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Regulator UK 

Senior Financial Conduct Authority (FCA) and Bank of England (BoE) figures told the House of Lords’ EU Financial Affairs Sub-Committee last week that the UK should be granted the status of ‘equivalence’ from the moment the Brexit transition period ends at the end of the year, thereby maintaining market access to the bloc. However, BoE CEO Sam Woods also cautioned against remaining “blindly aligned” to EU financial regulations after the transition period. (Investment Week) 2 mins

Meanwhile, Nausicaa Delfas, head of international at the FCA, has pledged to keep the UK at the forefront of international financial regulation and underlined its common priorities with the EU post-Brexit. Speaking at a seminar in London last week, the senior FCA official said that the UK would continue to “engage with the future EU agenda.” (Global Legal Post) 2 mins

After a review by the FCA, payments company ePayments Systems Ltd has been forced to suspend all activity on customer accounts. In an announcement on its website, the payments firm said that its operations had been suspended due to weaknesses in its anti-money laundering systems and controls which required remediation. (Finance Magnates) 2 mins

The FCA has issued over 40 warnings in relation to clone websites this year already. Recently, high-profile hedge funds such as Winton and Algebris have been targeted by scammers. (Reuters) 2 mins


Regulator EU

Steven Maijoor, chair of the European Securities and Markets Authority (ESMA) has said that ESG ratings agencies need more supervision to prevent ‘greenwashing.’ Greenwashing refers to products that wrongly claim to be sustainable. (Reuters) 2 mins

The European Banking Authority (EBA) has launched a consultation on draft guidelines on the appropriate subsets of sectoral exposures to which competent or designated authorities may apply a systemic risk buffer (SyRB) in accordance with the Capital Requirements Directive (CRD). The consultation runs until 12 May 2020. (EBA) 2 mins


Regulator US

The US Treasury’s Office of Terrorist Financing and Financial Crimes has published a report identifying the top vulnerabilities that allow criminal money to enter the US financial system. The report states that criminals are taking advantage of new technologies such as digital assets and encrypted messaging applications. (The news.asia) 2 mins


Regulator Asia

Hong Kong’s Securities and Futures Commission (SFC) has fined BMI Securities HKD $3.7 million for failing to comply with anti-money laundering (AML) and counter-terrorist financing (CFT) regulatory requirements. The regulator has also suspended the firm’s responsible officer, Maggie Tang, for five-and-a-half months. (Fund Selector Asia) 2 mins


Regulator international 

The International Organisation of Securities Commissions (IOSCO) has published a report that looks at the issues and risks associated with crypto-asset trading platforms (CTPs), and sets out the key considerations to assist regulatory authorities in addressing these issues. IOSCO recently stated that crypto-assets are one of its top priorities this year. (Finextra) 2 mins

The TR’s State of regulatory reform special report 2020 can be downloaded here (Thomson Reuters)


Compliance

The Bank for International Settlements has released the report ‘Operational and Cyber Risks in the Financial Sector.’ One conclusion in the report is that better regulatory supervision is associated with lower operational losses. (Mondovisione) 2 mins

2020 will be the year that financial institutions are held accountable for failing to ensure their businesses can withstand disruptive events that could impact the broader markets, writes Carlo di Florio, Global Chief Services Officer at ACA Compliance Group. Di Florio believes that regulators are keeping a close watch on how banks manage their cybersecurity and technology risk. (FT Adviser) 3 mins

Here’s also a recent blog which looks at digital regulation and exciting, break-through things you might miss out on if you are using outdated tools – “Are you still managing compliance with paper and spreadsheets?” (Thomson Reuters Regulatory Intelligence) 3 mins


RegTech

RegTech ‘hackathons’ are gaining popularity in the US. In these get-togethers, data scientists, developers, and experts from banks, tech companies and regulatory agencies brainstorm ideas for compliance technology and write code together. (American Banker) 4 mins

With the help of ClauseMatch, digital bank Revolut is automating its compliance functions. Revolut has been working with ClauseMatch to map regulations to policies, and provide evidence of compliance in the jurisdictions where Revolut operates – a task that would take thousands of hours to carry out manually. (Bank innovation) 2 mins

RegTech group BearingPoint has won a contract to supply Regulatory-as-a-Service (RaaS) solutions to Sweden’s GCC Capital AB. GCC will use BearingPoint’s Abacus360 Banking solution to fulfil its EBA reporting. (Finextra) 2 mins

Irish RegTech firm Fenergo has raised $80 million in a funding round that values the company at $800 million. The funding will be used to continue building more products and for acquisitions. (Tech Crunch) 3 mins

RegTech firm SteelEye has secured $10 million in growth capital in a round led by the FinTech Strategic Investments team at Eight Roads, the investment firm backed by Fidelity, alongside existing investor Illuminate Financial. The funding takes the total amount raised by SteelEye to $20 million. (Finextra) 2 mins

US bank Wells Fargo has invested $5 million in London-based RegTech start-up Elliptic, which helps banks manage the risks associated with digital asset exposure. Elliptic’s technology recently uncovered a terrorist group using Bitcoin to finance its operations by tracking suspicious transactions. (CNBC) 3 mins

The Centre for Finance, Technology and Entrepreneurship (CFTE) has put together a ‘teaser’ YouTube video that looks at its upcoming RegTech course. It’s also written a simple guide on the basics of RegTech which contains seven things you need to know about RegTech in 2020. (CFTE) 3 mins

A week ago, the ClauseMatch team was hosting the Future of RegTech breakfast round table at Level39. The discussion was ongoing for more than an hour. Stay tuned for the key take aways. (ClauseMatch LinkedIn)


FinTech

Online bank Revolut has more than tripled its valuation to $6bn (£4.6bn) after a long-awaited bumper funding round finally closed. (Telegraph) 3 mins

German digital bank N26 has announced that it is pulling out of the UK and will close its 200,000 UK customer accounts. The bank has blamed Brexit, yet others believe that the competitive nature of the challenger bank market is the real reason it has pulled out of the UK. (The Guardian) 3 mins

In a sign that FinTech is finally cracking the US banking sector, Varo Money is poised to become a fully-fledged bank. According to a statement released last week, the online bank got approval from the Federal Deposit Insurance Corporation (FDIC) to receive deposit insurance, making it the first FinTech upstart to win that approval. (QZ) 2 mins


Technology

According to a recent report from Business Insider Intelligence, artificial intelligence (AI) technology could help banks achieve an estimated $447 billion in cost savings by 2023. Financial institutions adopting AI should establish a framework that protects their customers and validates the decision-making behind their algorithm applications, says Lisa Shields, Founder and Chief Executive Officer at FISPAN. (Inside Big Data) 2 mins

The Cambridge Centre for Alternative Finance and World Economic Forum has released the results of a study it ran on AI in financial services. Based on responses from 151 firms across 33 countries, the study found that 77% of respondents said that AI will be important for their businesses in the next two years. (Regulation Asia) 2 mins

Singapore Exchange Regulation, a wholly-owned subsidiary of Singapore Exchange (SGX), has announced that it is introducing AI technology to enhance its monitoring systems. AI technology will help single out unusual trading activities through the analysis of data. (Leaprate) 2 mins


AML 

In its recent 2020 Strategy document, the US Department of Treasury stated that a risk-based approach is key to combating money-laundering going forward. However, implementing a risk-based approach has its challenges, writes Shirish Netke, President of RegTech firm Amberoon. (Finextra) 3 mins