IA Fintech Member Insights: Clausematch 

 

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Happy Monday! I hope you had a very nice weekend!

In this week’s edition of the RegTech X, banking technology is a key focus. One highlight is the 36-page report on machine learning in financial services that has been put together by the Bank of England and the Financial Conduct Authority. I also reveal how slow, manual onboarding processes could cost traditional banks a staggering sum of money in the years ahead.

In the RegTech space, I have some exciting news regarding a collaboration between ClauseMatch and Aberdeen Standard Investments in Singapore. In addition, you’ll find links to the new REGTECH Book that was launched recently.

You’ll also find the latest regulatory developments in relation to the Securities and Exchange Commission, the European Securities and Markets Authority, the Hong Kong Monetary Authority, and the Bank of Japan.

Read on to find out more!

Have a great week! ☕

Cheers,

Evgeny

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Regulator UK 

X The Bank of England (BoE) and Financial Conduct Authority (FCA) have published a 36-page report on their recent survey into machine learning (ML) in UK financial services. The survey found that ML is increasingly being deployed within the industry, with use expected to more than double in the next three years. (Global Government Forum) 3 mins

One of the key findings of the report was that machine learning is used the most within risk management and compliance. However, interestingly, the report also said that the technology is actually making risk and compliance more complex. (eFinancialCareers) 3 mins

Meanwhile, the FCA has pledged to ramp up its spending on data analytics on the back of criticism that it is slow to act. According to FCA chief Andrew Bailey, there is a growing impatience at the regulator’s response time. (FN Financial News) 2 mins

Bailey has also said that the FCA is still dealing with trust issues that were born in the Global Financial Crisis. In a speech to the city at Mansion House, Bailey said the financial crisis had fuelled a breakdown of trust in regulators and that the FCA was still dealing with the fallout. (FT Adviser) 2 mins

The FCA has confirmed that it will not investigate its own role in the recent Woodford Investment Management debacle, despite accusations that the regulator missed red flags. Consumers are expected to lose large sums of money from the saga. (FT Adviser) 2 mins

John Glen, Economic Secretary to the UK Treasury, has said that the FCA has the authority to introduce bans on cryptocurrency derivatives. Last year, the regulator made a commitment to consult on the potential prohibition of crypto derivatives. (Yahoo Finance) 2 mins

The Prudential Regulation Authority (PRA) is looking at ways to lower barriers to growth for smaller banks. However, it has stressed that it has no intention of weakening the resilience of the UK financial system. (Financial Reporter) 2 mins


Regulator EU

The European Securities and Markets Authority (ESMA) last week distributed its latest list of checks for regulators to carry out against listed companies’ 2019 financial statements. The objective of the list is to help build investors’ confidence in European capital markets. (ESMA) 3 mins

The European Banking Authority (EBA) has extended the deadline for the migration to Strong Customer Authentication (SCA) to 31 December 2020. The new deadline gives companies a 15-month extension to prepare for the regulation. (Crowdfund Insider) 2 mins


Regulator US
Four US regulators, including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) have joined the Global Financial Innovation Network (GFIN), a global FinTech sandbox led by the UK’s FCA. Established in August 2018, the GFIN aims to provide a platform for innovative firms to better interact with regulators and trial cross-border solutions. (Token Post) 1 min

The SEC has revealed plans to introduce crowdfunding regulations. SEC acting Director-General, Ms. Mary Uduk, said the move was aimed at protecting investors in the capital market. (Punch) 2 mins


Regulator Asia 

Japan’s central bank and its financial regulator are teaming up to test major banks’ resilience to mounting risks. The joint stress tests by the Bank of Japan (BoJ) and the Financial Services Agency (FSA) will require five banks to measure their ability to withstand shocks such as a sharp economic slowdown, falling stock prices, and changes in interest rates. (Bloomberg Law) 3 mins

The Hong Kong Monetary Authority (HKMA) has issued a new supervisory policy manual on risk management of e-banking, following consultation with two industry associations. The supervisory policy manual seeks to strengthen risk management controls in electronic banking channels by providing more principle-based guidance. (Regulation Asia) 3 mins

Ravi Menon, managing director of the Monetary Authority of Singapore (MAS) has said that central banks need to respond to the challenge posed by Facebook’s attempt to create a faster and more affordable payments network via Libra. According to Menon, Libra shows that banks can do more. (Bloomberg Law) 2 mins


Compliance 

An understanding of behavioural ethics can help strengthen a firm’s compliance programme, says compliance specialist Jeffrey Kaplan. Behavioural ethics is a field of social science that shows how, due to various cognitive biases, we are not as ethical as we believe we are. (FCPA) 3 mins


RegTech

ClauseMatch is collaborating with Aberdeen Standard Investments (ASI) in Singapore for the Investment Management Association of Singapore’s (IMAS) Digital Acceleration Program (DAP) to pilot a solution for the industry. The collaboration has allowed ClauseMatch to deepen its understanding of the challenges faced by the asset management industry. (Finextra) 2 mins

Last week saw the launch of ‘The REGTECH Book’ at Level 39 in Canary Wharf. The first of its kind, the book provides a comprehensive and invaluable source of information for corporates, regulators, compliance professionals, start-ups and policy makers. (Eventbrite) 1 min

You can find the book on Amazon right here.

RegTech is zooming in on the European Union’s Sixth Anti-Money Laundering Directive (6AMLD). This directive is due to take effect on 3rd December 2020, and carries substantial penalties for non-compliance. (Finextra) 2 mins

RegTech goes far beyond risk reduction and cost saving, according to this article in Planet Compliance. It can also add enormous business value by generating data insights and potentially transform the way a company operates. (Planet Compliance) 6 mins

Another recent article published by Planet Compliance analyses Innovation Hubs and Regulatory Sandboxes, comparing these two formats. (Planet Compliance) 12 mins


FinTech

The key challenge facing many FinTech players is that the regulators they deal with are not open enough, which can hinder their growth and expansion plans. This was one of the conclusions from the SCxSC Fintech Conference 2019 that took place in Malaysia recently. (TechinAsia) 3 mins

In Australia, the government has formed a Committee on FinTech and RegTech. The objective of the committee is to examine the size and scope of the opportunity for Australian consumers and business, the barriers to the uptake of new technologies in the financial sector, current practices and ways to strengthen them, as well as the effectiveness of current initiatives in promoting a positive environment for FinTech and RegTech firms. (ZDnet) 2 mins

Client Lifecycle Management firm Fenergo has revealed that slow and manual onboarding processes could lead to commercial and business banks individually losing $4.5 billion in revenue. The company says that commercial and business banks that rely on traditional processes to onboard new clients are in danger of becoming obsolete. (The FinTech Times) 2 mins

After a great deal of anticipation, Revolut has launched its services in Singapore. Customers can now open an account from their phones and start spending worldwide in over 150 currencies at the real exchange rate without hidden fees. (Finews.asia) 2 mins

UK challenger Starling Bank has raised £30 million in a new funding round. The capital will be used to strengthen its B2B offering and expand into European markets. Since launching its app in May 2017, Starling has opened 930,000 accounts. (Finextra) 2 mins


White Paper 

What will compliance look like in 10 years? If you haven’t yet had a chance to read our new White paper the team at ClauseMatch prepared, you can do so by following this link  (ClauseMatch website) appr. 1 hour


Technology

Finalists have been announced for the Banking Technology Awards. Revolut and ClauseMatch have been nominated in the Best Use of RegTech category. You can find the list of finalists in all categories here. (Banking Technology Awards) 2 mins

Financial institutions need to be more aware of how the data they provide to regulators is being used, says Herbert Smith Freehills in its 2019 Global Bank Review. Firms should be conscious that the information disclosed to one regulator could be disclosed to other regulators around the world. (Regulation Asia) 3 mins


AML 

Dirty money has spread throughout the UK economy and is targeting prestige services such as private school education and luxury accommodation, according to Transparency International. The watchdog believes that up to £325 billion of dirty money comes in to the UK each year. (BBC) 2 mins

Countries should establish systems that use multiple methods to identify the beneficial ownership of an entity says the Financial Action Task Force (FATF). The intergovernmental body says that countries that rely on a single approach are less effective in obtaining accurate and timely information about the ownership of an entity. (The Wall Street Journal) 3 mins

Facebook’s relationship with banks could be threatened if it launches its digital currency Libra without fully addressing concerns over money laundering, according to a recent article in The Financial Times. ING CEO Ralph Hamers says that banks are the ‘gatekeeper’ to the financial system and they won’t bankroll companies that could put the financial system at risk. (Pymnts.com) 2 mins