Compiled by PA Consulting, the Financial Conduct Authority’s (FCA) new report into new technologies within compliance in financial services examines what role new technology can play within regulatory compliance and how they can support compliance activity.
The report is intended to increase the level of understanding of emerging technologies and their potential application within Anti-Money Laundering (AML) compliance. The FCA have recognised that the legislation that is now in place to combat money laundering has moved on significantly in recent years and this report reflects these changes. The report has been written on behalf of the financial services sector, but includes interviews with technology providers and offers valuable advice to any firm who is, or is considering, adopting technology to help them in their fight against Money Laundering.
The report concluded that financial services sector firms are using different technologies within their AML compliance, but that the rate of take-up has varied across firms and different technologies are seen by the industry as being more valuable than others.
Those interviewed from the financial services sector were particularly enthusiastic about data analytics, machine learning and natural language processing, all of which it was felt, could transform AML compliance. Respondents from the tech sector were cautiously optimistic, with most confident in the abilities of their technologies, but facing obstacles to adoption from clients. These obstacles came primarily from large financial services firms who can be sceptical on the ability of products and services, especially from smaller tech companies.
About the Financial Conduct Authority, financial services firms were generally positive, specifically regulator’s involvement in recent innovation initiatives. However it was felt by some firms that the FCA could be more proactive in updating guidance on regulations to reflect the emergence of new technologies and by facilitating further industry wide discussions on AML compliance and relevant technologies. There was recognition that some of the issues are not specific to the FCA but “reflective of a global trend whereby lawmakers and regulators struggle to keep pace with new technologies”.
To read the full report from the Financial Conduct Authority: