As most businesses adjust to a new, largely remote, way of working, the benefits of regtech, both in terms of continuing to tackle financial crime and implementing efficient processes, are becoming increasingly evident.
Criminals are taking advantage of the COVID-19 pandemic to carry out financial fraud and exploitation scams, which is why businesses must remain vigilant, according to the Financial Action Task Force (FATF). In a statement, they highlighted that “various medical scams targeting innocent victims are likely to increase, with criminals attempting to profit from the pandemic by exploiting people in urgent need of care and the goodwill of the general public and spreading misinformation about COVID-19.”
The body also points out that, while resources are assumed to be focused elsewhere, criminals may look to use any weaknesses in Anti-Money Laundering (AML) programmes to their gain, making supervision and enforcement more important than ever. Underlining the importance of utilising robust solutions, including regtech, to minimise this risk, particularly within our rapidly changing society, the statement continued: With people around the world facing confinement or strict social distancing measures, in-person banking and access to other financial services is difficult, and unnecessarily exposes people to the risk of infection.
Use of digital/contactless payments and digital onboarding reduces the risk of spreading the virus. As such, the use of financial technology (fintech) provides significant opportunities to manage some of the issues presented by COVID-19. In line with the FATF Standards, the FATF encourages the use of technology, including fintech, regtech and suptech to the fullest extent possible.
Wayne Johnson, CEO of Encompass, said that regtech is key when it comes to operating safely, responsibly and effectively as unknown territory is navigated. Calling on firms to realise its role in stopping opportunistic fraudsters, money launderers and terrorists in their tracks, as well as aiding those hit hardest during the pandemic, he said:
In line with the FATF’s recommendations and guidelines to combat illicit financing, regulatory technology (regtech) and financial technology (fintech) must be implemented on a larger scale by financial institutions and organisations. This is essential for a number of reasons: for a start, automated customer onboarding is effective, efficient and completely negates the need for human interaction, which is quite simply no longer an option during this unprecedented time.
Furthermore, the efficiency of proven regtech software can ensure financial institutions are in a position to comfortably manage, and even accelerate payment processes – a particularly useful function for SMEs, organisations and individuals at a time when they need access to finances and payment processes more than ever
Finally, regtech and fintech play an important role in managing comprehensive background checks and due diligence.
Due to the influx of remote workers, there is an increasing amount of opportunistic cyber criminals looking to exploit the goodwill of people through fake charities and financial fraud schemes, and laundering stolen money through overworked and strained financial services. With the right technology in place, financial institutions can reduce the strain on their employees and resources, and flag criminal or suspicious activity at an unprecedented rate.
This will help combat the wave of online financial crime facing financial institutions, while simultaneously speeding up the ability to support workers and businesses in lockdown by providing access to desperately needed funds. Banks and other financial institutions have a critical role to play in sustaining the economy and the livelihoods of individuals throughout this time, and regtech is central to that.