On 21 January 2021, the Hong Kong Monetary Authority (the “HKMA”) published a report entitled “AML/CFT Regtech: Case Studies and Insights” (the “Report”) highlighting the opportunities that Regulatory Technology (“Regtech”) offers to transform the effectiveness and efficiency of Anti-Money Laundering and Counter-Financing of Terrorism (“AML/CFT”) efforts, and sharing end-to-end approaches which worked in real-life examples.
This Report details case studies and insights of banks which have implemented technologies, including network analytics and robotic process automation. The purpose of this Report is to give banks a practical guidance at various stages of AML/CFT Regtech adoption.
Key observations of the Report include:
- Stakeholder Buy In & Executive Support – Ensuring management expectations were aligned to the proposed approach have helped many early adopters build credibility with management, especially for more complex and larger scale deployments of AML/CFT Regtech.
- Cross Functional & Interdisciplinary Teams – Diversity broadens perspectives and enables banks to comprehensively evaluate third party Regtech vendors, identify any additional benefits/uses for a solution, anticipate and address potential barriers to implementation, and secure the buy in.
- Forums to Exchange Views & Experiences – Many early adopters, especially for institutions with group operations spanning multiple markets, found creating forums to share and exchange ideas and experiences had accelerated AML/CFT Regtech adoption.
- Focus on Data Readiness – It is important to start discussions with data owners early and planning ahead.
- Working with Third Parties – When assessing opportunities to partner with third parties, early adopters have looked at compatibility, scale and sustainability.
- Considering a Holistic Definition of Value – Many early adopters of AML/CFT Regtech look beyond immediate financial and operational benefits and include the people impact through experiential learning and cross functional collaboration, the customer impact, and adaptability in terms of further uses.