Stella Clarke, Chief Strategy Officer at Fenergo tells RegTech Insight, “With regulatory pressure increasing and financial crime getting more complex, automation is essential for staying compliant and competitive. Our AI Powered CLM not only addresses these challenges head-on but also represents a step forward in the evolution of compliance technology. It’s about leveraging technology to more efficiently meet the demands of the evolving regulatory landscape, while optimizing client experiences and staying ahead in the market.”

The integration of AI into Fenergo’s CLM promises to reduce costs, speed up onboarding processes, and improve end-user experiences through frictionless CLM processes.

Fenergo’s new AI functionalities include Intelligent Document Processing (IDP), Advanced Reporting, and an AI Assistant.

The IDP feature, available immediately, promises to reduce manual document handling by 72% for corporate onboarding, which typically involves managing 100 documents across 150 data fields.

A survey by Fenergo found that nearly half (48%) of banks globally admitted they have lost clients due to slow or inefficient onboarding, 45% of which claim to be a result of poor document and data management.

The Advanced Reporting module, also available now, offers no-code AI-driven capabilities, allowing compliance professionals to build complex reporting queries without needing coding skills. This module leverages Amazon Web Services (AWS) native AI capabilities to generate advanced analytics visualizations for quicker decision-making.

Scheduled for release later this year, the AI Assistant will use generative AI (GenAI) and natural language processing (NLP) to further save time and costs while managing risk more efficiently.

The post Fenergo launches AI powered CLM with Amazon Bedrock appeared first on A-Team.

This year’s RegTech Insight Awards Europe included more than 30 categories ranging from Best Solution for Sell-Side Regulatory Compliance to Best Transaction Reporting Solution, Best Trade Surveillance Solution, Best Client On-Boarding Solution, Best Cloud-Based Solution for Regulatory Compliance, Best Solution for Buy-Side Regulatory Compliance, Best Solution for Sanctions Management, Best Regulatory Data Solution, and more.

An editor’s recognition award for European RegTech Industry Professional of the Year was given to Dawd Haque, Global Lead Market Initiatives, Regulatory Transformation and Strategy at Deutsche Bank.

Andrew Delaney, President and Chief Content Officer at A-Team Group, said: “Congratulations to the award winners and thank you to all the vendors that entered A-Team Group’s RegTech Insight Awards Europe 2024, to our RegTech Insight community that voted for its preferred solutions, and to our independent, expert advisory board that worked in collaboration with our editorial team to select this year’s winners.”

A complete list of winners and their solutions can be found in the RegTech Insight Awards Europe 2024 report.

You can find out more about A-Team Group awards, which also cover data management, trading technology and ESG here.

The post A-Team Group Announces Winners of RegTech Insight Awards Europe 2024 appeared first on A-Team.

Technology and Operational Challenges

The explosion of data – alongside innovations in cloud computing, artificial intelligence (AI), distributed ledger technology (DLT) and digital assets – creates new threat opportunities that demand robust surveillance systems capable of real-time monitoring and analysis. However, the investment required for such technology is substantial and often hard to justify. Firms typically allocate Governance Risk and Compliance (GRC) resources to address immediate regulatory demands and to prevent recurrence of past incidents. Making a compelling case for investing in technology to prevent something that might happen in the future has proven difficult.

AI and Machine learning (ML) technologies have underpinned compliance solutions for a decade or more but their ability to handle the scale and diversity of data and adapt to the latest regulatory requirements is becoming tested. Many compliance practitioners at industry forums report having to cope with high levels of false positives from legacy surveillance systems and burdensome regulatory reporting demands.

Generative AI (GenAI) and large language models (LLMs) offer the potential to alleviate excessive compliance workloads. These technologies can help improve the efficiency of GRC teams through their ability to analyse huge amounts of structured and unstructured data and generate well-formatted investigative reports, allowing practitioners to focus on more complex, high-impact cases. But these technologies also pose new opportunities for financial criminals. For example, using highly convincing fake identities to gain access to internal systems and sophisticated deepfakes generating false information to manipulate markets.

A shortage of AI skills is another frequently cited challenge at industry conferences. This is exacerbated by the competition for talent by pioneering tech giants including Google, Meta and Amazon. Firms must invest in training and awareness programs and develop robust policies based on thorough risk assessments. Regulators have a role to play by making reported incident and threat data transparent and accessible for analysis. The FCA again leads here by also offering advice and information for policy development.

Strategic, Scalable, Integrated Solutions

Implementing financial crime solutions requires a clear definition of the problem, an understanding of the firm’s risk appetite, and a selection of appropriate use-case specific tools. There is no one-size-fits-all solution. This process should follow a lifecycle approach that includes constant monitoring for market and regulatory developments and model recalibration to guard against drift.

Solutions must be scalable to handle the exponential growth in data volumes, and they should enhance rather than detract from the customer experience. The current levels of data volume already present significant challenges. Data must be clean if surveillance tools are to be effective; the age-old adage ‘garbage in, garbage out’ holds particularly true for effective monitoring, reducing excessive false positives and not missing a false negative.

Industry associations that bring together participants, their technology partners and regulators have a significant role to play in combating financial crime. Collective intelligence is a powerful weapon particularly when facing state sponsored adversaries. In the US, this year’s SIFMA AML conference features a keynote address from FinCen director Andrea Gacki. The UK FCA is demonstrating regulatory leadership by setting up tech sprints and development sandboxes where industry participants can pilot their latest innovations in a regulated environment and simulated market conditions.

Screening for Perpetual KYC

Perpetual know your customer (KYC) or continuous due diligence involves switching to an event-driven methodology to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. This ongoing approach contrasts with the traditional method where KYC checks are conducted during onboarding followed by annual reviews. Perpetual KYC aims to capture changes in customer circumstances and risk profiles in real time or near real time, thus providing a more dynamic and accurate picture of customer activities and associated risks.

One of the primary challenges in implementing perpetual KYC is identifying beneficial ownership. This process involves determining the natural persons who ultimately own or control a legal entity. This can be obscured through layers of corporate structures, trusts, and other legal entities across multiple jurisdictions. Scanning for changes in beneficial ownership and keeping up to date with frequently changing sanctions lists from various global regulatory bodies requires access disparate data sources.

An additional complication in beneficial ownership scanning is identifying politically exposed persons (PEPs). These individuals who are or have been entrusted with prominent public functions, often creating heightened risks in financial dealings due to their ability and opportunities to influence high-level decisions and potentially engage in or unwittingly exposed to illicit activities such as corruption and bribery. Scanning for PEPs is going to be particularly challenging this year with national elections in more than 60 countries including the US, UK, EU, and India.

GenAI and LLMs offer powerful solutions to these challenges by automating the collection and analysis of vast amounts of unstructured and structured data pulling from multiple databases and sources to continuously update records and provide alerts on changes that might affect a customer’s risk profile.

Combining GenAI and Social Network Analysis (SNA) with transaction data can detect anomalies that suggest changes in business activity potentially linked to money laundering or other illicit activities. Additionally, GenAI can help with data quality issues. By integrating GenAI and SNA into their compliance systems, firms can not only increase their operational efficiency but also improve their ability to mitigate risks and adhere to regulatory requirements, ensuring a robust AML/CTF posture.

Social Network Analysis, or link analysis, is a form of data analysis that focuses on the relationships between nodes in a network, where nodes represent entities like individuals, accounts, or businesses, and links denote the connections between them. This approach helps AML professionals distil complex financial transactions into understandable patterns and identify anomalies that may suggest illicit activities.

Looking Ahead

The future landscape of financial crime prevention appears to be one where AI powered RegTech innovations play pivotal role, not by replacing jobs but by augmenting the capabilities of GRC practitioners. The challenge lies in coordinating these advancements across the global organization and collaboration with other participants and regulators through industry associations like SIFMA.

By tackling these issues in manageable chunks and ensuring that solutions are adaptable and scalable, the capital markets sector can better safeguard itself against and the ingenuity of financial criminals and state sponsored threat actors.

The post An Integrated Approach to Combating Financial Crime appeared first on A-Team.

The acquisition will enhance Plenitude’s specialist tech advisory and data analytics capabilities, supporting its ambition to be the preferred tech advisor and implementation partner for AI-powered FCC technology solutions. All of Contineo’s employees were retained, boosting Plenitude’s workforce by 20%.

Alan Paterson, founder and CEO of Plenitude, outlined the integration as follows: “Each Contineo employee will receive initial training on Plenitude values and behaviours and will be introduced to our behavioural learning catalogue alongside our wider training and development programme.”

Founded in 2012, Plenitude Consulting has steadily built its reputation for deep subject matter expertise in FCC. Plenitude provides advisory and transformation services augmented by subscription products to enhance insight into FCC laws, regulations, guidance, and risk indicators. The company provides services across the financial ecosystem, including investment, commercial and retail banks, asset managers, insurance companies, FinTechs, professional services and crypto firms.

Subscription products include Compass—Financial Crime Country Risk, Client Sight Online—Financial Crime Client Risk Rating, KYC, Client Due Diligence, and Reg Sight Online—Financial Crime Compliance Obligations Management. They also include regulatory horizon scanning, checking policy alignment with the latest regulations, and addressing any gaps.

In 2022, Plenitude Consulting was appointed to the Financial Conduct Authority (FCA) Skilled Persons Panel for Financial Crime, which confirmed Plenitude meets the FCA’s requirements for expertise across a range of regulatory topics, including financial crime, anti-money laundering, anti-bribery and corruption, sanctions, cryptocurrency and payments solutions, tax evasion, and market abuse (including insider dealing and market manipulation).

GCP, which specialises in creating investment partnerships with entrepreneurial growth companies, made a minority investment in Plenitude Consulting in July 2022. GCP tends to focus on minority or majority transactions with investments ranging between £10 million and £50 million in businesses valued between £25 million and £150 million.

GCP’s partnership with Plenitude is focused on strategic initiatives. In addition to funding for acquisitions and product development, GCP provided hands-on support to source and onboard senior hires, invested in people operations, and worked with the senior leadership team to evolve the organisational structure for accelerated growth.

Targeted growth areas included international expansion in Europe and Asia and the emerging digital assets market. Support was extended to invest in tooling and automation, evolve back-office systems, and drive improved reporting and strategic decision-making.

The post Plenitude Acquires Contineo Financial Risk Solutions in Strategic Move appeared first on A-Team.

By Rory Doyle, Head of Financial Crime Policy at Fenergo.

Just when you thought the drama was over after the Nigel Farage-Coutts saga, along comes another high-profile figure to re-shine a spotlight on a problem that refuses to disappear.

Andy Haldane, a former bigwig at the Bank of England, is the latest to be denied a bank account due to his perceived political affiliations, despite no longer being employed by the Bank. It’s like déjà vu, but instead of a Brexiteer, it’s an ex-central banker taking centre stage.

Haldane, who would have spent more time crunching numbers than shaking hands with politicians, appears to have found himself in hot water simply for his past Threadneedle Street gig. But the Bank of England isn’t exactly known for its political shindigs – so why the snub? Turns out, it was a simple case of mistaken identity, courtesy of a computer glitch. Sound familiar?

The incident underscores the complexities inherent in politically exposed persons (PEPs) identification and the potential consequences of misclassification. PEPs aren’t just your run-of-the-mill VIPs; we’re talking presidents, prime ministers – those who really call the shots. But it doesn’t stop there. Royal families, leaders at state-owned companies, and even the top dogs at international organisations like the UN are fair game. The idea is simple: where there’s power, there’s potential for corruption.

The issue is there is no one-size-fits-all description of a PEP, with every jurisdiction playing by its own rules. The US has one definition, the EU another, and let’s not get started on the rest of the world. So, what’s a bank to do?

Well, for starters, they need to up their game when it comes to due diligence. We’re talking Sherlock Holmes levels of sleuthing here. Banks must dig deep, not just into the pockets of PEPs, but into their entire financial history. Who’s giving them money? Where’s it coming from? And most importantly, is it clean?

But there’s a deeper issue at the heart of this longstanding predicament: many banks still rely on antiquated systems and processes when it comes to onboarding and managing clients who are categorised as PEPs, leaving them drowning in a sea of paperwork and red tape. Or as in the case of Haldane, fall foul of human error.

Thankfully, though, a life raft may be within reaching distance.

Advancements in client lifecycle management (CLM) software can enable banks to finally untangle the mess of corporate hierarchies and more accurately understand who’s really pulling the strings – or perhaps more fittingly, the purse strings. It can help banks deal with the complexities of identifying and understanding the potential risk of PEPs by enabling them to sift through complicated company setups more easily – meaning they can pinpoint the real decision-makers much faster. Tech solutions can also make it easier to gather all the extra info needed to meet the regulatory rules, in theory making PEP onboarding and management smoother than ever.

Considering the Haldane case, it’s evident the challenges surrounding PEP identification and management persist, with real-world implications for individuals and institutions alike. As financial institutions navigate this problematic issue, a proactive approach, bolstered by technological innovation and regulatory collaboration, seems essential.

By learning from incidents like Haldane’s, financial institutions can enhance their ability to effectively onboard  and manage PEPs, thereby mitigating risks and safeguarding the integrity of the financial system. As we move forward, let’s heed the lessons of the past and work together to ensure PEP management remains a top priority for the industry.

The post Ex-BoFE Haldane’s Headache Amplifies Banking’s PEPplexity appeared first on A-Team.

This year’s platinum award winner is Regnology for its Most Innovative Regulatory Reporting Solution. Gold award winners include Interop.io, Quod Financial, S&P Global Market Intelligence, and SmartStream Technologies, with plenty more entrants picking up silver awards.

The Innovation Awards 2024 included over 40 categories across A-Team Group’s Data Management Insight, TradingTech Insight, RegTech Insight and ESG Insight news channels. They ranged from Most Innovative Smart Trader Desktops and Workflows to Most Innovative Data Standards Initiative, Most Innovative ESG Data Solution, Most Innovative AI in Regulatory Compliance Initiative, Most Innovative Data-Driven Transformation Project, Most Innovative Financial Technology Executive, Most Innovative Professional Development Initiative, and more.

A complete list of winners and their solutions can be found in the Innovation Awards 2024 report.

The post A-Team Group Names Winners of Innovation Awards 2024 appeared first on A-Team.

Dow Jones Integrity Check is an automated screening solution that identifies risks and red flags from thousands of data sources including, accessing millions of registries and screening data sources and trillions of web pages across the indexed Internet.

Designed with regulatory guidance in mind, the new solution incorporates proactive safeguards against hallucinations and continuous review to ensure trustworthy, unbiased results. The outputs are fully sourced and auditable, with links to the original articles and records for further interrogation.

“Reducing the amount of time needed to run a background check from days to minutes will transform the way compliance teams approach due diligence, ultimately providing greater transparency and assurance on who they are doing business with,” says Joel Lange, EVP and GM, of Dow Jones Risk & Research. “Together with Xapien, we are pioneering the future of risk mitigation, harnessing GenAI and other emerging technologies responsibly to facilitate smarter, faster decision-making.”

Dow Jones Risk & Compliance is a subscription-only service that provides information curated exclusively from publicly available sources. Risk & Compliance collects and processes this information, which includes personal data available in the source material such as newspaper articles, government and other official websites, government directories, and other publicly available information, to assist subscribers in performing due diligence and other screening activities in accordance with their legal or regulatory obligations and risk management procedures. The information is only made available to subscribers who require it to mitigate risks and meet regulatory requirements relating to, for example, money laundering, bribery and corruption, sanctions, due diligence, and commercial risk operations.

The solution includes customer due diligence (CDD) and onboarding processes comprising extensive checks over beneficial ownership, screenings for politically exposed persons (PEPs), sanctioned entities, and adverse media. Ongoing monitoring ensures that existing customer profiles do not evolve in ways that increase risk exposure. A range of managed services is available supporting the full spectrum of compliance activity, from initial setups and reviews to continuous monitoring and support. These offerings are supported by a comprehensive risk database, cutting-edge research tools, and educational resources.

Dow Jones Risk & Compliance was voted Best Sanctions and PEPs Solution in the A-Team Group RegTech Insight Awards for 2023.

The post Dow Jones Risk & Compliance Deploys Generative AI to Transform Due Diligence appeared first on A-Team.

Originally incubated by AlixPartners, GSS tackles the complexity of sanctions with a platform that operates as a collaborative hub, bringing together financial institutions and industry partners to deliver efficient and effective transaction screening for sanctions.

AlixPartners is an existing investor in the company, along with Cynosure Group and financial institution MUFG. An addition in this funding round is Commonwealth Bank of Australia (CBA). The company will continue with its advisory board of more than 30 global financial institutions that has worked together since 2021 to create a common technology framework and agree standards for the financial sector.

Tom Scampion, CEO and co-founder of GSS, says: “GSS is well positioned to deliver improved regulatory compliance and an enhanced customer experience.”

As part of its investment in GSS, CBA will join the company’s main board as an observer. The bank will be represented by its executive general manager of financial crime compliance, John Fogarty. He says: “We’re excited about the potential of GSS with its global reach and look forward to seeing how CBA can potentially use the technology to continue to prevent sanctioned parties from accessing and moving money into or out of Australia.”

The post Global Screening Services Raises $47 Million, Moves into Operational Phase appeared first on A-Team.

Founded in 2011, SmartSearch offers solutions for AML compliance, customer due diligence, Know Your Customer (KYC) and Know Your Business (KYB). Its AML verification platform conducts individual and business searches across UK and international markets with automated sanction, PEP, UBO and adverse media screening, and ongoing monitoring.

Guy Harrison, CEO of SmartSearch, says: “Triple is a good match for SmartSearch. The business is looking forward to calling on its expertise in scaling mission critical, B2B risk and compliance software.”

Mads Hansen, head of investments and managing and founding partner at Triple, adds: “This is Triple Private Equity’s first investment in SmartSearch, a market leader in GRC in the UK, a key investment space for Triple. The company has shown consistent growth and profitability and provides a high-quality software platform for its clients. We look forward to partnering with the SmartSearch team to pursue the company’s next stage of growth.”

The post SmartSearch Sets Growth Plans Following Investment from Triple Private Equity appeared first on A-Team.

“This outcome sends a clear message to market participants that breaches of market integrity rules will result in substantial penalties that should not be seen as a cost of doing business.”

Market Abuse and Trade Surveillance were the focus of a recent A-Team Group webinar that brought together representatives from the regulatory, market participant, and vendor communities. 

The panel was moderated by Sarah Underwood, Editor at A-Team Group, and comprised Yasmin Lee, EMEA lead for Surveillance at Macquarie, focusing on trade e-comms, voice, and commodity markets; Jamie Bell, head of Secondary Market Oversight at the FCA; and Dermot Harris, Head of Regulatory Solutions at OneTick.

The webinar was conducted under Chatham House Rules; hence any quotes aren’t attributed to a specific panel member.

The Current State of Trade Surveillance
An opening audience Poll asked the question: “To what extent is your organization satisfied with its trade surveillance for market abuse?” The majority response (90%) was satisfied (53%) or somewhat satisfied (37%) with room for improvement in both cases.

Lack of regulatory clarity in other jurisdictions can make a case for investment difficult. For example, statements from regulators like the following do not help the business case; “Well, we’re not gonna obligate that you have surveillance, but, if we investigate you and we find some wrongdoing and you have gaps, then the fines will reflect that.”

Cyber risk and data security are also factors affecting trade surveillance. During the pandemic, smaller firms conducting business over the public internet were exposed to, and some suffered ransomware attacks. The message from the panel is clear; “Cyber risk is as dangerous as regulatory risk and financial risk.”

There is a trend towards hosted surveillance solutions. It is far easier to keep a hosted cloud-based surveillance system current. On-prem surveillance systems, whether third-party or homegrown, can quickly become out of date with performance falling and end-users losing confidence in the system.

The consensus from the panel is that resilience is improving. Enforcement actions by regulators are having an effect. The size of the penalties being imposed, in the tens – in some cases hundreds – of millions of dollars, is letting market participants know that “breaches of market integrity rules will result in substantial penalties.”

While firms have been making progress with upgrading their trade surveillance systems and processes there remains a lot to do, keeping systems updated and models recalibrated as regulations and front office activities change over time is a particularly challenging area.

Challenges and Solutions for Effective Trade Surveillance

A second audience Poll asked: “What are the ongoing and emerging challenges of achieving effective trade surveillance at your organization?” 

By far the majority response (84%) was “Legacy systems and processes” followed by “Meeting requirements for real-time monitoring (44%).

Staying ahead of front-office innovations like algo trading, and emerging markets like crypto and carbon is a challenge for control functions. The Front Office has the budget and the incentive to innovate with the latest technologies (AI/ML) and create novel financial derivative structures. Firms can very quickly fall out of compliance as control functions struggle to adequately surveil these new AI-powered processes.

Legacy systems and processes can be hard to adapt to structural changes in market practices and meet transparency requirements. 

Lack of risk model expertise outside the front office manifests itself as a lack of concern over surveillance model risk. One of two scenarios is typically encountered; in the first instance, the model is tuned to suppress alerts completely, and in the second case, the false positive rate is almost 100%.

The fear of recalibration and obsession with false positives by firms creates challenges for everyone, not least the firm itself!

When hundreds of thousands of alerts are generated per day, it is impossible for a manual system to triage everything, and true positives can go unnoticed. The ASIC case against Openmarkets cited at the top of this article highlights the risk of not recalibrating.

Firms have started to calibrate alerts, albeit reluctantly, following the FCA publication Market Watch 69. Previously, firms were demanding that vendors guarantee their default parameters meet the regulatory requirement. AI and machine learning have been an integral part of proprietary trading for many years. It is important that control functions also embrace and master these tools if they are to adequately meet their supervisory duties.

In response to an audience question about the benefits of surveillance beyond ‘mere’ compliance, panellists suggested that the broader benefits of effective trade surveillance include market confidence, a reduction in economic activity costs, and uncovering other organizational issues. The specific benefit, panellists agreed, is the firm’s ability to meet compliance requirements at a lower overall cost and improved efficiency through effective automation. 

Action Item 

So what should practitioners be doing?

The panel suggested that a comprehensive and up-to-date market abuse risk assessment (MARA) is the first step in establishing a comprehensive fit-for-purpose surveillance system, targeted to the identified risk profile of the firm. There is no “one size fits all” solution.

Investigations of Market Abuse cases typically lead to the discovery of one or more of the following best practices being incomplete or missing; a Surveillance system designed to meet the firm’s MARA, people, and processes capable of reacting rapidly to alerts, and an analysis of near misses (false positives). Firms that can tick all these boxes tend to fare better.

Strategies for ensuring that surveillance systems remain current and effective in detecting and preventing market abuse, include hosted solutions that leverage cloud technologies, and maintaining active engagement with vendors and regulators.

The UK FCA is leading the way in regulatory innovation and market support. The FCA Innovation Hub offers participants a Regulatory Sandbox to test product innovation in a virtual market with real customers, and Digital Sandbox offers a range of sanitized and synthetic data sets to test and develop new innovative products.

Firms should take advantage of the FCA publications including the Market Watch 69 publication on Market Abuse Regulation (MAR).

Pay attention to data and cyber security. The message from the panel is clear; “Cyber risk is as dangerous as regulatory risk and financial risk.”

Getting the skills to build and sustain a robust surveillance framework is critical. When firms are developing requirements, they must get past naive questions about how the model detects a false positive and ask about how true positives are detected, how false negatives are suppressed, and how weak cases (false positives) can be used to detect underlying trends. A False positive is a weak case that failed to meet the case for triage. These cases should not be discarded, and firms should be asking vendors to explain how their solutions make use of this data. Must-haves for a trade surveillance solution should include easy calibration, AI/ML-powered analysis of false positives, model risk management and operational security.

The panel was asked what’s coming next in Market Abuse and Trade Surveillance?

With this challenge in mind, vendors are looking at a more automated “black box” risk model that automatically adjusts alert parameters based on observed history. Vendors will have to meet transparency and explainability requirements for these models to become accepted by the mainstream and regulators.

The UK FCA has redefined the relationship between a regulator and the market it monitors, by genuinely fostering innovation through publications, development sandboxes, and access to extensive sanitized and synthetic market data. The extent to which regulators in other jurisdictions follow this example will be a factor in controlling market abuse globally.

The post Best Practice Approaches to Trade Surveillance for Market Abuse appeared first on A-Team.