In a speech delivered last week by Nikhil Rathi, chief executive of the UK’s Financial Conduct Authority (FCA), to the Peterson Institute of International Economics, Rathi explained that the regulator has “invested heavily in data and technology” to take a more proactive stance and, crucially, spot harm and intervene more quickly and more broadly.
Rathi’s speech addressed the manner in which the watchdog plans to shape its regulatory approach into the future, canvassing the need for intensive dialogue between the UK and US, deepening ties on crypto-asset regulation, supporting the industry to prioritise ESG commitments, and, the need for innovative technology.
He explained that the FCA automatically scans 100,000 websites every day for fraudulent or scam activity targeting UK consumers, and that following the regulator’s decision to shift core systems to the cloud, they have transferred over 50,000 firms and tens of thousands of users to a new regulatory data platform. “Using out data lake, we aim to more swiftly identify, connect and react to firm and market issues.”
The chief executive explained that the watchdog’s analytics tools are speeding up case management and providing improved visibility of risk in each firm. “We are rolling out new analytics screening tools to help ensure firms are implementing robust controls to comply with sanctions effectively. As part of this, we have developed an automated tool to test firms’ systems and assess their ability to identify sanctioned entities effectively.”
Rathi continued: “There is and must remain a laser focus on the quality of data coming in, in the first place. And this is an area where we are holding firms increasingly to account. We are examining what potential systemic risks are posed by our financial services sector relying upon the resilience of services provided by a small number of critical third parties – including cloud providers – and will soon publish a joint discussion paper with the Bank of England setting out potential new measures. In this work cross-border cooperation will be key.”
Reacting to the speech, Dr Henry Balani, global head of industry and regulatory affairs for Encompass Corporation, commented: “The FCA’s commitment to evolving and developing the regulatory system, and its own operational platform, to anticipate and tackle threats should be welcomed. With a sharp rise in financial crime, banks and other financial services organisations require the very latest support to operate effectively and improve standards of compliance and reporting.”
“Boosting digital capabilities must be key to this effort. The time is now when it comes to investing in the latest automated technologies to improve AML and KYC checks. These solutions give organisations a complete view of their customer base and activity, and the tools to the act, ultimately ensuring continued compliance,” Balani added.
Source: Finextra
