The REGTECH Book

RegTech and Financial Crime Prevention

By Jennifer Hanley-Giersch

Managing Partner, Berlin Risk Ltd

This chapter sets out the challenges facing the anti-financial crime (AFC) framework overall and the opportunities offered by the RegTech sector and their technology solutions. The chapter highlights the role that RegTech tools can play in supporting AFC and cybercrime prevention efforts, while adding value to the business in moving from a defensive risk avoidance mindset to a strategic risk management approach.¹ As with any advances in science, however, we must also take a critical stance and assess the risks that might emerge by adopting and implementing RegTech technologies.

Lack of ROI – Calling for a Framework Overhaul

Some 20–30% of banks’ cost base globally can be attributed to governance, risk, and compliance costs. The British Bankers’ Association estimated in 2016 that financial crime compliance costs its members some £5 billion a year, and is increasing yearly owing to changing regulatory requirements. Nonetheless, estimates suggest that well over a trillion dollars of illicit financing is raised and moved globally every year. Despite the significant funds invested, questions are being raised regarding the effectiveness of the procedures and AFC approaches, which have led to fines paid of some €300 billion,² in particular for crimes relating to money laundering and corruption, and in recent years for failing to prevent financial crime within their organizations. ...