The Role of Regtech in Combating Financial Crime: Insights from Our Experts

Are financial institutions ready to combat the ever-changing financial crisis? Regulatory technology (Regtech) is emerging as an effective ally in the fight against financial crime as technology advances and criminals find new ways to exploit vulnerabilities. In this blog post, we will look at what Regtech is?, how Regtech is playing an important role in combating money laundering, and how new approaches are reshaping compliance.

The Challenge of Financial Crime

Financial crime is a significant threat to the global financial system’s integrity. Money laundering, fraud, terrorist financing, and other illegal activities are rampant, making them difficult to detect and prevent. According to PwC’s Global Economic Crime and Fraud Survey 2020, the global cost of economic crime and fraud has reached US$42 billion in the last 24 months.

  • Cybercrime is the main trend in financial crime in 2023; more people are using electronic methods to pay bills and buy goods and services. Cybersecurity Ventures projects that by 2023, the cost of cybercrime will be $8 trillion, and by 2025, it will be 410.5 trillion.

The traditional manual enforcement process cannot keep up with the swiftness and complexity of these illicit activities. This is where Regtech comes in, leveraging technological advances to improve Regtech compliance and anti-money laundering effectiveness.

The Power of Regtech in Combating Financial Crime:

Top Regtech solution companies use a variety of technologies to strengthen Regtech compliance tools and identify potential risks, such as artificial intelligence (AI), machine learning, big data analytics, and blockchain. Let’s look at some of the key areas where Regtech can help Fintech:

Know Your Customer (KYC) and Money Laundering Agreement (AML):


Regtech solutions help financial institutions better verify customer identities, monitor transactions, and detect suspicious activity by streamlining Regtech AML and KYC processes. Advanced data analysis, for example, can detect patterns that indicate money laundering or fraudulent transactions and flag them for further investigation.

  • Here’s a recent example: The UK’s Financial Conduct Authority (FCA) fined a major bank £7,671,800 for failings in its anti-money laundering (AML) systems and controls. This event emphasizes the importance of robust Regtech compliance solutions for preventing money laundering.

Fraud Detection and Prevention:

Regtech compliance solutions analyze data volumes in real time using AI algorithms and machine learning, allowing for early detection and prevention of fraudulent activities. These technologies can detect anomalies, unusual patterns, or deviations from normal behavior, alerting financial institutions to potential fraud attempts. According to Juniper Research, online retailers will lose $50.5 billion to fraud by 2024.

The most common fraudulent activities in banking that AI can detect are as follows:

  • Email phishing
  • Credit card theft
  • Identity theft
  • Forged document

In the banking industry, for example, AI-powered fraud detection systems have reduced the incidence of fraudulent transactions by accurately detecting suspicious activity and immediately blocking it.

Compliance Monitoring and Reporting:

Regulatory requirements necessitate the timely and accurate reporting of compliance-related data. Regtech solutions streamline this process by automating data collection, analysis, and reporting, ensuring regulatory compliance.

Financial institutions have been able to comply with regulatory requirements such as the General Data Protection Regulation (GDPR) and the Markets in Financial Instruments Directive II (MiFID II) thanks to the adoption of Regtech solutions.

How Top Companies Should Use RegTech to Fight Against Financial Crimes?

Improved Regtech Compliance:

RegTech solutions streamline compliance processes by utilizing advanced Regtech trends such as artificial intelligence (AI) and machine learning (ML). This increases the efficiency with which suspicious activity is monitored and detected, reducing the burden of manual compliance work. RegTech solutions assist financial institutions in allocating resources efficiently and focusing on areas of greatest concern by automating repetitive tasks and processing analytical data.

Real-time Monitoring:

Traditional compliance methods frequently rely on periodic inspections and retrospective investigations, which can result in delays in detecting potential financial fraud. RegTech solutions enable companies to detect suspicious transactions, wrongdoing, and potential threats in real time. Financial institutions can take swift measures to reduce risk and prevent financial scams with real-time information.

Improved Risk Assessment:

RegTech solutions analyze large amounts of data quickly and efficiently using sophisticated algorithms and data analysis. This enables financial institutions to gain a better understanding of customer behavior, spot trends, and assess risks. Companies can automatically identify high-risk individuals, organizations, or businesses and implement appropriate risk mitigation measures by using advanced risk assessment models.

Accurate Regulatory Compliance Tools:

The ever-changing quality of the regulatory framework makes it difficult for financial institutions to stay compliant. RegTech’s solutions aid in compliance by incorporating process updates and changes into your rules-based algorithms and systems. This lowers the risk of non-compliance, penalties, and reputational harm associated with violations.

Cost Saving:

Implementing RegTech solutions can result in substantial savings for financial institutions. Companies can reduce manual work, eliminate human error, and maximize resource allocation by streamlining compliance processes. Furthermore, using a cloud-based RegTech solution eliminates the need for costly infrastructure maintenance.

Bottom Line

The importance of Regtech in thwarting these illegal activities grows as financial crimes become more sophisticated. Regtech solutions play a critical role in ensuring the integrity of the fintech, from AML and KYC compliance to fraud detection and reporting. By collaborating with Enlatics, you can gain access to cutting-edge Regtech compliance solutions designed to meet the unique requirements of your company. Together, we can make the financial landscape safer and more secure, protecting your business from the perils of financial crime.

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