The changing environment and the dynamic transformation of financial sector entities towards digital and multi-channel banking, requires compliance management professionals and especially the Compliance Officer an academic p repair comprehensive and multidisciplinary to be able to respond and meet the demands of a world in constant transformation. The compliance function is more demanding every day due to state regulations ‘local and external’ and expectations of the Board of Directors, so it is vitally important to find a way to increase its efficiency and effectiveness in the face of the challenges brought by new technology trends. disruptions that support businesses that are increasingly critical and competitive and that impact the risks to be considered in the development of AML (Anti Money Laundering) compliance plans and programs.
The advances of digital banking derived from financial technologies (Fintech) in the global financial market have established a wide variety of products and services, which however involve at the same time different and complex types of risks that still the financial industry has not fully understood and managed them and they are leaving important pending tasks of identification and analysis regarding the treatment of risk that they must evaluate and complete within their organizations. Then "new risks and opportunities" open up both for clients, the financial system, obliged subjects as well as supervisors.
New disruptive technological trends must necessarily be accompanied by the Compliance management solutions to carry out an objective and technical evaluation to mitigate the various emerging risks of this era of Fintech within each process and financial product impacted associated with money laundering and financing. of crimes.
Creating a Modern Compliance Program
As organizations continue to improve their business technology and the quality of their data, their Compliance team has the opportunity to provide a value-added service thanks to the power of data analysis (Data analytic and Artificial Intelligence) and other emerging technologies that they have also developed. Therefore, the compliance program must also be focused on:
- Give priority to areas and products with a high and extreme level of risk, based on the assessment and acceptance of AML risk.
- Analyze, if applicable, all transactions, especially those classified as high and extreme risk in less time, regardless of the type, volume or origin of the data (Artificial intelligence has more benefits than an AML system that only parameterizes groups of transactions according to defined filters).
- Perform transactional data analysis with more coverage and security and in less execution time.
- Quickly identify suspicious or fraudulent trends or transactions that go outside the demographic and transactional profile of customers, not only based on automated parameters, but also based on defined artificial intelligence criteria.
- Improve the performance, value-added initiatives and the professional image of the compliance function vis-à-vis the organization and other external actors or interested parties (stakeholders).
Fintech and Banking
The Fintech-based services that are a reality today have the potential to change the business models, structures and operations of the traditional financial and banking industry, thus requiring new skills and competencies for the Compliance Officer who Apart from their expertise in the prevention of money laundering and financing of terrorism, they require technological support and knowledge and general management of economic, financial, accounting, tax, audit (financial, operational and forensic), AML prevention, legal issues. and regulatory, administrative, logistics, Information Technology (IT) systems and, above all, new trends in disruptive technology, among others.
This innovative Fintech trend has a notable impact on the competitiveness of the service and the well-being of the client and poses a challenge for regulators and operators, it is also advisable to measure its impact on financial results, level of customer satisfaction, as well as the level compliance with the applicable regulations, since not all the laws of the countries contemplate and regulate in whole or in part the broad spectrum of these financial services innovations that are already a reality and are available to customers and users.
The main business areas where the concept of Fintech is embodied are: payments and transactions, personal finance, consulting and marketing for investments and financing alternatives between individuals and companies; which include activities such as: mobile banking, big data and predictive models, AML compliance, crowdfunding, crowdlending (financing by several investors), cryptocurrencies and alternative currencies, foreign exchange market, automated process management and digitization, payments and transfers, p2p loans (online loans between individuals), security and privacy, financial advisory services, trading or marketing of crypto assets, among others. As can be seen, a large part of the financial activities related to Fintech are services provided by private banks and other financial entities,
In this context, it is important to train all the officials in charge of these activities within the financial institution about the risks associated with Fintech and the prevention of money laundering, to also ensure that they are included in the monitoring and training program. Apart from specialized training for Compliance officers who must be fully trained is these new technologies.
These challenges and pending tasks must be aligned in a coordinated manner so that the implementation of improvements is integrated and thus be able to be more effective in the results.