Utilising regtech to combat money laundering remains at the heart of the payment industry’s priorities, Payment Expert caught up with CEO at Kompli-Global, Jane Jee to discuss the subject further. 

Payment Expert: How important is it that companies continue to place a focus on eradicating the growing problem of money laundering? 

Jane Jee: It is essential that companies strive to do more to eradicate the scourge of money laundering. It remains a huge issue, as was reported this month, when British companies were fined nearly £300 million in 2019 by the FCA, for breaching anti-money laundering (AML) rules last year. 

Money laundering is the end stage for criminal activity and helps to fuel it. Therefore, preventing it is vital for the good of both the company and society as a whole. 

Fraudsters always look to exploit the weakest links in any system, for example, by taking advantage of gaps in customer due diligence. Criminals use all methods at their disposal including innovative technologies to remain undetected. They use increasingly complicated methods to legitimise criminal proceeds and these methods are very difficult to detect unless the right technology is deployed to defeat them. 

There are numerous examples of criminals utilising the very latest technologies to further their criminal activities and enterprises. Therefore, companies on the front line, such as those in financial services, often bear the brunt of both the financial and reputational damage from such Crimes.

PE: What more can the FCA do to increase the significance of its role in combating money laundering?

Jane Jee: This news of record fines of British companies is a clear indicator that the FCA is stepping up its activity in the financial crime arena. 

Encouragingly, the FCA has also expressed recognition of the importance of technology to fight financial crime – Megan Butler, Executive Director of Supervision – Investment, Wholesale and Specialists division, at the FCA, was quoted last year as saying: “…don’t be afraid to use technology and innovate to keep criminals out.” The FCA is no longer asking whose technology do you use but is that technology fit for purpose and how does it make your onboarding and ongoing monitoring safer? 

PE: In what ways will the growth and evolution of regtech play a role halt the growth of fraudulent behaviour? 

Jane Jee: Firstly, compliance must be a priority for all businesses. Regtech covers a huge range of technologies which can enable better due diligence of customers and safer on boarding as well as better transaction monitoring – many providers offer real-time services as opposed to out of date and incomplete data providers of the past. 

Software enables continuous improvement. And breaches, such as those fines handed out to British companies in 2019, mean that regulated entities need to keep progressing their financial crime programmes to make better use of their compliance budgets and resources – working smarter not just harder. 

This is the only way to keep on top of criminal activity and minimise the risk of fines and, ultimately, reduce fraud losses. 

PE: How can companies ensure they are correctly maximising regtech innovations?  

Jane Jee: It is important that businesses find the right solution for them. They should look across the market at what technology is available to prevent fraud and money laundering and ask questions of suppliers and the regulators to get the best-in-class solutions.

At the heart of the prevention of criminal infiltration of a regulated entity is that  organisations know their customer. RegTech that employs real time software enables organisations to access the most up to date information when they are making on-boarding decisions. Regtech can also makes ongoing monitoring easier – reducing manual processes and increasing the efficacy of human judgement about risk.

PE: Is it imperative that high risk industries such as gambling deepen their measures when it comes to AML?

Jane Jee: It is clear from the fines handed out by the regulator that the gaming sector has not avoided penalties for  AML breaches. In July last year, Ladbrokes Coral was fined for conducting inadequate money-laundering checks and failing to protect vulnerable gamblers. 

The gaming sector has embraced digital technologies in their customer-facing operations, so now is the time for them to do the same with their compliance processes. If they do not, then they run the risk of gambling away their revenues and their brand image.