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RegTech to the Rescue: Combining Data Utilities and Case Management for Compliance

Regulatory Demands on the Rise

In financial services, regulatory demands continue to increase along with the pressure from regulators. For example, year after year Anti-Money Laundering (AML) requirements are always a regulatory priority, with local AML requirements around the world consistently changing and increasing. Global banks are currently struggling with implementing processes and procedures to satisfy the new FinCEN CDD rule in the US and the various EU member state localizations of the 4th EU Money Laundering Directive. As part of these requirements, banks have to collect and keep up to date additional documentation and information about their clients. Doing so can be timely, expensive, and frustrating for their customers.


Data Providers and Utilities: Part of the Solution

While adding headcount has been the way to solve the compliance conundrum in the past, the rise of RegTech has provided an alternative route to streamline and optimize existing compliance departments to handle the increased workload. From a due diligence perspective, these varying data providers and utilities provide a variety of services:

-          Source, collect, and maintain customer documentation and information

-          Verify customer identity

-          Screen and monitor customers

-          Conduct adverse media research

While this use of specialized providers to support compliance departments creates great benefit, the introduction of these new processes and influx of readily available information can also create some challenges of its own. Key components of compliance programs are organization, consistency, and documentation – which can be difficult to ensure when coordinating the use of varied utilities by multiple parties as part of the program. Lack of governance and control over the use of the utilities can lead to analysts using the utilities in inconsistent ways, at inconsistent times, with inconsistent levels of documentation.


Case Management: The Other Integral Part of the Solution

Why solve one problem, while creating another? Utilities and data providers are only part of the solution. The other part, which is equally important, is having proper case management to organize your compliance program and the use of these utilities and data sources. The governance and structure that case management can provide will ensure organization, consistency, and documentation of these new and complex sources of information in the following ways:


  • Utilize a single interface to avoid the “swivel chair effect” of using multiple providers
  • Organize the incoming data in a way that is easily usable for the analyst
  • Automatically orchestrate the requests within the overall compliance process


  • Coordinate when to use which utility at the right time in the process
  • Ensure that utilities are used in the same ways for the same situations


  • Keep an audit trail of when the utilities are used, who used them and what information was brought back
  • Centralize and standardize the storage of collected information for each customer.


Using Beneficial Ownership Requirements as an Example

To satisfy the beneficial ownership requirements of the new FinCEN CDD rule and the 4th EU Money Laundering Directive banks must identify and verify the identity of certain ultimate beneficial owners (UBOs) and controlling parties of entity customers. A bank can source this information from a data provider and then use an identity verification service to verify those individuals’ identities. Global institutions will likely also need to use different UBO data sources and identity verification providers based on the customer and/or booking location.  A bank could rely on its analysts to decide which service to use and when and how those services are used. However, this can lead to the wrong utilities being used, requests going out late, analysts wasting time moving through various applications, inconsistent types of information being requested and received, and inconsistent levels of documentation of the requests and the results.

Instead of relying on the analysts to direct the process, the better way to manage this is for banks to use case management to orchestrate and control the use of those utilities. By doing so, banks can automatically generate the requests at the right time, use the right provider for the right customers, store the data in the right place, and document when the data was sourced. Through these benefits the bank can save time, effort, cost, and headache when a regulator or auditor examines the use of these utilities.


This is just one example of how data providers and utilities combined with strong case management can greatly enhance your compliance program. By utilizing these two technological resources together, compliance programs can meet new regulatory requirements efficiently, consistently, and accurately.  



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