In today’s business world, it is crucial for companies to remain compliant with laws and regulations, especially those pertaining to anti-money laundering and counter-terrorism financing (AML/CTF). One way to manage compliance obligations is by engaging with a regulatory technology (RegTech) business.
While the Australian Transaction Reports and Analysis Centre (AUSTRAC) does not endorse any specific RegTech business or product, they acknowledge that RegTech solutions can be useful in managing AML/CTF obligations.
If you are considering engaging a RegTech, it is important to keep in mind the following factors to ensure that the solution will effectively meet your AML/CTF obligations. Following are the AUSTRAC Guidelines:
Understanding of the AML/CTF Framework and Obligations
One of the most critical factors to consider when engaging a RegTech is their understanding of the AML/CTF framework and obligations. A reliable RegTech should have a deep understanding of the regulatory requirements and obligations in the financial sector, as well as their application to different industries. This knowledge will ensure that their solution addresses the specific compliance requirements of your business.
Understanding of Your Industry and Risks
Another essential factor to consider is whether the RegTech understands your industry, the services you provide, and how regulatory obligations affect your business. AUSTRAC has considered this as an important guideline. RegTech solutions should be tailored to meet the unique needs of each business, and a RegTech that understands the nuances of your industry can better design a solution that is suitable for your business.
The RegTech should also have an understanding of the risks and operational challenges that your business faces, to ensure that the solution addresses them adequately.
Integration with Existing Systems and Procedures
A RegTech solution should seamlessly integrate with your existing systems and procedures. Before engaging a RegTech, ensure that they can explain how their solution will integrate with your current systems and procedures, and that it can operate to the expected standard. If the integration is not done correctly, it can cause significant disruptions to your business operations.
Clear Explanation of the Solution
A RegTech should be able to provide a clear explanation of their solution, including the obligations it is designed to meet, its limitations, and the extent to which it supports your business in meeting AML/CTF obligations. This will help you understand how the solution works, and ensure that it aligns with your compliance needs.
Tool Developed for the Australian Jurisdiction (AUSTRAC)
RegTech solutions should be developed specifically for the Australian jurisdiction to align with the AML/CTF framework. If the tool was initially developed for another jurisdiction, it will likely need to be modified to comply with AUSTRAC’s regulatory requirements.
Offer Ongoing Support by Engaging a RegTech
It is not a one-time process. It is a long-term commitment that requires ongoing support to help you achieve and maintain AML/CTF compliance. Therefore, it is essential to ensure that the RegTech you engage offers ongoing support after purchase, such as installation and set-up, training, and updates.
Provide Demonstrations and Testimonials from Business
A reliable RegTech should be able to provide demonstrations of their tool and testimonials from businesses similar to yours. Demonstrations will help you understand how the solution works, while testimonials will provide insight into how the RegTech has helped businesses similar to yours achieve compliance.
In conclusion, engaging with a RegTech can be an excellent way for businesses to meet their AML/CTF obligations. However, it is crucial to keep in mind the factors mentioned above to ensure that the RegTech’s solution is appropriate for your business needs.
Remember that while a RegTech solution can be a useful tool, it should not be considered as a replacement for human expertise and judgment. Ultimately, businesses are responsible for their compliance with applicable laws and regulations, and RegTech solutions should be used to supplement and support their compliance procedures.
