As with all areas of technology, the regulatory space continues to evolve and look at ways to use tech to make things more efficient.

RegTech is a general term for the use of technological applications and systems to help manage, whilst ensuring compliance with, regulatory demands and responsibility. Historically, such systems have been used to help simplify large manual tasks, particularly in relation to anti-money laundering and the detection of suspicious transactions. However, with the recent developments in AI, RegTech has started to realise and discover the enhancements it can bring to their products.

So will it be that RegTech continues to utilise the advances in AI or will AI eventually take over RegTech? Similarly firms need to consider their workforce and how AI will enhance it.

What are businesses doing about it?

The vast majority of businesses are thinking about AI, talking about AI, and researching AI to understand how it can work for them, across many areas of their business. Compliance and AML is undoubtedly a big focus within this.

For instance, BCB Group, a leader in payment services for crypto exchanges, is actively exploring ways to embed AI into its compliance framework, demonstrating a commitment to innovation while prioritising customer experience and safety.

Businesses such as BCB want AI tools to:

● Automate manual processes
● Drive efficiencies
● Improve processing times
● Unlock new potential

As an example, many processes in Anti Money Laundering (AML) & Terrorist Financing (TF) require analysing large volumes of data, identifying anomalies, and making decisions as to what should happen next. AI tools, such as those considered by forward-thinking companies, can significantly improve time and efficiency in these areas, as they can sift through larger volumes of data more quickly.

If AI tools were used for this type of work, they could allow businesses to be more agile, lean, and efficient, with less use of AML professionals' time on manual and process-oriented work. This is something BCB is keen to progress on, as it allows its AML professionals more time to concentrate on in-depth investigations, latest learning, framework development and enhancement as well as personal career focus and development.

And this isn't the only way that AI can impact compliance and AML teams; it can also help dismantle barriers by providing cost-efficient ways to help the firm's growth. For example, AI translation tools can be very powerful in assisting with communications between teams around the world, whether they are in-house or outsourced. This could mean that businesses can be more cost-effective and able to grow their global reach, without compromising on the safety or quality that can be impacted by breakdowns in communication due to language and time zone barriers.

But there is a health warning!

Whilst there are many ways in which AI can impact businesses in a positive way, as highlighted above – this should also be viewed alongside a number of concerns and warnings about AI, some of which are detailed below.

1. One of the most important factors to remember is that AI tools learn from the data which is inputted into them. If that data is inaccurate, then the tool will also be inaccurate.
2. Businesses implementing such tools would need to 'train' these systems to ensure that they are producing the correct results – and this training can take many months.
3. Regulators recognise this fact, so they want businesses to make sure AI tools are consistently quality assured and that professionals still have oversight on decisions made using information from AI tools.
4. Privacy concerns! Anyone inputting KYC/KYB information into AI that you don't host or have full control over must ensure they have strong safeguards in place to make certain they are protected against potential data breaches and so forth.
5. There are/could be AI impact on careers and jobs

Before making any decisions on whether AI is something your firm is ready to embrace alongside a skilled workforce who are able to utilise the opportunities to grow your firm, and your own career do consider the below points when wondering if and how AI might impact your firm or role:

● AI isn't going anywhere so embrace it, if you don't someone else will! Think of AI as a tool that you can use to help you work smarter.
● AI isn't always accurate, so professionals will always be required to ensure the best outcomes. This means it's important to continually develop your own skills and keep them agile and up to date.
● Keep reviewing your own skill set, your value-add, and your impact on the business, and whether this is sustainable as AI evolves. Learn about AI's value-add as well, and instead of trying to replicate it, think about how you can use it to elevate your own position.
● The importance of soft skills cannot be under-estimated so keep focusing on this. They will become even more important in the future. Keep having conversations, network, and learn from peers. In an era where home and remote working has become prevalent, it's important to retain your communication skills by ensuring you're interacting with others often.

Conclusion

 Conversations about AI and RegTech will continue, and AI will keep evolving and even enhancing RegTech. Businesses should leverage the opportunities that AI can bring whilst exercising caution and continuing to hire and retain professionals with agile skill sets, who can ensure AI is used successfully and safely.

Whilst BCB and Twenty84 agree that advancements in AI will aid in AML investigations, we believe it cannot replace the human expertise and knowledge of high quality AML and Compliance professionals; they remain as important as ever. AML and Compliance professionals can and will only benefit from learning about AI, keeping up to date with its development, and embracing its use. By doing this, they can assure their own position as well as helping their firm to thrive.

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This blog has been written in collaboration with Kym Routledge, Head of Financial Crime at BCB Group.

 Kym joined BCB in August 2022 as Head of Financial Crime, after holding the same position at an authorised UK lending platform which she left to expand her experience into DeFi. Having over 20 years experience in financial services in TradFi, including 13 years spent at HSBC group and time at BOS, as well as working for a UK FinTech, Kym is a forward thinker, who has a proven track record of assembling and managing Financial Crime teams of multiple sizes across different jurisdictions, whilst driving efficiencies and safeguarding firms against money laundering (ML) and terrorist financing (TF) threats. Kym is responsible for leading a team of Financial Crime SME's and Analysts to develop and operate the firm's ML and TF control framework.