To support real-time payments there is still much to be done in the way of continued application of innovation, compliance and operations. There is also a significant need for financial institutions to continue to engage with their regulators to discuss innovation in compliance, and the sector is undoubtedly well placed to collaborate on any such changes or improvements.

See:  RegTech: The Financial Industry Disruptor

Erin Zavalkoff, global head of AML compliance risk management for foreign correspondent banking, Citi, provides her perspective on the subject in light of correspondent banking and the challenges presented across this sector.

“I think the biggest challenges is that the fintechs are very tech driven and client focused and may not be as appreciative at least at the outset of the regulatory constraints as banks. This makes fintechs ripe for training, and banks well placed to assist them in coming to appreciate their regulatory obligations.

Noting that these challenges have existed in correspondent banking for quite some time, moderator Ron Giammarco, partner, financial crime compliance, innovation, technology and operations, EY, questions whether it is therefore fair to say that while there has been plenty of innovation in payments, there hasn’t necessarily been a great deal of disruption.

Jeremy Warren, MD financial crimes compliance CIB, JPMorgan, adds that banks are increasingly seeing a need for partnerships and acquisitions which allow banks to deliver offerings provided very well by fintechs.

“Banks aren’t able to build as quickly or execute as efficiently so there are opportunities to buy or partner in these spaces. For instance, due diligence related to the onboarding of a client typically goes hand in hand with partnerships and acquisitions.

See:  FinCEN Files: All you need to know about the documents leak

Zavalkoff adds that the success or failure of such exercises really depend on how the regulation can be altered to allow for such innovation, namely, easing restrictions on the sharing of KYC information between banks.

“But if the objective is to prevent financial crime then that can only be achieved through these greater partnerships and by lessening the burden on banks to do the more rote technical compliance and allowing more compliance resources to be put to work toward projects that may actually detect financial crime before it occurs.”

Continue to the full article --> here