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Sibos 2020: Rethinking compliance for friction-free payments

Finextra | Oct 6, 2020

future of banking - Sibos 2020: Rethinking compliance for friction-free paymentsA handful of topical areas were canvassed in the ‘Friction or fiction: compliance in a real-time world’ panel session on day one of Sibos 2020’s virtual event. While there has been significant innovation in domestic and global payments, financial institutions still play a critical role in the global payment process.

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.

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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.

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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.”

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NCFA Jan 2018 resize - Sibos 2020: Rethinking compliance for friction-free payments The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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