Inside RegTech - Regulatory Compliance Technology

The worldwide economic repercussions of the 2008 financial crisis led regulators to strengthen their regulations and controls against the financial market operators. Today, financial institutions are facing a challenging regulatory landscape (MiFID2, AMLD5, GDPR, FATCA, CRS, CRD, UCITS, PRIIPS, FRTB, EMIR,...) accompanied by regulatory evaluations and coercive measures that urge them to revise their corporate regulatory compliance program as a top priority.


What is the definition of Regtech or Regulatory Technology ?
The cost of revising internal compliance with a new set of regulation have consequences for any business due to the operational implications. Updating an active financial organisation's operating system to comply with new regulatory requirements comes with a substantial financial impact.

It might require to adapt or to remodel system interfaces, rationalise business processes and workflows, to create or to update policies and procedures that formalise the new compliance methodology and its working instructions.


Today's cost of non-compliance could increase the amount of compliance revision if the means put in place are considered insufficient and have been proven to be the source of poor vigilance or lack of controls leading to an abuse of the financial system.

Cost-effectively speaking, it is during that crucial moment that Reg Tech startups and Reg Tech companies entered the financial services market.

Compliance Reg Tech


Reg Tech, also known as Regulatory Technology, is the management of regulatory processes (risk, monitoring, reporting, assessment, compliance) through innovative technology solutions within numerous industries. Today it is finance’s preference and main focus.


Being aware of the difficulties that financial institutions are constantly faced when remodelling their operational systems and processes to keep up to pace with the trends in the regulatory landscape expansion, Reg Tech startups took the opportunity to offer compliance tools that help financial organisations process legal requirements more efficiently, cost-productively and with more agility.

Nowadays the Reg Tech industry is growing rapidly and Reg Tech companies are entering the most significant and newest financial operators that deliver innovative cloud computing technology solutions to help them analyse and treat their data in a more complex and automated way. Artificial Intelligence through Machine Learning algorithms is setting new standards in patterns recognition and is already being used for detecting and preventing financial crimes.


Fin Tech is a new industry that applies innovative technology to serve and improve financial activities. Reg Tech companies are already shaping the future standards of banking and financial institutions analysis, monitoring and reporting aspects of regulatory compliance, but Reg Tech is by definition applicable to various industries.
A standard definition of Reg Tech often classifies it as a subset of FinTech. But is it justified?

Finance and Information Technology symbiosis was established a long time ago. Fin Tech is a new industry that applies innovative technology to serve and improve financial activities.

While Fin Tech and Reg Tech are two industries that could benefit financial institutions, Regulatory Technology targets a broader scope of industries.
Sensitive regulatory requirements do not solely regard banking and financial industries. Governmental applications, pharmaceutical industries, and human resource services could be the next generation of businesses to benefit from Reg Tech compliance platforms and dedicated services aimed at reducing the cost of regulatory compliance.
What are Regtech vs Fintech-differences?

Bio-metric technology is it Fin Tech or Reg Tech ?


The line is thin between Fin Tech and Reg Tech. The certainty is that the first industry brought the second to life and both can be perfectly combined. Reg Tech companies are already shaping the future standards of banking and financial institutions' analysis, monitoring and reporting aspects of regulatory compliance, but Reg Tech is by definition applicable to various industries.


Reg Tech KYC and Reg Tech AML solutions are leveraging technology to foster inclusion of big-data pertinent information analysis, monitoring and reporting into banks and financial institutions preventive due diligence operations to fight against the misuse of the financial system and to help detecting suspicious financial crime situations such as money laundering, tax avoidance, terrorism and nuclear weapons financing.
Technology as a backside of regulatory compliance processes within financial institution have two main illustration:

RegTech KYC and RegTech AML

The know your customer regulation or KYC is a major concern among the compliance processing domains.
To realise the applicability of swiftly changing regulations to ensure that appropriate controls are in place is not an easy task.

All along the course of the business relationship, the financial firms need to identify and verify the identity of their customers.
To prevent financial institutions from being used for criminal activity such as money laundering, continuous monitoring of transactions and other customer behaviours, assessments of the relationship and individual risk profiles are a complex but a necessary burden.

The complexity of the identification and verification processes and continuous evolving aspects of these variables often leads to assigning these essential parts of the process of detection of financial crimes to manual pricey and labour consuming investigation processes.
This ultimately exposes financial accountability in the fight against money laundering and prevention of the abuse of the financial system.

Banking Reg Tech Compliance KYC AML

The monitoring of transactional behaviour is one of the most essential elements in helping compliance officers to detect anomalies. The technology behind financial companies payment or exchange services is designed to capture the details of every transaction occurred in their network.
Modern-day technology-driven mechanisms reinforce the knowledge and control of criminal activity patterns hidden behind the gigantic amount of data transactions carried out by the detection systems of financial institutions.
Artificial intelligence already fed by detection scenarios and enhanced with pattern recognition (machine learning) mechanisms, challenges compliance officers in the discovery of suspicious transactional behaviours.

Reg Tech KYC and Reg Tech AML solutions are leveraging technology to foster the inclusion of big-data pertinent information analysis, monitoring and reporting into banks and financial institutions preventive due diligence operations to fight against the misuse of the financial system and to help detect suspicious financial crime situations such as money laundering, tax avoidance, terrorism and nuclear weapons financing.
For Business RegTech Compliance Solutions and Professional Guidance
Oscar Canario da Cunha - Pideeco Network Partner
Oscar Canario da Cunha Associate Director
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