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AML vs. Technology: the never-ending challenge

The technology behind finance has never been so efficient, fast, and reliable. You could have any product, everywhere in the world, at any moment. It’s all about what, where, and when you want it. Unfortunately, as it often happens, the technology is so advanced that the related regulation struggles to keep up.

Furthermore, considering that finance laws are by far the most strict and complicated, we can immediately understand why fintechs all over Europe are grappling with this topic. 

In finance, delays are inevitable. Nowadays, the primary anti-money laundering requirements are familiar to anyone: 1) a good risk-management in place, 2) the customer due-diligence and 3) the suspicious activity report (also known as SAR); but not everyone knows that the regulation it’s so detailed that requires specialists for each subtopic to make every process compliant.

Let’s take the customer due-diligence as an example. The so-called KYC (know your client) is very time-consuming and requires a lot of operational effort to fulfil the requirements.

The main idea behind it is that every client of a financial institution needs to be identified (who is the client) and verified (making sure that the client is who he/she says he/she is).

The good news is that new technologies came in place to help. Smart solutions emerged to identify and verify clients using a video-identification system. But, which rules must this video-identification follow? If you are a German financial institution (with German clients living in Germany), the answer is simple: the local regulator issued 2017 a circular with all the details. But what happens if the clients are not sitting in Germany? And what if the client is not German?

Regulation is still too fragmented on this matter. Every national regulator within the EU has taken a different approach to digital identification, making it difficult for companies to operate across Europe.

As mentioned above, KYC is just one of the challenges to operate across Europe; tax and logistics, for example, are other important “bottlenecks” while moving into a pan-European financial business. That is why, Upvest has been developing a smart solution to tackle and help to solve all these challenges at once: its API technology.

While regulation is moving in the right direction, our company is at the forefront of the discussion. Working with organizations like EFA and building a solution that is not only compliant but efficient from a business perspective.

Want to know more about Upvest’s solution? Contact us; we are happy to hear from you!

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