Following the recent announcement that firms which invest in technology that helps them to meet their regulatory obligations will be eligible for tax relief under the government’s proposed spending plans for 2024 and 2025, RiskScreen chief executive Stephen Platt explains how such a move can contribute to the vision for a modern and successful financial centre
THE tides of regulatory compliance have surged considerably in recent years. Businesses are under increasing pressure to meet evolving regulatory requirements.
The framework for Anti-Money Laundering and Know Your Customer due diligence, in particular, has become substantially more complex and critical. As a result, companies have been forced to hire increasing numbers of compliance staff.
This is a particularly acute problem in small jurisdictions such as Jersey which are hindered by staff shortages in risk and compliance roles. The answer lies in regulatory technologies, which enable businesses to reduce dependency on manual human effort while benefitting from huge operational efficiencies and, ultimately, more effective compliance.
This has been recognised by the Island’s government, which recently announced a two-year pilot investment scheme providing tax incentives for businesses which invest in regtech solutions that help boost productivity.
Efficiency gains through regtech
The fundamental premise of regtech is to harness the power of technology to facilitate the efficient management of regulatory compliance requirements. This is a paradigm shift from the traditional, labour-intensive approach that has been the norm for years.
By automating many aspects of the compliance process, businesses not only reduce costs and significantly decrease the chances of human error, but they can also benefit from the competitive advantages that such changes bring.
Regtech encompasses a broad spectrum of digital tools and solutions, each designed to address different aspects of compliance. At RiskScreen, we specialise in AML and KYC technology, with screening, onboarding and perpetual-KYC (pKYC) solutions that deliver enormous productivity gains and accelerate time to revenue without compromising on compliance performance.
The benefits of implementing regtech are manifold. Firstly, it frees up human resources from routine tasks and allows greater focus on higher-value activities. Instead of sifting through mountains of data, compliance staff can be deployed in areas that require their expertise. This reallocation of talent leads to a more efficient workforce and increased job satisfaction.
Secondly, the accuracy of compliance processes improves significantly. By relying on automated systems, businesses can drastically reduce the margin of error in their due-diligence processes and gain greater peace of mind from knowing that compliance processes, particularly in relation to customer onboarding, are being followed consistently across divisions or regions. This results in fewer regulatory breaches and reduces the risk exposure of the business.
Thirdly, regtech can provide dynamic insights into compliance status. With the help of real-time management information, businesses can dynamically and continuously monitor their compliance posture and risk exposure, enabling them to proactively address issues before they escalate and ultimately make better decisions.
Business competitive advantage
In the highly competitive world of finance, gaining a competitive edge is essential. Achieving compliance with speed and accuracy is not merely a regulatory obligation; it is a business advantage.
Firms that can onboard customers better and faster by obtaining the necessary data accurately and quickly with minimum effort and less inconvenience for their customers will outperform the competition. The way businesses comply can now be a significant factor in gaining competitive advantage.
Jersey: A leading light in regtech innovation
As a leading international financial centre, Jersey is uniquely positioned to spearhead the regtech revolution. By embracing and encouraging regtech innovation, Jersey will strengthen its position and attract businesses that value efficiency, innovation and compliance excellence.
Encouraged by international bodies such as the Financial Action Task Force, the Jersey Financial Services Commission has demonstrated a proactive approach towards technology adoption by businesses.
The commission’s willingness to encourage the use of regtech is commendable and vital in ensuring the Island has a joined-up approach to the development of the regtech industry for the benefit of the wider economy. Singapore has long adopted a similar policy from which it has benefitted enormously.
Ultimately, the intersection of finance and technology is where the future of compliance and thus the Island’s finance industry lies.
As the chief executive of RiskScreen, I take enormous pride in having established our regtech venture in Jersey.
We now deliver our solutions to more than 1,000 organisations across over 100 jurisdictions.
Our success is a testament to the seriousness with which Jersey takes the issue of financial crime compliance. As the government does, we see the Island as an ideal location for innovation and growth in the sector.
The recent tax incentives are not just a financial boost for businesses looking to embrace transformation but also a vote of confidence in the potential of the local regtech industry. The initiative announced by Treasury Minister Ian Gorst, which is ultimately designed to improve Jersey’s international competitiveness, is to be applauded.
