The application of due diligence from a RegTech perspective

Abstract

Technological innovations are changing the course of nature in the financial services market especially its institutions. At the heart of this change lies the phenomenon of Regulatory Technology where its algorithms and automations are paving the way for an expeditious outcome in many firms and professions. This dissertation will focus on the efficiency of regulatory technology when used in a way to prevent or combat financial crime by facilitating the compliance procedure. Furthermore, this dissertation will evaluate if having an automated compliance procedure is the best strategic move against other competitors in the market, and if so, are legislators prepared to invoke new regulations that appertain to technological innovation? The pressure from financial institutions with regard to regulatory requirements continues to scale at an alarming rate. The repercussions of not investing in regulatory technology may lead to risky or detrimental results that could have easily been avoided in the first place. In fact, this dissertation will focus on analysing certain cases from around the globe, where adequate due diligence procedures were looked over and harsh penalties were given out. These penalties have led legislators to reconceptualise financial regulation. RegTech enables better compliance and adherence to governance without weighing the firm down in its efficiency and growth process. The European Union and its 6th AML Directive acknowledge technology as the way forward and this will be further examined in the following chapters. This dissertation sets out the foundation for a better understanding of RegTech and its implementation may be benefited by regulators, institutions and professions alike in the financial services market.