Hong Kong Monetary Authority (“HKMA”) – AML/CFT Regtech: Case Studies and Insights

22 February 2021, Banking & Finance, Newsletter by Simon Deane, Randy Lam

The HKMA published a report titled “AML/CFT Regtech: Case Studies and Insights” highlighting the opportunities that Regtech offers to transform the effectiveness and efficiency of Anti-Money Laundering and Counter-Financing of Terrorism (“AML/CFT”) efforts, and sharing end-to-end approaches which worked in real-life examples.

The report provides insights under five themes: (i) getting started; (ii) data and process readiness; (iii) third-party vendor relationships; (iv) people, talent and culture; and (v) performance metrics and indicators. These thematic insights are intended to help institutions identify an adoption process that is applicable to their particular circumstances.

The report offers the following key observations:

(a)

Stakeholder Buy In & Executive Support - Ensuring management expectations are aligned to the proposed approach has helped many early adopters build credibility with management especially for more complex and larger scale deployments of AML/CFT Regtech.

(b) 

Cross Functional & Interdisciplinary Teams – That diversity broadens perspectives and enables banks comprehensively to evaluate third party Regtech vendors, identify any additional benefits / uses for a solution, anticipate and address potential barriers to implementation, and secure “buy-in”.

(c) 

Forums to Exchange Views & Experiences – Many early adopters — especially those part of large banking groups — found creating forums to share and exchange ideas and experiences had accelerated AML/CFT Regtech adoption.

(d) 

Focus on Data Readiness – Importance of starting discussions with data owners early and planning ahead.

(e) 

Working with Third Parties – When assessing opportunities to partner with third parties, early adopters have looked at compatibility, scale and sustainability.

(f) 

Considering a Holistic Definition of Value – Many early adopters of AML/CFT Regtech looked beyond immediate financial and operational benefits and included the people impact through experiential learning and cross functional collaboration, the customer impact, and adaptability in terms of further uses.

The report is accessible here: link

The HKMA press release in relation to the report is accessible here: link

The HKMA circulars in relation to the report are accessible here: (i) link (for circular to AIs) and (ii) link (for circular to Stored Value Facility Licensees)