Regtech can help professionals, but luck favors the cautious

AS REGULATIONS gets challenging, compliance professionals — in financial services or anywhere else — often find themselves on their toes.

Using regtech (regulation technology) solutions can often come in handy, but Tokenize Xchange Director and Chief Compliance Officer Jessica Chuah warns that companies need to be careful.

“Implementing a regtech solution doesn’t allow you to wash your hands off compliance requirements put in place by the various regulatory bodies in the many locations you operate in.”

Instead, Chuah believes that since it is the compliance officer’s duty to ensure that the company always meets all regulatory obligations, they must be vigilant irrespective of what solution they implement.

Chuah, of course, doesn’t recommend steering clear of the many interesting regtech compliance products in the market. She does agree that such products can be incredibly helpful to the average consumer — but believes that relying too heavily on these might prove catastrophic.

“Many a time, the statutory and legal texts that these intelligent solutions refer to aren’t updated as soon as the announcement is made.

“The vendors take a bit of time, and for good reason — they need to ensure that the interpretation they make is accurate as implications can be severe.

“Unfortunately, the process isn’t quick enough. In some cases, organizations might need to make changes with immediate effect or retrospectively which is why it pays to have compliance officers that are vigilant and haven’t left flagging issues solely to their regtech solution.”

Chuah, who will be speaking on the topic at the Malaysian Institute of Accountant’s Forensic Investigation and Fraud Analytics Conference next month, told Tech Wire Asia that in her opinion regtech is critical for businesses — but they must be willing to allocate a budget to ensure it’s maintained and updated frequently.

In Chuah’s experience, organizations also seem to sometimes cut corners when implementing regtech solutions.

“I’ve heard companies often neglect the customization requirements for regtech software. Banks, for example, spend time and money on this prior to implementation because they know it’s important. Other industries don’t because they want to save a fraction of the overall implementation cost.”

In the grand scheme of things, it sets up the business for failure at some point in the future, Chuah believes, which means they’ll probably end up coughing up much more in penalties and fines as regulatory action, especially in the APAC, is getting more proactive and stringent.

The reality is that regtech solutions are important for all kinds of businesses today — especially as a part of the digital transformation of the finance function — but compliance professionals and organizational leaders must all be careful.

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