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Enabling change should now be firmly established in any AML/CTF supervisory toolkit
With FATF and the international standards leading the way, the need to embrace technology in AML/CTF supervision and stimulate certain innovation in supervised institutions has never been clearer; enabling change should now be firmly established in any AML/CTF supervisory toolkit.
The value in talking to other supervisors making similar journeys and taking actions to help create a culture where innovation becomes business as usual cannot be understated. Supervisors are familiar with what the industry is doing in terms of regtech adoption, but perhaps less so with how best to achieve the desired outcomes, in particular the roles of technologies. With this in mind, in November 2019, the HKMA, assisted by Deloitte, organized the first AML/CFT RegTech Forum1 in Hong Kong to bring together banks, regtech providers, consultants and regulators to discuss challenges and opportunities in imple- menting regtech for AML/CTF. Panel discussions were followed by three breakout sessions focusing on banks at different stages of adoption――identified as “accelerators,” “enablers” and “collaborators”――and since then, work has been coordinated across these three groups through various means.
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Noting that there are always new and emerging risks and the need to stay vigilant and agile, HKMA’s Deputy Chief Executive for Banking Arthur Yuen stressed that the biggest risk is being complacent and carrying on as before without confronting barriers to progress: “We should not be afraid of trying out solutions that we feel will have genuine impact, even if some turn out not to deliver everything they promise.”
In November 2020, the HKMA and InvestHK co-organized Hong Kong FinTech Week. Among several major announcements made at the event was the HKMA’s two-year road map to further promote regtech adoption in Hong Kong’s banking sector.
Under this overall regtech strategy, important conversations and engagement have been taking place with banks involving both anti-money laundering subject-matter experts, technology and transformation teams where these existed. To facilitate the sharing of valuable experience, in January 2021, the HKMA published “AML/CFT Regtech: Case Studies and Insights.”2 This report, drawing on HKMA’s interaction with banks during the forum and subsequent follow-ups with the three breakout groups, offers real-world insights and experiences from banks that have actually implemented AML/CTF regtech or are in the process of doing so. Rather than merely focusing on describing the technologies available and their potential―important as these are―the HKMA wanted to share with the banking sector a number of actual, hands-on lessons learned by industry peers. Individuals that have been and are still engaged in implementing various technologies including strategies that worked, how to select and prepare for regtech initiatives, and some common issues that are likely to arise.
The value in talking to other supervisors making similar journeys and taking actions to help create a culture where innovation becomes business as usual cannot be understated