The transformative role of regtech to fight financial crime

Wednesday 3 March 2021 09:13 CET | Editor: Mirela Ciobanu | Interview

The Paypers sat with Abhishek Chatterjee, CEO of Tookitaki, to learn how regtech solutions like Tookitaki can help banks better screen transactions for potential money laundering activities using big data and AI

What is Tookitaki for those who do not know it yet?

Tookitaki is a regulatory technology (regtech) start-up that delivers compliance infrastructure software as a service (CI-SAAS) to some of the world’s leading banks and financial institutions to help them transform how they manage their regulatory obligations. Our compliance infrastructure harnesses artificial intelligence (AI) to support a family of smart specialist compliance applications that set new standards in accuracy, speed, and resilience.

COVID-19 has left many FIs and banks having to cope with an avalanche of card and online transactions. Could you please tell us more about the importance of regulatory technology during the pandemic and why its use is crucial than ever before?

As criminals continue to take advantage of the outbreak of the COVID-19, financial institutions (FIs) are trying to address the heightened risk of money laundering. In connection with COVID, there have been mounting cases of the counterfeiting of medical supplies and vaccines, investment fraud, adapted cyber-crime scams, impersonation of government officials, fake charity campaigns, and exploitation of economic stimulus measures put in place by governments. These predicate offences, some of which have never been seen before, have led to heightened money laundering activities. However, banks and FIs require smarter solutions with better data processing power and faster deployment options to keep up with the change required. Compliance failures, though expected during a crisis like this, can be curtailed to a great extent with the use of the right technology. Modern technology not only helps mitigate risk, but also augments process efficiency significantly to levels where financial institutions may be able to face similar crises smoothly.

The rising number of pandemic-related crimes means that banks need to be more diligent with changes in customer behaviour and customer onboarding. Regulators such as the US Financial Crimes Enforcement Network (FinCEN) acknowledged banks’ challenges in meeting obligations, including the ‘timing requirements for certain BSA report filings’ and accepted the fact that ‘there may be some reasonable delays in compliance’. Regulatory technology can help banks and FIs address both new compliance challenges without impacting their deadlines.

Many agree that 2021 is the year crypto and virtual assets will be entering the mainstream financial world.

What role will AI/ML play in detecting money laundering and terrorist financing risks arising from the use of these new payment methods?

In order to counter increasing AML/CFT threats related to cryptocurrencies, regulators across the globe have come up with rules and recommendations for firms dealing in these currencies. While some regulators have included crypto exchanges and wallet companies under the purview of existing AML regulations, some issued new regulations for them.

Tookitaki developed a Typology Repository Management (TRM) framework which addresses the pitfalls of the current AML transaction monitoring ecosystem. TRM is a new way of detecting money laundering through collective intelligence and continuous learning. This advanced machine learning approach will enable financial institutions to capture changing customer behaviour and stop the bad actors. It detects suspicious cases, besides prioritising alerts with high accuracy, without the need to apply any personally identifiable information (PII), rules and thresholds. Our TRM concept won Singapore’s MAS’ FTSI-PoC grant. Tookitaki successfully applied the concept for tackling money laundering related to cryptocurrencies. As of part of the G20TechSprint challenge, hackathon-style competition jointly organised by the Bank for International Settlements (BIS) and the Saudi G20 Presidency, we developed a TRM-based solution for cryptocurrency AML compliance. The same has won the competition in the monitoring and surveillance category.

When it comes to AML transaction monitoring some banks augment their systems by collaborating with regtechs and others replace them completely with innovative regtech solutions. From your experience what trend have you spotted in Asia -Pacific region and what option would you suggest banks take to avert the potential risk of getting fined due to the ever-changing regulatory requirements? 

We have seen both. Some big institutions are reluctant for a complete replacement. In such cases, Tookitaki helped them augment efficiency and effectiveness of compliance programs by providing them AI-based secondary monitoring and screening solutions. Meanwhile, there are new-age financial services wanting to go for a complete overhaul of compliance systems working from secured cloud. Tookitaki platform is agile and scalable enough to handle both these requirements and ensure optimal results.

What are the challenges of selling and implementing regtech solutions?

Numerous factors contribute to the challenges of selling and implementing regtech solutions. Even though tried and tested, technologies such as AI and machine learning are still subject to a lot of scepticism. Still, we have started seeing the scepticism fading away gradually. The initial onboarding costs of investing in new infrastructure and solutions will lead to some firms continuing to choose to invest in legacy systems rather than new technologies.

Additionally, many institutions see third-party risk as a main factor for not implementing regtech solutions. Still, amid COVID-19 pandemic it is a crucial time for FIs to implement these solutions and some are slower than others to adopt them, as organisations focus on business continuity rather than risk mitigation.  

We recently announced our collaboration with UOB where we worked together on an artificial intelligence (AI) solution that is highly accurate in identifying suspicious transactions and connected parties as it combats the increased sophistication in financial crime. UOB is the first Singapore bank to apply AI concurrently to two anti-money laundering (AML) risk dimensions – transaction monitoring and name screening. The Bank’s use of AI enables it to pinpoint higher-priority cases from the more-than-5,700 average monthly suspicious transaction alerts flagged and to deploy the necessary resources swiftly to investigate potential money laundering attempts.

What are Tookitaki’s top three trends to watch out for in the regtech space in 2021?

  1. Banks’ reliance on technology would increase in the post-COVID situation as remote working is poised to become a common trend.

  2. The ballooning cost of compliance and hefty regulatory fines would prompt companies to adopting modern technologies such as AI and machine learning for better risk management. We don’t see AI and machine learning replacing compliance staff in the near future, but these techs would make them more productive and effective.

  3. Increased funding for regtech companies would lead to better research and development, resulting in better innovation leading to efficient compliance solutions. Regtech solutions can provide unmatched analytics driven by technologies such as Big Data, which can help firms make informed decisions quickly.

About Abhishek Chatterjee

Abhishek Chatterjee is the Founder & CEO of Tookitaki. With 15 years of rich experience in big data and investment banking, Abhishek holds multiple patents in machine learning techniques and has been a true inspiration to fight money laundering and help financial institutions implement advanced technologies and decode dirty money. He has recently won the Singapore Fintech Awards 2020 in the Fintech leaders category and has been named one of top 25 regtech executives by the Financial Technology Report.


About Tookitaki

Tookitaki delivers compliance infrastructure software as a service (CI-SAAS) to some of the world’s leading banks and financial institutions to help them transform how they manage their regulatory obligations. Our compliance infrastructure harnesses artificial intelligence (AI) to support a family of smart specialist compliance applications that set new standards in accuracy, speed, and resilience. Incorporated in November 2014 in Singapore, the company is led by a core team with cumulative 150+-years’ experience in finance, AI, Big Data Analytics, and financial crime. The company is headquartered in Singapore, with offices in Charlotte, North Carolina, US, and Bangalore, India.

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Keywords: artificial intelligence, regtech, money laundering, AML, machine learning, transaction monitoring, financial services
Categories: Securing Transactions | Digital Identity, Security & Online Fraud
Countries: World
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