RegTech in the time of COVID-19

Increased compliance obligations and additional financial crimes associated with COVID-19 make this an ideal time for financial institutions to invest in solutions to reduce risk and increase efficiency

Greg Pinn

Greg Pinn

May 21st 2020
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Businesses around the world are discovering new ways to operate during the COVID-19 pandemic from temporarily shutting down to finding new ways to operate. Financial institutions have unique challenges when it comes to operating during the novel coronavirus: they must continue to comply with customer due diligence (CDD) and other compliance requirements. FinCEN has been clear that, while some reporting deadlines may be extended, all AML, KYC, and BSA processes must continue.

The change in internal processes at financial institutions due to COVID-19 without any change in compliance obligations is having significant ramifications on businesses globally.  Additionally, government programs such as the CARES Act and its Payroll Protection Program (PPP) have put additional strain on compliance departments: Financial Institutions must comply with all existing onboarding requirements for PPP loans for new customers quickly and efficiently to ensure compliance with the PPP policies while minimizing fraud.

In addition to the increased workloads mentioned above, financial crime increases during natural disasters and emergencies, putting more pressure on compliance teams.  For COVID-19, FinCEN has focused its attention on imposter scams, investment scams, product scams, and insider trading.  This is in addition to natural disaster frauds, benefits fraud, charity fraud, and cyber-related fraud.

With all of these new risks and a workforce that is newly distributed, pressure is being placed on compliance teams to do more with less.  These institutions can no longer afford to rely on legacy solutions built decades ago to solve their compliance challenges. The regulatory community has recognized the need for Financial Institutions to innovate before, beginning in December 2018, and is reiterating the focus on innovation in light of the current situation.  The Federal Reserve, FDIC, FinCEN, National Credit Union Administration, and OCC are all aligned that banks must embrace innovation to help “identify and report money laundering, terrorist financing, and other illicit financial activity by enhancing the effectiveness and efficiency of banks’ BSA/AML compliance programs.”

Many businesses may see the global pandemic as a time to lock everything down to weather the storm, however, this would be counterproductive for compliance teams. The current reality requires innovative ways to work and innovative technologies to ensure compliance.  One area that many compliance organizations must address is the inefficiencies in rule-based and keyword-based solutions for unstructured adverse media screening.  

To that end, Merlon has built the world’s leading adverse media research platform.  The context-aware, natural language processing platform solves many of the problems of existing, keyword-based solutions in the market today.  Find out more about Merlon’s solution, and try it out for yourself.

We built Merlon to allow you to instantly use the power of AI to fight financial crime.