Vedant Sangit, Co-Founder of Regtechtimes discussed the role of Regtech in AML space in Australia with Anthony Quinn, Co-founder of the Regtech leader Arctic Intelligence.
What exactly Regtech means to you ?
“RegTech has a broad meaning and coverage across the audit, risk and compliance value chain but the outcome is consistent – to help regulated entities to develop the capacity and capability to manage risk exposures and meet (and exceed) compliance with laws.”
Brief overview about your product/service offering?
“Arctic Intelligence is a RegTech business that provides audit, risk and compliance “as-a-service” through technology. We have several platforms that are live, with another in development that we plan to launch in early 2019, these are:
AML Accelerate, which is a cloud based Money Laundering and Terrorist Financing risk assessment platform designed by experts and is tailored to over 30 financial and non-financial industry sectors. Since launching this platform we have secured clients in the banking, credit union, FX, gaming, digital currency, investment management, legal, accounting and real-estate sectors in different countries around the world.
Health Check Platform, which is a platform dedicated to audit/assurance and provides a structured process for regulated firms (and their professional advisers) for assessing the design and operational effectiveness of their compliance programs.
ezyKYC, which is a platform that helps regulated entities that are required to refresh or remediate high volumes of KYC data in cost effective and efficient manner.
The Risk Assessment Platform, is in development which will provide a very flexible risk and control framework for sophisticated financial institutions and other major corporates to identify, assess, mitigate and manage risks for money laundering, bribery, fraud, cyber and other risk domains”
What inspired you to build the above platforms?
“After spending 20 years consulting to retail and investment banks around the world several things became clear:
- There is a lack of understanding and appreciation of the financial crime risk exposures faced by businesses
- There was a lack of tools to support regulated entities
- There was (and still is) a massive reliance on spreadsheets and manual processes which are not fit for purpose
- There was a massive opportunity – AML laws apply in 200 countries and across 30+ industry sectors. There are capacity and capability issues of regulations and reporting entities and not enough skilled experts to service demand.”
How Unique is your Product from Others ?
One of your solutions is health check designed to assess the state of compliance programs. How unique is this product from other products ?
“It is quite different and has been designed to enable regulated entities (or their professional advisers) to assess the design and operational effectiveness of their compliance programs. We work with some major professional advisor firms, like Deloitte, who have white labelled our solutions and use this to perform these financial crime program reviews for their clients.”
How big is your team and who are critical players in your team ?
“We are still pretty small but we have a growing team and everyone has a critical role to play in growth and driving quality in everything we do – this means everything from product and technology, client service and operations and sales and marketing.
Following our $2.8m capital raise in July we are expanding our team in number of key roles to provide depth and experience in a number of important roles.
The key thing I have learned is surround yourself with absolutely the best quality people you can. We have a high-caliber board, some fantastic advisory board members and have hired some real “guns” that are high performers and we value the young talent in our team and work hard to provide opportunities to them too.”
What was the most critical aspect of your journey as the Founder of Arctic?
“Timing is everything! I founded Arctic Intelligence in 2013, when I thought the Australian government would expand anti-money laundering laws to gatekeepers, mana date independent reviews and generally drive financial crime compliance of the 14,000 regulated entities.
It’s 2018 and none of that has really happened yet – it’s been like shouting down a well for 5 years trying to get businesses to realize their risk exposures and the consequences of getting it wrong.
It has taken a royal commission and a $700m fine against the largest bank in Australia for Boards to wake up and take financial crime compliance seriously and we have a very long way to go in addressing the criticisms levelled at Australia by the FATF in their 2015 review. My best guess would be that AUSTRAC have only addressed 20% of the 84 recommendations that they committed to and most of that is low hanging fruit, we are still waiting for announcements on tranche 2.
As a RegTech firm in Australia you have to think global from day one as you could quite easily “die on the vine” until the market cares enough to take their financial crime compliance obligations seriously. In the early days we couldn’t find a client in Australia and our very first client was Deloitte out of Singapore who we have built and awesome relationship with, which is amazingly rewarding as a founder when someone gets your vision and backs you as if they hadn’t we could have been dead in the water!”
How did you overcome initial mindset challenges of the regulators/supervisors ?
“There is still a lot of talk. I’d like to see more action. We made a conscious effort of involving regulators early on. We did walkthroughs with many regulators on our early wireframe prototypes, showcased our methodology and involved the regulators and another 20+ companies in our beta testing. There is still a delicate dance going on though as regulators can’t advocate or endorse solution providers and regulated entities are looking for a clear signal from regulators that it’s ok to experiment and try new ways of doing things – with the support ASIC and AUSTRAC have shown, they have the mandate to experiment so we hope to see many more companies moving things forward.”
Where do you see yourself in next three years?
“We have so much we want to achieve still. Our goal has been to create accessible and affordable financial crime audit, risk and compliance solutions for companies regardless of their size, sector and geography. We are really just starting to prove our solutions value and building a diverse customer base and giving them the best possible experience we can.
We want Arctic Intelligence to be positioned as a market and thought leader in our space but our higher purpose has always been to make a contribution to reducing the impacts on financial crime in society and whilst this is a huge problem, estimated to cost the Australian economy $36billion a year we believe technology has a role to plan in financial crime prevention but we are a long way off executing the full vision.”
Which countries do you feel you can expand to with your offerings?
“We have content, partners and clients in Australia, New Zealand, UK, USA, Canada, Hong Kong, Singapore and South Africa and we get approached every week by clients and partners overseas so who knows what the future holds.”
Have you built any consulting model for the consultants from different countries ?
“Yes, we are essentially a RegTech firm but we have established relationships with consultants from the big 4 to independent financial crime experts and want to continue to grow this part of our business as many regulated entities still want that extra support with audit, risk and compliance programs.”