The Advance of AML SupTech and RegTech in Africa
The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system. It reports regularly to the G20 and through its work, the FSB seeks to strengthen financial systems and promote international financial stability. The FSB acknowledged the benefits of SupTech and RegTech in their report of October 2020:
“For authorities, the use of SupTech could improve oversight, surveillance and analytical capabilities, and generate real time indicators of risk (. . .). For regulated institutions, the use of RegTech could improve compliance outcomes, enhance risk management capabilities and generate new insights.”
SupTech is short for Supervisory Technology. It refers to technologies that are specifically intended for use by Regulators to add value to their activities, for example during a Thematic Review, whereas RegTech (or Regulatory Technology) is designed for use by Financial Institutions (FIs).
The innovation of the Thematic Review was born in Africa in 2014 when the idea of using established anti-money laundering (AML) technology for supervisory and regulatory inspection purposes came about.
From this moment, the use of RegTech repurposed as SupTech became an integral component of an AML Thematic Review. AML Analytics were the pioneering drive behind this, using their existing sanction screening system testing technology as SupTech.
SupTech is all about the use of technologies to improve efficiency through automation. It is about streamlining workflows and introducing new capabilities to simplify complex processes. By digitising data and leveraging the power of computer algorithms to run checks, SupTech can greatly enrich a Regulator’s core AML processes.
Imagine a Regulator being able to view live sanction screening system data on high-level dashboards for all its regulated entities. This revolutionises the way that Regulators and FIs interact allowing for continuous, real-time monitoring and reporting of system efficiency and effectiveness for on-the-spot risk assessment.
SupTech developed by AML Analytics has been used in multiple Thematic Reviews around the globe. It enables a Regulator to see the sanction screening system results of an entire market on a single screen, allowing target performance benchmarks for regulated entities to be set.
The most valuable SupTech solutions are agile and flexible, intuitive and simple in their functionality. SupTech brings with it the new challenges and infrastructures of cloud computing and Application Programming Interfaces (APIs) which allow for the easy collection, storage and analysis of large data sets, such as during a Thematic Review.
SupTech and RegTech have been seen from the outset as essential for the fight against financial crime. With the global AML solutions market set to reach $5.5 billion by 2027 according to work carried out by Research and Markets, innovative AML technologies do indeed have a vital role to play as the pace of SupTech development gathers momentum.
Ultimately, this will drive an increase in AML performance and reduce risk as Regulators will be able to identify emerging and prevalent risks in their market more easily.
The future of SupTech is certain amid a rapid global uptake and will surely become a strategic priority for all Regulators in Africa to assist with their supervisory AML activities, thus securing the stability and financial integrity of countries in Africa.