The REGTECH Book: The Financial Technology Handbook for Investors, Entrepreneurs and Visionaries in Regulation

Preface

About the Editors

Acknowledgments

1: Introduction

1.1 What a RegTech Compliance Killer System Will Look Like

1.2 Technology Enabled Collaborative Compliance

1.3 The age of RegTech disruption to the status quo is here

1.4 RegTech and Financial Crime Prevention

1.5. RegTech: Tackling Regulation with Innovation

1.6 Identities, the RegTech Holy Grail

2: The RegTech Landscape

2.1 Islamic RegTech

2.2 How RegTech Could Help Determine the Future of Financial Services?

2.3 Introducing the RegTech Quality Compass: The Five Factors of RegTech Quality

2.4 How Banks are Managing Their Risk Through Technology and Market Infrastructure

2.5 RegTech and the Science of Regulation

2.6 GDPR and PSD2: Self-Sovereign Identity, Privacy and Innovation

2.7 Rise of RegTech in the German Market

2.8 The Power of RegTech to Drive Cultural Change and Enhance Conduct Risk Management across Banking

3: Regulatory Innovation and Sandboxes

3.1 Discover the Innovative Technology behind RegTech Leaders

3.2 Enabling RegTech Upfront: Unambiguous Machine Readable Regulation

3.3 Align Open Banking and Future-Proof RegTech for Regulators and TPP to Deliver the Optimal Consumer Convenience and Protection

3.4 A Seat at the Table – Bringing the Voice of FinTech to the US Regulatory Process

3.5 Sandbox Game for RegTech

3.6 Legal Guidance for Entering the Sandbox and Taking Advantage of Cross-Border Cooperation Agreements

3.7 Disrupting the Sandbox – Why, who and how?

4: A Call for Innovation or Disruption?

4.1 Governance Risk and Compliance: Complex or Complicated?

4.2 Innovation or Disruption: It Is Not Always Black and White

4.3 How to Use Digital Marketing Data in Regulated Industries

4.4 Invention versus Reinvention

4.5 Making Regulation Machine Readable

4.6 Can We Digitise Know Your client?

4.7 Overcoming the Constraints on RegTech Potential

5: RegTech Investment and compliance spending

5.1 Why a Substantial Investment in Financial Services RegTech Now, Will Strategically Reduce Your Future Regulatory Compliance Costs

5.2 Old Tech + New Tech = RegTech: Excel Spreadsheets and End User Computing in a Regulated World

5.3 Will Financial Institutions Ever Achieve a 100% Compliance with Anti-Money-Laundering and Combating the Financing of Terrorism Rules?

5.4 Merits and Demerits of a Shared Risk Engine

5.5 Spend on Compliance: A Necessary Evil or Business Enabler?

6: RegTech for Authorised Institutions

6.1 RegTech Opportunities in a Post-4MLD World

6.2 Passporting in the EU - Is an Opportunity Also a Problem?

6.3 RegTech Applications Architecture in Financial Holding Companies - A Chinese Perspective

6.4 Regulation in a Digital World

6.5 What Do PSD2 and Similar Activities Mean for Banks and FinTech Startups?

7: RegTech from a regulatory perspective

7.1 The Role of Anti-Money Laundering Law and Compliance in FinTech

7.2 Banking Supervision at a Crossroads – RegTech as the Regulators’ Toolbox

7.3 FinReg, FinTech and RegTech – Quo Vadis, EU?

7.4 The RegTech Landscape from a Regulator’s Perspective

7.5 RegTech is for Regulators Too, and Its Future Is in Emerging Markets

8: Blockchain and AI in RegTech

8.1 The augmented compliance office

8.2 Dissolving Barriers: A Global Digital Trust Protocol

8.3 Can AI Really Disrupt Monitoring for Suspicious Activity?

8.4 Forging a Responsibility and Liability Framework in the AI Era for RegTech

8.5 Compliance with Data Protection Regulations by Applying the Blockchain Technology

8.6 Blockchains are Diamonds’ Best Friend: The Case for Supply Chain Transparency

9: RegTech Applicability Outside the Financial Services Industry

9.1 Protecting Consumers and Enabling Innovation

9.2 RegTech Impact on the Private Security Industry

9.3 Art and RegTech: How Blockchain Can Improve Provenance

9.4 The Potential of RegTech in Improving the Effectiveness of Environmental Regulation

9.5 RegTech Applicability Outside the Financial Services Industry

9.6 Using RegTech as a Cross-Industry Digitalisation Tool

9.7 RegTech Unleashed: Discovering the Pathways Beyond Finance

9.8 RegTech Outside Finance: Four Options, One Clear Choice

9.9 RegTech: A Safe Bet for Tackling AML and Fraud in the Gambling Sector

10: Social Impact and Regulation

10.1 The FinTech Ecosystem between Legal Compliance and Social Dimension

10.2 The End Justifies the Means: Putting Social Purpose Back at the Heart of Banking and Financial Regulation

10.3 RegTech’s Impact on Trust and Identity

10.4 How Technology is Driving Financial Inclusion

10.5 Banking the Unbanked and Underbanked: RegTech as an Enabler for Financial Inclusion and Empowerment.

10.6 Super Hero Way: Enhancing regulatory supervision with SuperPowers

11: The Future of RegTech

11.1 Market Surveillance 2020

11.2 I Regulate Therefore I Am? Regulating Humans and Machines’ Conduct and Culture

11.3 The Future of RegTech

11.4 From RegTech to TechReg - Regulation in a Decentralised World

11.5 Emerging Innovations in RegTech

List of Contributors

Acronyms

Index

JANOS BARBERIS is a Millennial in FinTech, recognized as a top-35 global FinTech leader. He founded FinTech HK, a thought leadership platform, and the SuperCharger – a FinTech Accelerator that strategically leverages on Hong Kong as a gateway to Asia. In parallel, he sits on the advisory board of the World Economic Forum's FinTech Committee and is a PhD Candidate at Hong Kong University Law School.

DOUGLAS W. ARNER is the Kerry Holdings Professor in Law at the University of Hong Kong and one of the world's leading experts on the intersection between finance, technology and regulation. He has advised on financial sector regulatory issues in markets across Africa, Asia, Australia, Europe and North America, with governments, international organizations including the Asian Development Bank and the Alliance for Financial Inclusion, and private sector institutions. Douglas has published 15 books and over 150 articles, chapters and papers on related subjects. He led the development of the world's largest massive open online course (MOOC): Introduction to FinTech, launched on edX in May 2018, now with over 35,000 learners spanning every country in the world.

ROSS P. BUCKLEY is the KPMG Law – King & Wood Mallesons Professor of Disruptive Innovation, and a Scientia Professor, at UNSW Sydney. His research focus is on FinTech, RegTech and blockchain. He chairs the Digital Finance Advisory Panel of the Australian Securities and Investments Commission (ASIC). He consults regularly to the Asian Development Bank, and has consulted to government departments in 10 countries, including Australia and the US. He has twice been a Fulbright Scholar, at Yale and Duke.