RegTech at the Service of FATF Standards

Financial Action Task Force1 is the most important body which is active in the field of Anti-Money Laundering and Combating Financing of Terrorism2 and is a standard-setting body whose recommendations are widely accepted by countries. The history of its recommendations dates back to 1990 when the AML recommendations were introduced. Later, in 2001, the CFT recommendations were added and at present this group has got 40 recommendations covering AML, CFT and proliferation, which are observed by more than 200 countries.Some of the recommendations of this group are the ones which should be observed by financial institutions and their non-compliance or non-effective compliance may expose the financial institutions to risks which would entail heavy penalties for them.In the past, the financial institutions were trying to train their human resources in order to ensure compliance with international AML/CFT requirements; however, due to the crises which have taken place, now financial institutions seek assistance from technology; which ensures themthat regulations would be observed more effectively. In case technology is properly used, it can help financial institutions in the correct implementation of AML/CFT rules and regulations and increase their effectiveness in the areas including: on-boarding customers and customer due diligence, suspicious transaction reporting, risk-based approach, etc, which are all among the requirements set by FATF. Regulatory Technology3 which is the result of the marriage of t technologyuand t regulationsuis trying to manage the compliance risk and decrease the ever-increasing compliance costs for financial institutions