Innovation - impact of technology in managing FC/AML risk

Opening comments by Nausicaa Delfas, Director of Specialist Supervision at the FCA, for a panel discussion at our Financial Crime Conference.

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Watch the video from the panel discussion

Speaker: Nausicaa Delfas, Director of Specialist Supervision
Event: FCA Financial Crime Conference, London
Delivered: 10 November 2016
Note: this is the speech as drafted and may differ from delivered version

Welcome back everyone and now we begin the next item on our agenda – our first panel session to discuss Innovation – and specifically the impact of technology to help the financial sector manage financial crime and money laundering risk. 

As you will be aware from our speeches earlier today, and from our Business plan, both Financial Crime and Innovation and Technology are two of the FCA’s priorities for this year – and we anticipate, will continue to be. Interestingly, these two themes in particular do not always go hand in hand as there can sometimes be a perception that AML regulation (or regulation generally!) can appear to stifle innovation. 

Like you, and the government, we are keen that AML regulation is truly effective – to identify and detect financial crime, thus stopping the financial services industry being used for financial crime – and efficient – that it is proportionate, and not unduly bureaucratic and cost efficient.

I am delighted to welcome our panellists today:

  • Andrew Bud, CEO of iProov, a UK based pioneer in online authentication services based on secure face verification
  • Geraldine Lawlor, Global Head of Financial Crime at Barclays Bank
  • David Rennie from the Cabinet Office’s Verify scheme, a new way to prove who you are online when you access government services like filing your tax or checking the information on your driving licence
  • Mark Mullen, CEO of Atom bank, an app based bank, which amongst other things uses biometric security, namely face and voice recognition

Before we start I’d just like to say a few words about the FCA’s perspective.

We are conscious that some AML practices have not evolved much over time. In particular, basic customer due diligence checks undertaken by many firms are much as they were 20 years ago – paper-based when the rest of the world has moved to the 21st century. Knowing who your customer is and monitoring their transactions are fundamental parts of the AML framework within a firm -  and if there are ways firms could genuinely do things better, more efficiently, and even reduce burdens and costs then this is certainly something we would encourage you to explore.

As you may know, the FCA has set up an Innovation Hub to support firms entering the market, and address any unintentional barriers to innovation, and a Sandbox initiative to support firms by allowing them to test new business models in a controlled environment, where customers are suitably protected, but without incurring all the normal regulatory consequences of engaging in those activities. So far, we have found this initiative to be of widespread interest in terms of geographic range, business models, and sectors. The application window for firms to be part of our second sandbox cohort will open on 21 November.

These developments continue to signify that the financial sector is changing its service and product offerings to retail clients and this momentum is unlikely to slow down as firms seek to adopt new and innovative ways to meet the demands of their customers, many of whom are technologically savvy.

And so the purpose of this panel is to talk about technology and try to unpick the question that’s important for the FCA at the moment, which is ‘can technology help make your compliance processes slicker, more efficient and more effective?’  
I’d now like to hand over to my fellow panellists, who will each briefly explain their perspective on innovation and its impact on financial crime regulation.

We will be taking some questions throughout the panel, both from the floor and also via text and the panel is being filmed, which includes the questions and answers.