REGTECH Book

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.

• A FinTech and RegTech Overview: Where We Have Come From and Where We Are Going viAbout the Editors xiiAcknowledgements xiv1. IntroductionWhat a RegTech Compliance Killer System Will Look Like 6Technology-Enabled Collaborative Compliance 10The Age of RegTech Disruption to the Status Quo Is Here 16RegTech and Financial Crime Prevention 20RegTech: Tackling Regulation with Innovation 26Identities, the RegTech Holy Grail 302. The RegTech LandscapeIslamic RegTech 38How RegTech Could Help Determine the Future of Financial Services 44Introducing the RegTech Quality Compass: The Five Factors of RegTech Quality 50How Banks Are Managing Their Risk Through Technology and Market Infrastructure 55RegTech and the Science of Regulation 58GDPR and PSD2: Self-Sovereign Identity, Privacy, and Innovation 62Rise of RegTech in the German Market 66The Power of RegTech to Drive Cultural Change and Enhance Conduct Risk Management Across Banking 703. Regulatory Innovation and SandboxesDiscover the Innovative Technology Behind RegTech Leaders 80Enabling RegTech Up Front: Unambiguous Machine-readable Regulation 85Align Open Banking and Future-Proof RegTech for Regulators and Third-Party Providers to Deliver the Optimal Consumer Convenience and Protection 89A Seat at the Table – Bringing the Voice of FinTech to the US Regulatory Process 93Sandbox Games for RegTech 99Legal Guidance for Entering the Sandbox and Taking Advantage of Cross-Border Cooperation Agreements 102RegTech and the Sandbox − Play, Innovate, and Protect! 1064. A Call for Innovation or Disruption?Governance, Risk, and Compliance: Complex or Complicated? 118Innovation or Disruption: Not Always Black and White 122How to Use Digital Marketing Data in Regulated Industries 126Invention Versus Reinvention 130Making Regulation Machine Readable 134Can We Digitize Know Your Client? 1385. RegTech Investment and Compliance SpendingWhy a Substantial Investment in Financial Services RegTech Now Will Strategically Reduce Your Future Regulatory Compliance Costs 146Old Tech + New Tech = RegTech: Excel Spreadsheets and End User Computing in a Regulated World 150Will Financial Institutions Ever Achieve a 100% Compliance with Anti–Money Laundering and Combating the Financing of Terrorism Rules? 154Merits and Demerits of a Shared Risk Engine 158Spend on Compliance: A Necessary Evil orBusiness Enabler? 1636. RegTech for Authorized InstitutionsRegTech Opportunities in a Post-4MLD/5MLD World 172Passporting in the EU – Is an Opportunity Also a Problem? 177What Do PSD2 and Similar Activities Mean for Banks and FinTech Start-ups? 1817. RegTech from a Regulatory PerspectiveThe Role of Anti–Money Laundering Law and Compliance in FinTech 190Banking Supervision at a Crossroads – RegTech as the Regulators’ Toolbox 195FinReg, FinTech, and RegTech – Quo Vadis, EU? 199The RegTech Landscape from a Regulator’s Perspective 205RegTech is for Regulators Too, and its Future is inEmerging Markets 2108. Blockchain and AI in RegTechThe ROI of RegTech 218The Augmented Compliance Office 221Dissolving Barriers: A Global Digital Trust Protocol 226Can AI Really Disrupt Monitoring for Suspicious Activity? 231Forging a Responsibility and Liability Framework in the AI Era for RegTech 235Compliance with Data Protection Regulations by Applying the Blockchain Technology 246Blockchains Are Diamonds’ Best Friend: The Case for Supply Chain Transparency 2509. RegTech Applicability Outside the Financial Services IndustryProtecting Consumers and Enabling Innovation 260RegTech Impact on the Private Security Industry 263ArtTech: How Blockchain Can Improve Provenance 266The Potential of RegTech in Improving the Effectiveness of Environmental Regulation 270RegTech Applicability Outside the Financial Services Industry 274Using RegTech as a Cross-Industry Digitization Tool 278RegTech Unleashed: Discovering the Pathways Beyond Finance 282RegTech Outside Finance: Four Options, One Clear Choice 287RegTech: A Safe Bet for Tackling AML and Fraud in the Gambling Sector 29210. Social Impact and RegulationThe FinTech Ecosystem Between Legal Compliance and Social Dimension 300The End Justifies the Means: Putting Social Purpose Back at the Heart of Banking and Financial Regulation 305RegTech’s Impact on Trust and Identity 310How Technology Is Driving Financial Inclusion 314Banking the Unbanked and Underbanked: RegTech as an Enabler for Financial Inclusion 318Superhero Way: Enhancing Regulatory Supervision with Superpowers 32311. The Future of RegTechMarket Surveillance 2020 330I Regulate, Therefore I Am? Regulating Humans’ and Machines’ Conduct and Culture 335The Future of RegTech 340From RegTech to TechReg – Regulation in a Decentralized World 344Emerging Innovations in RegTech 348List of Contributors 351Index 358

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