In a recent speech at the Peterson Institute of International Economics, Nikhil Rathi, chief executive of the UK’s Financial Conduct Authority (FCA), outlined the regulator’s commitment to leveraging data and technology for a more proactive approach in identifying and addressing harm within the financial sector.
Rathi emphasized the importance of ongoing dialogue between the UK and US regarding regulatory frameworks, particularly in the realm of crypto-assets, while also highlighting the necessity of supporting the industry in prioritizing ESG commitments and fostering innovation.
He detailed the FCA’s extensive efforts, including the daily automated scanning of 100,000 websites for fraudulent activities targeting UK consumers. Additionally, Rathi noted that the shift of the FCA’s core systems to the cloud has enabled the transfer of over 50,000 firms and numerous users to a new regulatory data platform. This “data lake” is designed to facilitate rapid identification, connection, and response to issues affecting firms and markets.
Rathi also discussed the enhanced analytics tools that are streamlining case management and enhancing visibility into the risks associated with individual firms. New analytics screening tools are currently being rolled out to ensure firms have robust controls in place for compliance with sanctions. An automated tool has been developed to test these systems and assess their ability to identify sanctioned entities effectively.
He underscored the necessity of maintaining high-quality data from the outset and emphasized the FCA’s increasing accountability measures for firms. Rathi expressed concern over potential systemic risks stemming from the financial services sector’s reliance on a limited number of critical third-party providers, including cloud service providers. In collaboration with the Bank of England, the FCA plans to publish a discussion paper outlining potential new measures, with cross-border cooperation being integral to this effort.
Dr. Henry Balani, global head of industry and regulatory affairs at Encompass Corporation, responded positively to Rathi’s remarks, noting that the FCA’s proactive stance in evolving regulatory systems and operational platforms is commendable. He stressed the importance of investing in advanced automated technologies to enhance AML and KYC checks, which would provide organizations with comprehensive insights into their customer base and activities, ultimately ensuring sustained compliance.