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John Karantzis Says Real-Time Data Is The Future of Know Your Customer (KYC)
Mr John Karantzis, the CEO of iSignthis shares his views on the Regtech domain and the vast vision he carries for this segment. He shares his insights on how he made this happen, why he believes in it, what it takes to get where he is and his thoughts on future of this sector. Read ON!
John, how did your career in finance begin and how did you make the decision to enter this particular field?
My professional experience actually started from the payments side, with my involvement in an early online digital business. Back in 2004, the requirements to facilitate payments online for digital products, were almost as complex as delivering the digital product itself. Armed with both legal and engineering qualifications, I found myself becoming more and more involved in the practical side of finance and payments, as well as extending my expertise into the regulatory requirements surrounding this sector.
In order to qualify as a patent attorney, it is a requirement to have formal qualifications in engineering or higher science discipline, together with legal qualifications. Therefore, “RegTech” is also a perfect fit for my skill set, as it requires the combination of those same engineering and legal skills and qualifications.
As CEO of iSignthis, how does your company and solutions help in forming an advanced financial and regulations landscape? What means are you using?iSignthis has been developed as a hybrid team, including both legal/compliance and technical professionals. Unlike most other FinTechs or RegTechs, we challenge the current legal and technical (if they exist) approaches, and look for other means to achieve an outcome.
The company is an active participant of the Open Identity Exchange (OIX), the European Card Stakeholders Group (ECSG) and a regular contributor to regulatory reviews and consultations. iSignthis also extensively promotes regulatory change as representing opportunities for regulated and AML obligated entities. We help our customers to re-engineer their businesses and online processes entirely, to the extent permissible under regulation.
Based on your long-term expertise as a thought leader, what are the key elements needed to succeed in the current RegTech landscape?
RegTech is all about the back office of FinTech, with some front-end interaction with FinTech’s customers (or our customers’ customers). A deep understanding of both the operational regulatory requirements of the sectors in which the RegTech intends to serve, is critical.
By way of example, iSignthis are conversant with regulatory requirements of both the securities and gambling sectors, in addition to the operational regulatory requirements associated with being an eMoney and payments institution. There is a high degree of regulatory overlap, but operations are significantly different between the three areas of securities, gambling and payments.
At NPF - Regtech Leaders Forum you will be presenting on the role of technology in KYC. What are the most crucial points businesses must be aware of as well as the challenges of this implementation?
The incoming 4AMLD has changed the way technology can be applied to KYC. Some subtle changes in the legal texts are having a massive impact on implementation, and thus technology.
We are seeing concepts such as “recency” of data (or “up-to-date”) coming into play within guidance and regulation, forcing operators to incorporate real-time data into their KYC processes. This means that historic data as stored in legacy electronic databases will no longer be suitable as a ‘stand-alone’ solution under the 4AMLD to on-board customers, unless there is also a real-time verification action or other process associated with it.
The 2017 draft JMLSG, the 2016 CySec regulations, and the 2017 AUSTRAC regulations all have a requirement for a real-time verification when data is incorporated, unless traditional manual approaches are also used.
You will also be discussing the 4th AML Directive. Tell us about the most prevalent money-laundering methods and the ways to prevent them, based on your expertise.
The iSignthis approach to AML is to use multi point, independent real-time data as part of the on-boarding decisioning process. The intent is to allow the MLRO/AMLCO time to focus on the “why” and “why now” of the business relationship, whilst automating and enhancing confidence of the 90-95% of customers that we can analyse in real-time. Usually, as these customers are financially included and bank verified, we already have a reasonable basis from which to start, and we are looking for anomalies in their transactions from which we might infer AML or payment risk.
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How will Regtech evolve over the next 5 years? What challenges do you predict?
Given the pace with which regulation and technology have moved over the last 5 years, I am unsure of what the future will hold. Although, I can be certain that we will see increased automation, and better decisioning, based upon automated processes with access to both deep, big data compared against very customer specific narrow and lean data.
Regtech and Fintech experts are set to gather in Brussels on 6th & 7th September, to participate in the NPF & Regtech Leaders Forum 2017. Topics such as PSD2, MIFID, cybersecurity, processes automation, and the changing landscape of the industry will be discussed by experts from EPA, the EU Commission, EPC and ECB.
Due to rising and already confirmed regulatory changes in the EU, a special emphasis will be placed on compliance, KYC and AML, to be discussed by expert John Karantzis, CEO & Managing Director of financial services provider, iSignthis.
Inspiration Unlimited eMagazine is delighted to become the Online Media Partner for this event and is able to offer value to all its readers with special discount codes issued to participating audience among the readers of iU eMagazine. If you wish to receive the discount code and participate in this forum contact us immediately.
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Any facts, figures or references stated here are made by the author & don't reflect the endorsement of iU at all times unless otherwise drafted by official staff at iU. This article was first published here on 18th August 2017.