Session Summary – More Bang for Your Buck – How to Leverage Utility Models for AML

At the Canadian Regulatory Technology Association (CRTA)’s inaugural event, David Peters from Promontory Financial Group (an IBM Company) chaired a session on the design challenges and practicalities of implementing an industry utility in Canada. David was joined by Sandra Persaud, Director, Risk Advisory from Deloitte, Alex Dixon, Enterprise Solutions from Bloomberg and Stuart Davis, Global Head, Financial Crimes Risk Management, from Scotiabank.

​Alex Dixon, an industry veteran in regulatory compliance set the scene by providing a definition of a utility or shared service along with industry examples such as SWIFT and the Global Legal Entity Identification (LEI) system.  At Bloomberg, Alex is involved in expanding the reach of the Entity Exchange product, which is used to securely transmit documents and data between counterparties. The Entity Exchange product is a good case study of a successful commercial utility.

Alex’s opening led the group into a discussion on the different types of utility models. There have been several industry utilities over the years that financial institutions in Canada leverage for various regulatory obligations to help reduce the cost of compliance. However, unlike jurisdictions like Luxembourg and Singapore, Canada has not pursued a solution for KYC/AML although there are good reasons to do so. The use of a centralized utility presents an opportunity for financial institutions to rationalize costs while enhancing the onboarding experience through more precise, efficient and transparent onboarding processes.

David shared how in Singapore, financial institutions use a public sector database called the myinfo data base to obtain certain data points that are required for KYC compliance. Corralled by Sandra, Matt Elton shared his experience with i-Hub in Luxembourg, a utility that aims to create a centralized depository for data and documents regarding natural and legal persons. i-Hub belongs to, and is operated by, a public institution, the Post Luxembourg group and is a great example of public and private sector collaboration.

Sandra, having worked in regulatory technology for many years at Scotiabank and CIBC was able to provide examples where technology has been an effective enabler to reduce the compliance burden. She shared how now at Deloitte, she is working with clients to explore the use of specialized enhanced due diligence (EDD) utilities (ie for Cannabis or complex/high risk entities) and technologies such as blockchain and robotic process automation (RPA) to remove friction in the investigation process.  
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Stuart shifted the discussion back to Canada and shared some insights from recent discussions with the department of Finance, the Office of the Privacy Commissioner of Canada and FINTRAC.  He stressed that there have been ongoing discussions on this topic for many years but unlike Europe where, for example, Beneficial Ownership Utilities are mandated, there is no regulatory impetus in Canada. He believes there is a willingness within the community but finding the right user case is a challenge we will need to overcome.

We at the CRTA believe that there is an opportunity to continue this discussion as an organization to find the right use case that will have the greatest benefit to the industry. Join us to continue the discussion by emailing us at: info@regtechroundtable.com
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For more information on Bloomberg’s document exchange product, contact Alex Dixon at: adixon30@bloomberg.net
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Author

Written by: Donna Bales Co-Founder and Board Member The Canadian Regulatory Technology Association   ​