Answers to common questions about the tools and platforms reshaping compliance, risk management, and financial crime prevention.
What is regulatory technology?
Regulatory technology, or regtech, refers to the software and platforms that help organisations meet regulatory requirements more efficiently. It covers everything from automated compliance monitoring and transaction screening to AI-powered risk assessment and regulatory change management. The RegTech category tracks the companies and tools driving this market.
What is the difference between regtech and fintech?
Fintech broadly covers technology that improves financial services, from payments and lending to insurance and wealth management. Regtech is a subset focused specifically on regulatory compliance and risk management. A digital bank is fintech. The software that monitors that bank’s transactions for money laundering is regtech.
What is KYC automation?
Know Your Customer automation uses technology to verify customer identities, screen against sanctions lists, and assess risk profiles during onboarding. Traditional KYC processes are manual, slow, and expensive. Regtech platforms automate data collection, document verification, and ongoing monitoring, reducing onboarding times from weeks to minutes in some cases.
What is AML compliance technology?
Anti-money laundering technology automates the detection and reporting of suspicious financial activity. It includes transaction monitoring systems, sanctions screening tools, and suspicious activity report generation. AI and machine learning have improved detection accuracy while reducing false positives, which historically consumed the majority of compliance team resources. See our Financial Crime coverage for the latest developments.
What is regulatory change management?
Regulatory change management is the process of identifying, assessing, and implementing new or amended regulations. Regtech platforms in this space scan regulatory feeds, classify changes by relevance, and route them to the right teams. Without automation, compliance teams manually track thousands of regulatory updates per year across multiple jurisdictions.
What is GRC software?
Governance, risk, and compliance software provides a centralised platform for managing an organisation’s regulatory obligations, risk exposure, and internal controls. Modern GRC platforms integrate with other compliance tools to provide a single view of regulatory risk across the business.
How does AI improve compliance?
AI improves compliance in several ways: natural language processing reads and classifies regulatory text, machine learning identifies patterns in transaction data that human analysts would miss, and large language models are beginning to draft regulatory filings and internal policies. The technology is strongest at high-volume, pattern-based tasks and weakest at judgment calls that require legal interpretation. Our Compliance section covers how firms are deploying these tools.
What is perpetual KYC?
Perpetual KYC, or pKYC, replaces periodic customer reviews with continuous automated monitoring. Instead of reviewing a customer’s risk profile every one to three years, pKYC systems trigger alerts when material changes occur, such as changes in beneficial ownership, adverse media hits, or unusual transaction patterns. It shifts compliance from a scheduled exercise to a real-time function.
What is sanctions screening?
Sanctions screening is the process of checking customers, transactions, and counterparties against government-issued sanctions lists. Automated screening tools compare names and entities against lists from bodies like OFAC, the EU, and the UN in real time. The challenge is balancing thoroughness with false positive rates, which remain a major operational cost for financial institutions.
What is the difference between compliance and risk management?
Compliance ensures an organisation follows specific laws and regulations. Risk management is broader, covering the identification, assessment, and mitigation of all risks to the business, including operational, financial, reputational, and strategic risks. In practice, they overlap significantly, and most regtech platforms serve both functions.
