Regulatory technology (RegTech) is enhancing the accounting profession in the United Kingdom by making compliance better, improving efficiency, and allowing accounting and finance professionals to focus on more important strategic work. RegTech is technology-based software and tools that use data analytics, machine learning, automation, and cloud-based platforms to simplify and streamline regulatory compliance.
To maintain compliance in the regulatory environment, management accountants should strongly consider integrating RegTech and adapting to new technologies, as the evolving accounting profession now requires a blend of traditional accounting skills and technological expertise.
Obtaining the CGMA® designation through CIMA® significantly strengthens the skills that management accountants need now, and in the future. The CGMA designation equips you with a diverse skill set, adaptability, and empowers you to navigate and lead confidently in a growing financial regulatory compliance landscape.
RegTech’s impact on accounting is driven by the need for regulatory changes. Its use improves efficiency and accuracy in compliance and allows management accountants to offer more strategic value to their clients or employers.
Critical regulatory changes propel the adoption of RegTech
New regulations on anti-money laundering (AML), countering the financing of terrorism (CFT), transaction monitoring, and fraud detection have emerged, making RegTech increasingly crucial in the financial sector.
According to the 2021 PwC article ‘Impact of RegTech on anti-money laundering, terrorism financing transaction monitoring and fraud detection’, global losses from payment fraud tripled from 9.84 billion USD (7.62 billion GBP) in 2011 to 32.39 billion USD (29.09 billion GBP) in 2020.
During the COVID-19 pandemic, the global surge in online payments during nationwide lockdowns led to fraud spikes. Increased online, real-time payments gave fraudsters greater anonymity and made it harder for financial institutions to investigate suspicious transactions thoroughly.
Financial institutions’ adoption of RegTech has been prompted by key regulatory changes, including stricter AML and CFT regulations, which require more thorough customer due diligence and transaction monitoring from organisations. Additionally, there are higher customer and client expectations for real-time fraud detection and prevention. Financial firms must also establish comprehensive compliance management systems, and regulatory bodies such as the Financial Conduct Authority and the Swiss Financial Market Supervisory Authority demand transparency regarding regulatory reporting.
Valuable support with reporting and recordkeeping
RegTech uses transaction pattern analysis to identify normal patterns and thresholds, flagging deviations for further investigation. Furthermore, RegTech uses behavioural analytics to monitor customer interactions, detecting unusual behaviours like fast account access and frequent or large fund transfers that may indicate fraudulent activity.
Data correlation enables RegTech to combine and compare different data sources to create comprehensive risk profiles and uncover hidden connections that could expose fraudulent schemes. When RegTech detects suspicious activities, it automatically triggers alerts, allowing you to respond quickly and mitigate potential losses.
With RegTech’s data-driven insights, you can address compliance risks sooner, reducing the likelihood of costly fines, reputational damage, and other regulatory issues. RegTech achieves this by monitoring activities in real time, tracking regulatory changes, and providing alerts for potential noncompliance.
Additionally, this tech-based system helps optimise resource allocation, enhance risk management, and align compliance efforts with your organisation’s financial and operational goals.
Increasing management accountants’ strategic leadership
RegTech’s advanced analytics can quickly analyse large volumes of financial data, enabling your organisation to find patterns, unusual activities, and potential risks. Its machine learning algorithms scan transactions, account records, and other financial data to uncover suspicious activities or irregularities, aiding you in fraud prevention, ensuring accurate financial reporting, and improving forecasts, budgets, and financial plans.
Automated data collection, data analysis, and documentation ensure accurate and timely compliance activities, allowing more time for higher-value work such as financial analysis and business advisory services. By reducing the burden of repetitive compliance tasks, you can provide greater strategic insights, support decision-making, and drive organisational growth.
Gain a deeper understanding of how RegTech impacts anti-money laundering, terrorism financing transaction monitoring, and fraud detection with insights on regulatory developments, key industry observations, and recommendations from PwC’s article.
