Technology applied to Compliance, is it possible?

Did you ever imagine the legal field to be so permeated by technology? How do you cope with the tsunami of organisations being immersed in such a variable environment?

Compliance is no stranger to this. Risk management, online education and training, ethical channels, software for monitoring and tracking the implementation of controls, among other aspects, require the automation of internal processes.

Business regulation is becoming increasingly stringent around the world, motivated by the goal of avoiding penalties for legal and regulatory non-compliance and suffering financial or reputational losses.

Technology applied to Compliance for companies that, regardless of their size and volume, can identify, analyse, monitor and mitigate 100% of their corporate and business risks. In this way, access to tokenisation or blockchain technology in regulatory compliance, business risks and corporate governance is democratised to small compliance departments or micro-companies. And, in addition, to comply with international standards such as ISO 19600, ISO 37001 and UNE 19601.

The latest trends are tools with blockchain, an information technology that, being distributed among multiple nodes (computers) and using cryptographic algorithms, makes it possible to generate and keep an accurate and verifiable record of digital events, for example, to have traceability of risks in the evolution of the risk map and in the communications poured into ethical channels.

Although this technology is associated with cryptocurrency transactions, its advantages are being taken into account to implement it in different areas of the company. All the information that is incorporated through this blockchain remains fixed in the register and the only way to modify it is by generating an operation to add new information.

The key is the guarantee that they are always recorded and fully traceable.

Another key point is the technology applied to time-stamping through the online certification of all types of documents. This allows the possibility of archiving them so that they can never be altered or deleted, guaranteeing transparency and legal certainty.

In specific risks, money laundering and terrorist financing is a pioneer in the incorporation of technology, being able to access updated information in real time, which allows tracking the background of suspicious subjects and operations of dubious legitimacy all over the world.

Added to this is the need for Predictive Analytics, which turns data into valuable information to determine the likely outcome of an event or the probability of a situation occurring.

Big Data in AML is extremely valuable: having customer and transaction information and accurate scoring lists for the detection and prevention of potential financial crimes.

Artificial Intelligence (AI) and Machine Learning enable the identification of behavioural patterns. They therefore become a key factor in the detection and prevention of AML, as they drastically reduce the false positive rate, providing the required efficiency and effectiveness to the system.

Biometrics is here to stay. In an era where the relationship between financial institutions and their customers is 100% digital, it has become a must-have technology. Biometric identification through facial or fingerprint recognition allows institutions to apply the appropriate Due Diligence and Know Your Customer (KYC) measures and comply with regulations.

Third parties pose a high risk for organisations, and the technologies that have been created to identify them have also been booming. There is significant regulatory pressure to identify and prevent risks, prior to contracting suppliers and customers (but also subcontractors, franchises, etc.) and during their relationship with them, favouring the traceability of the supplier approval process, for example.

Companies work with hundreds or thousands of active and many more inactive or potential third parties. The possibility of being infected by any risk is high: Compliance, Privacy, Cybersecurity, among others, can be key in the phases of opening markets, strategic collaborations, company acquisitions, creation of joint ventures, etc.

One of the biggest mistakes is the use of technology that only generates documentation and lends itself to poor compliance practices. Technology should be used to optimise the scarce human resources that Compliance areas often have, making them more effective and freeing up their workload.

Nowadays technology is highly necessary for any organisation, being present in almost all departments, human resources, marketing, accounting and now in Compliance. But the main characteristic of Compliance is the high presence of the human factor, therefore, technology in this area should only be applied as a productivity tool for the Compliance Officer and not as a substitute.

Whatever the modality and practical application, having technology in Compliance implementation, whether as in-house lawyers or consultants, will unify activities, manage policies and improve governance and compliance.