The emergence of financial technology (FinTech) has encouraged governments around the world to loosen financial regulations which in turn further boosts growth of the technology. As such, technology companies are now able to offer services like mobile payments, robo-advisors, self-service banking, etc to provide customers with better financial services and promote financial inclusion for all. However, as innovative services are taking the world by storm, offenders have also started abusing new technologies and using them as convenient channels for money laundering and other criminal acts. According to KPMG's 2020 Taiwan Banking Report, the global banking industry spends US$25 billion annually on financial crime prevention and control, most of which goes towards Know Your Customer (KYC) related operations.
With continuously updated global financial laws and increasingly stricter anti-money laundering regulations, financial institutions without proper KYC implementation are at risk of being heavily fined by the authorities. In fact, the New York branch of Taiwan's Mega International Commercial Bank was fined US$180 million in 2020 for failing to comply with anti-money laundering regulations in August 2016. This challenging task has attracted the attention of many technology developers and startups, who are now investing in the development of regulatory technology (RegTech), to assist financial companies to meet the anti-money laundering regulations without exorbitant amounts of time and human resource costs. As winner of five top prizes in the 2020 Taiwan RegTech Challenge (TRC), KryptoGO is a startup that has received considerable attention from the industry.
KryptoGO's founder and CEO, Kordan Ou said that the biggest compliance challenges in the financial industry in 2020 included overly stringent regulations that are difficult to enforce, insufficient staff trained in reinforcing anti-money laundering, underdeveloped and outdated anti-money laundering financial technology, identical name and last name concurrence in sanction lists matching, and insufficient budget on top of overly strict audits. These challenges have made it very difficult for financial companies to fully comply with the legal requirements and have caused human resource expenditure, at about 70% of the total cost, to become the most expensive aspect of KYC implementation. In response, KryptoGO has developed a proprietary AI-KYC engine to automate the regulatory process and enable the sharing of data between companies, helping the financial industry to quickly identify possible money laundering risks, while reducing operational expenses.
AI search engine quickly identifies persons of interest from built-in lists of sanctioned individuals
KryptoGO's KYC advanced financial regulatory DD search engine covers the lists of mainstream financial industry sanctions from over 200 countries. The proprietary Chinese natural language processing technology can analyze the digital footprints of each customer in real-time, conduct background research, filter sensitive keywords, emotions, and assess their money laundering risks to effectively reduce alerts for individuals who share the same surname and first name as those on sanctions lists and cuts down on investigation time by up to 80%. For example, KryptoGO can use its AI-powered customized search engine to collate the full range of money laundering risks of each client, then cross-references them with the search results of suspicious targets to easily generate a risk report that can help with money laundering risk assessment. This streamlined process drastically reduces tedious manual auditing tasks since it eliminates the efforts needed to photocopy, authorize, and store manually-generated reports, making anti-money laundering compliance easy and fast. In other words, KryptoGO can help the financial industry swiftly complete risk management, implement legally compliant management, supervise integrated real-virtual capital flow, and meet compliance requirements outlined by the Money Laundering Control Act.
Kordan stated that KryptoGO is led by a team with ICT expertise as well as three certified anti-money laundering (CAMS) specialists with over twenty years of experience in the financial industry. Their contributions allow the company to examine its clients' anti-money laundering processes and analyze potential risks, providing recommendations for improvement. Thanks to its multi-disciplinary team, KryptoGO offers a one-stop risk audit solution that makes the anti-money laundering process both fast and efficient. Moreover, the company can assist the financial industry in accurately grasping risks related to internal and regulatory compliance.
As a four-time serial entrepreneur, Kordan believes that the entrepreneurial environment in Taiwan has improved significantly in the past few years, and that the government is now allocating more funds and offering more comprehensive assistance for entrepreneurs to encourage them to start their own business. However, compared to other countries such as Singapore and the United States, Taiwan still has room for improvement. Regulations, in particular, need to be updated to attract more capital and talents to create a more vibrant startup environment.
KryptoGO Team
Photo: KryptoGO
(Editor's note: The original article was published in TTA Magazine Issue 9. Read more startup stories in TTA Magazines.)
