AFI members embrace technological innovation at FinTech & Risk Based Approach workshop in Seoul
AFI member institutions, namely the Reserve Bank of Fiji, Bangko Sentral ng Pilipinas, Bangladesh Bank, Central Bank of Sri Lanka and Bank of Thailand in addition to the AFI Management Unit, were amongst the speakers at the FinTech and Risk Based Approach Regional Workshop co-hosted by the Asia Pacific Group on Money Laundering (APG) and the Korea Financial Intelligence Unit, in Seoul 5-7 December.
The workshop was the first held by a Financial Action Task Force (FATF) Regional Body on the topic of FinTech. This event drew attention to the challenges and opportunities arising from the rapid development of FinTech in Asia, and how to mitigate potential risks to financial integrity whilst leveraging the opportunity to advance financial inclusion for the hundreds of millions of citizens in the region, who still lack access to financial services that meet their needs.
Technology needs to be seen as an ally rather than an enemy.
Discussions covered the regulatory and supervisory approaches countries in the region are taking to manage the money laundering and terrorist financing (ML-TF) risks emerging from financial innovations such as virtual currencies and peer to peer lending platforms. At the same time, participants saw opportunities in technological innovations such as biometric identity, RegTech software and blockchain, to strengthen both ML-TF compliance and financial inclusion. As such, participants concurred that technology needs to be seen as an ally rather than an enemy, and a technology-neutral approach should form the basis of regulations.
In order to advance FinTech for Financial Inclusion in the region, several members of AFI including Bank Negara Malaysia and the Bank of Thailand, have implemented Regulatory Sandboxes that provide a safe space for product innovation and limited regulatory exemptions under controlled conditions. A number of countries are also testing innovations for e-KYC (‘Know Your Customer’ requirements) to permit remote opening of bank accounts and other financial products, while others have introduced simplified requirements for low-risk products such as mobile payments.
The conference highlighted the need for continued peer learning and heightened national coordination on FinTech innovation, risks and proportionate regulatory approaches given the pace of development, and increasing range and complexity of financial services in the market.