How do RegTech help prevent money laundering?

money laundry

Money laundering is a growing concernfor financial institutions and regulatory authorities around the world. As criminals become increasingly sophisticated in their money laundering methods, companies need to look for innovative ways to detect and prevent financial fraud.

This is where RegTech, or regulatory technologies, come into play. These help prevent money laundering and other forms of financial crime through the use of innovative and automated technology solutions. These solutions may include data analytics, artificial intelligence and machine learning to detect suspicious patterns of financial activities and assist compliance experts. In addition, regulatory technologies can improve efficiency and transparency in the regulatory compliance process by facilitating data collection and analysis, thereby reducing risk exposure in the fight against money laundering.

The rise of RegTech, increasingly evident

Although not yet well known to the general public, RegTech companies have been present in the market for several years. These technology-based companies have become increasingly popular due to increased regulation by government agencies, as well as greater awareness of law enforcement issues.

This trend has been reflected in the new products and services developed, which seek to provide compliance solutions for companies that are facing increasing regulatory complexity.

Is the use of RegTechs reliable for money laundering?

Banking is one of the sectors most regulated by governments, especially when new technological advances emerge that must be supervised.

Thus, RegTech is an area of technology that is responsible for solving the regulatory-related difficulties that a global economy driven by automation and technology must face today.

The ascent of digital products has added a huge expansion in the processes of information leakage, digital assaults, tax evasion and many crimes that carry with them a time marked by technological innovation.

Faced with these circumstances, where the use of AI is gaining prominence, RegTech companies are positioned as a technological innovationthat lowers the risk, as it aims to provide information on tax evasion exercises occurring on the web.

For all this, the RegTech works to progressively examine the transactions that take place online, recognizing problems or irregularities in the financial climate. For example, any movements of an exceptional nature are reported to the bank for investigation and a decision as to whether criminal behavior is actually taking place.

When banking institutions recognize a threat to monetary security, they can stop problems such as money laundering in time.

What are the types of RegTech?

We are in a moment of explosion of the regtech ecosystem, so the map of this type of technologies is very variable. While, we can find them focused on KYC (know-your-customer) or those that propose tools against terrorism and crimes such as money laundering and that focus on administrative consistency using reporting and AML (anti-money laundering).

If we base them on the technological field, we can frame them as follows:


Staying away from cybercrime, safeguarding data, staying away from information theft is vital for people handling sensitive data. In particular, banks need secure systems to prevent and act against hackers and cybercriminals.

Identity identification

For fintechs, traditional and online banking institutions alike, relying on trustworthy systems and processes to verify the identity of customers remains a challenge.

Risk and compliance

Within regulatory consistency, banks demand more competent, merged and lower-cost bets from executives. Although this classification incorporates different levels of danger, the RegTech has different responses at its disposal to address them.

Digital evidence

The evidenciadigital companies are those that offer secure and reliable digital products and services to their customers. These companies focus on protecting the privacy and security of their users’ data, complying with established regulations and security standards. In addition, they usually have authentication and identity verification systems to ensure the reliability of transactions and prevent fraud.

Tax management

Tax management companies are those that are responsible for advising individuals and companies on tax matters, helping them to comply with their tax obligations and optimizing their tax burden. These companies offer software as a service in the preparation of tax returns, tax planning, defense against tax inspections and advice on tax compliance issues.

Data aggregation

They focus on the management of huge volumes of organized information, big data, semi-organized and unstructured information. Faced with the extraordinary increase in data due to the web economy, powerful research, representation, storage and search tools are needed.

RegTech and its multiple advantages to prevent money laundering

Undoubtedly, the RegTech have served as a benefit to provide greater security when making any digital monetary transaction, so we can mention some of the advantages of these technological tools:

  • Observation and verification of identity in a quick and simple manner in banking transactions to ensure compliance with legal regulations.
  • Increased control and detectability of customer information, which has an impact on customer relationships.
  • Improvement and reduction of administrative cycles through automated programs.
  • Expanded adaptability and versatility despite constant administrative changes.
  • Increased connection between the company and administrative bodies thanks to technological tools for reporting and data analysis.

New technologies in monetary innovation will continue to develop, and with them will come more essential control guidelines in each country. RegTech will continue to help fight all types of crimes related to money laundering, helping to provide a more transparent and secure global financial system.

If you liked it, share it on