The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has launched three RegTech pilots, in a bid to bolster compliance and risk management outcomes.
Firstly, the regulator is automating its license application process for venture capital fund managers through AI technology, to help improve business efficiency. Applicants will be able to interact with the “RegBot”, which leverages natural language processing (NLP) technology and machine learning to identify information and risk gaps in the application.
For example, if an applicant does not supply sufficient information on risk management systems and processes, the RegBot will prompt them.
With all the information in the application, the RegBot will extract the data to assess the readiness of the applicant and build an assessment report for the FSRA.
The FSRA chose the VC fund management industry for the pilot due to the rising pipeline of applications, it said. In 2017, the regulator released the first regulatory framework for VC managers.
To lower the regulatory reporting burden on non-bank licensed firms, while boosting their risk management capabilities, the FSRA is piloting application programme interfaces (APIs) to monitor client money held by licenced firms. This RegTech service will help reconciliation of client money balances held at the custodian bank.
The final pilot from the FSRA is digitising its regulations, leveraging semantics and natural language processing. This will enable regulations to be expressed as a set of APIs and regulatory taxonomy for firms to interact with dynamically, it said.
Its aim is to build “regulations in a box”, where firms can use the FSRA’s digital regulations to test and deploy innovations which are complaint by design.
FSRA CEO Richard Teng said, “As part of our ongoing efforts to build a best in class ecosystem of digital financial and business services, the Financial Services Regulatory Authority continues to commit significant resources to promoting business efficiency and innovation in a safe and well-regulated environment.
“These RegTech initiatives are prime examples of our model of close collaboration with the industry to develop practical solutions for industry participants to enhance regulatory compliance and instil the right compliance culture within their organisations.”
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