Question 1

What is RegTech?

Accepted Answer

RegTech (Regulatory Technology) refers to technology solutions that use AI, machine learning, and data analytics to automate and streamline regulatory compliance processes. In financial services, RegTech tools handle AML screening, KYC verification, transaction monitoring, fraud detection, and regulatory reporting — replacing manual processes and rule-based systems with AI-powered automation.

Question 2

How does AI improve AML compliance?

Accepted Answer

AI improves AML compliance by reducing false positive rates (50-70% vs rule-based systems), enabling real-time transaction monitoring at scale, detecting complex money laundering patterns through network analysis, automating suspicious activity report (SAR) filing, and providing perpetual KYC that continuously monitors risk rather than checking once at onboarding. ML models learn from new typologies over time, catching patterns that static rule sets miss.

Question 3

What is the difference between KYC and AML?

Accepted Answer

KYC (Know Your Customer) is the process of verifying a customer's identity and assessing their risk profile at onboarding — collecting documents, checking against watchlists, and determining risk level. AML (Anti-Money Laundering) is the broader regulatory framework that includes KYC plus ongoing transaction monitoring, suspicious activity reporting, sanctions screening, and record-keeping. KYC happens at onboarding; AML is continuous.

Question 4

Can AI compliance tools replace compliance officers?

Accepted Answer

No — AI compliance tools assist with compliance workflows but do not replace qualified compliance officers, legal counsel, or regulatory expertise. Regulators including the OCC, Fed, FCA, and MAS increasingly require documentation of how AI models make compliance decisions. AI compliance tools must be validated against your specific jurisdictional requirements before deployment. Human oversight is legally required for compliance decisions.

Question 5

What is perpetual KYC?

Accepted Answer

Perpetual KYC (also called continuous KYC or dynamic KYC) is an approach where customer risk profiles are monitored continuously rather than reassessed at fixed intervals. Instead of re-verifying a customer annually, perpetual KYC uses AI to trigger re-verification when risk signals change — a new sanction listing, adverse media mention, or change in transaction behavior. This aligns with how modern regulators think about ongoing due diligence.

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