CUBE, a leader in Automated Regulatory Intelligence (ARI) and Regulatory Change Management (RCM), has released a report detailing significant compliance challenges faced by global financial services firms today. The report serves as a strategic resource for compliance departments, incorporating insights from esteemed compliance professionals and regulatory experts within the industry.

Dr. Yin Lü, CUBE’s Global Head of Product for Artificial Intelligence, describes the recent environment in financial services as tumultuous, driven by rapid technological advancements, stringent regulatory scrutiny, and intense consumer demand for new products and services, all within a compressed timeline.

The report categorizes the primary compliance issues into five key areas: the rapid pace of regulatory changes, proactive risk management, the complexities of Environmental, Social, and Governance (ESG) criteria, data privacy concerns, and the challenges of operating within tighter budgets and rising costs.

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One significant point of concern is the expanding scope of regulations, exemplified by the constant updates to the UK’s payment frameworks post-Brexit and the U.S. regulatory bodies’ efforts to regulate cryptocurrencies, digital wallet services, and shadow banking. Since the 2008 financial crisis, CUBE’s regulatory inventory has tracked over 40 million regulatory documents affecting the banking sector, highlighting the complex landscape compliance professionals must navigate.

Dr. Lü emphasizes the importance of staying ahead of risks to mitigate increasing penalties for non-compliance. She notes that recent enforcement actions have focused on lapses in recordkeeping, cryptocurrency fraud, and weaknesses in corporate governance, with fines related to unmonitored phone usage topping $2 billion since 2022.

The report also discusses the growing ESG divide, noting the difficulty compliance officers face due to conflicting demands and evolving standards across various jurisdictions. With over 600 active ESG standards and frameworks, achieving compliance is increasingly challenging.

Data privacy remains a critical concern, with privacy laws expanding significantly since 2023 under heightened regulatory demands to protect consumer data. AI and machine learning are invaluable in helping compliance teams manage complex international frameworks through horizon scanning and data mapping.

Furthermore, Dr. Lü highlights the pressure on compliance functions to do more with less, suggesting that integrating AI into compliance processes is crucial for managing costs and enhancing efficiency. She advocates for transitioning to machine-driven and human-validated compliance workflows to maintain alignment with the latest regulations and reimagines the potential of compliance teams to enhance financial stability and protect businesses and consumers alike.

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Source: ibsintelligence.com

The post Can AI & ML revolutionise compliance in financial services amid regulatory challenges? appeared first on HIPTHER Alerts.

BlueFlame AI, a generative AI platform designed specifically for alternative investment managers, has successfully completed its Series A funding round, raising $5 million.

The round was 25% oversubscribed, reflecting strong investor confidence, and led to a new company valuation of $50 million. The funding sources included BlueFlame’s extensive industry network, strategic partners, and a notable contribution from the management team.

Established by experts in cybersecurity, FinTech, and governance, risk management, and compliance (GRC), BlueFlame AI is a leader in incorporating artificial intelligence into the alternative investment management arena. The company leverages cutting-edge AI and machine learning to create innovative solutions that transform the operations of investment managers, with a focus on enhancing security, privacy, and compliance.

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The newly acquired funds will fuel BlueFlame’s accelerated growth plans. The company intends to broaden its services, improve its generative AI platform, and hire additional high-caliber staff, including client success managers, engineers, product managers, and operations personnel.

This expansion is part of BlueFlame’s strategy to continuously improve its client support and develop new AI technologies that streamline data integration and enhance operational efficiency.

Since its launch in October 2023, BlueFlame has rapidly expanded, now employing over 20 professionals and serving global clients who manage hundreds of billions of dollars in assets. Its clientele includes private equity managers, hedge funds, and wealth managers who benefit from BlueFlame’s integrations with over 20 system providers and its more than 50 pre-built workflows that boost operational capabilities.

Raj Bakhru, the CEO of BlueFlame AI, highlighted the critical role of AI in contemporary investment strategies, stating, “AI has become an essential tool that alternative investment managers recognize as crucial for streamlining operations, enhancing efficiencies, and supporting advanced strategies. The value of AI is evident, and our investors are keenly aware of the challenges and opportunities in harmonizing structured and unstructured data using AI, while also adhering to compliance, security, and regulatory demands. This funding is a strong endorsement of our business model, our technology’s robustness, and the value we add to the industry. With this capital, we are poised to focus on our primary objectives of product innovation and delivering exceptional value to our customers, as we continue to explore new ways for our clients to use AI to minimize time on routine tasks and focus more on achieving results for their investors.”

Before this funding round, BlueFlame had not reported any prior investment rounds, indicating that this Series A represents a significant initial step in their journey to advance FinTech solutions within the investment management sector.

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Source: fintech.global

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The Central Bank of the UAE (CBUAE) has recently introduced the Sandbox Conditions Regulation, aimed at fostering a conducive environment for startups and global fintech companies.

This move is designed to enhance creativity and innovation within the financial sector by providing a structured regulatory and supervisory framework. The regulation is also expected to bolster the financial sector’s competitiveness and contribute to the UAE’s economic expansion.

Regulatory Framework and Participant Conditions

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The regulation sets out specific criteria that participants, including startups, fintech firms, and established businesses offering innovative financial services, must meet. It permits these entities to trial new business models, products, and services for a set period while adhering to ongoing regulatory requirements to safeguard the interests of all parties involved.

Enabling Proactive Supervision and Regulatory Compliance

These stipulations allow the CBUAE to proactively monitor and address innovations through its supervisory activities, assisting participants in aligning their operations with regulatory standards.

Application Requirements

To qualify, applicants must introduce a technologically innovative financial product, service, solution, or business model that could potentially benefit consumers and/or the broader industry. Participants are also expected to show an intention to expand the proposed service across the UAE after completing the sandbox program.

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Promoting Innovation and Protecting Stakeholders

Khaled Mohamed Balama, Governor of the CBUAE, remarked that the release of the Sandbox Conditions Regulation underscores the UAE’s dedication to nurturing innovation and advancing a knowledge-based economy. The framework not only encourages experimentation and positive contributions to the economy but also prioritizes consumer protection and the interests of all stakeholders.

The regulation has been officially published in the Official Gazette and is now in effect.

Source: economymiddleeast.com

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