The aim of the competition was to find the most innovative start-ups using Artificial Intelligence (AI) to solve regulatory problems, particularly in relation to Conduct Risk. Corlytics competed against 40 other businesses at the RegTech Challenge Pitch & Award Day, which took place at Deloitte Greenhouse in Milan earlier this month. The business was awarded with the accolade after showcasing how it is incorporating advanced AI modelling to provide regulatory risk ratings for financial institutions.

The competition success follows a number of major milestones for the business, including:

• The announcement in November 2018 that Corlytics is set to close a new €10m funding round
• Success in Allen & Overy’s Fuse programme, a tech innovation space to explore, develop and test legal, regulatory and deal-related solutions
• Cutting-edge innovative work with two new banking clients, introduced to the business by A&O
• Six successful global deals across 2018, with more new wins than competing emerging regtech companies

Kevin O’Leary, VP product management at Corlytics, comments, “The practical nature of Deloitte’s prize – which includes the opportunity to solve real business problems for their clients – makes this a brilliant win for the team. We were thrilled to compete against those doing some great work in the regulatory landscape.

He continues, “The accolade comes at a time when we are seeing real momentum in the regtech market. We’re now looking forward to delivering pilots and proof of concepts to help Deloitte’s partners understand the size, scope and root causes of regulatory risk.”

The Deloitte RegTech Challenge team declared: “We had the privilege to get in touch with some highly impressive start-ups throughout our RegTech Challenge and we want to congratulate Corlytics for the excellent result achieved. As Deloitte we are proud to create for Corlytics the opportunity to be a part of our innovation ecosystem that aims to solve real business problems and meet our clients’ needs.”

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TOM KENNY JOINS CORLYTICS AS CHIEF FINANCIAL OFFICER

Corlytics, the world leader in regulatory risk intelligence, has announced an addition to its executive team with the appointment of Tom Kenny as chief financial officer. 

Kenny will work closely with the team globally, to deliver on the company’s ambitious growth agenda. An experienced chartered accountant by trade, he has over 25 years’ experience. Having held a number of senior appointments in the international financial services sector, as well as a successful career at one of the top four accounting firms. 

Kenny joined Corlytics in October 2017, having previously held the role of managing director with Canada Life International Assurance. He was part of the senior management team that led the successful sale of the business on behalf of Legal & General Group PLC. Prior to working in the financial services sector, Kenny worked at Deloitte for 13 years. He also holds a Masters in Management Practice from Trinity College and is a Fellow of the Institute of Chartered Accountants in Ireland.

Tom comments, “I am delighted to have joined John Byrne and the Corlytics team. Having followed the international regtech market over recent years, I was impressed by Corlytics’ unique market position. It already has impressive reach helping to support regulated firms, regulators and professional services executives to mitigate risk through regulatory risk intelligence. I am looking forward to being part of helping shape Corlytics’ offering in the multi-billion regtech industry globally.”

John Byrne, CEO of Corlytics added, “Tom has enormous experience garnered from many years working in the financial services sector. He is a highly effective manager, a great motivator and will play a pivotal role in continuing to grow Corlytics and our offering worldwide. We are enjoying a strong phase of growth and will benefit greatly from having someone with Tom’s international financial management and regulation expertise in the team.”

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• • Global regulators have levied over USD $38.4bn in economic crime fines since Jan 2012
  • 97% of all fines from US regulators
  • UK, French, German and Swiss banks with branches in the US have paid almost 40% of the fines related to economic crime in the US
  • Top 10 European banks have paid USD $13.25 billion to US regulators since 2012
  • Average fine for European firms to US regulators is 10x the average of US firms
  • Economic crime makes up 18% of all regulatory enforcement fines in the period: 927 cases

  New data from Corlytics, the global leaders in regulatory risk intelligence, shows that European banks are under disproportional enforcement pressure from US regulators. Since 2012, of the $38.4bn levied in economic crime fines worldwide, 97 percent of all fines have come from US regulators. With the average fine for European banks being ten times the amount US banks have been served. The Corlytics Barometer, which this issue focuses on economic crime globally, reveals that enforcement action for sanctions and tax evasion are exclusively handed out by US regulators, whereas bribery and anti-money laundering AML are higher up the watch list for European and Asian regulators. Although the number of fines have increased over the last 12 months, the average value of each fine has decreased. This is due in some part to a few very large fines issued by the US regulators (predominantly the Office of Foreign Assets Control) in 2014. These were mainly for sanctions and Anti-Money Laundering and Banking Secrecy Act (AML/BSA) breaches.

US REGULATORS GETTING TOUGH WITH NON-US BANKS Corlytics uncovered a significant finding for banks operating outside of their originating jurisdiction. UK, French, German and Swiss banks with branches in the US have paid almost 40 percent of the fines related to economic crime in the US. IT’S GETTING PERSONAL Economic crime involves serious criminal acts committed both by senior individuals at institutions and the institutions themselves. Many regulators have focused on infringements by regulated individuals at firms, rather than just the firms themselves. This is especially true of European and Asian regulators. Enforcement involving criminal convictions, and imprisonment for individuals is very much on the increase in the UK, Hong Kong and Australia. CRIMINAL COST There is an emerging hierarchy of financial penalties for firms by regulatory category. Globally, crimes involving sanctions accounted for more than USD $1.77 in every USD $5 fined. This equated to over USD $13.5 billion for the period. It’s notable that this has decreased from USD $2 in every USD $5 from examined data since 2009, indicating that sanctions violations may be beginning to come under control. Sanctions was followed by AML/BSA at USD $8 billion, bribery at USD $7.7 billion, fraud at USD $4.4 billion, tax evasion at USD $2.8 billion, and misappropriation at USD $1.8 billion. CYBER INDICATIONS While cyber fraud has been an important part of economic crime, and there are several pending cases with regulators, there have been few associated fines in this period. However, this trend is expected to change for two reasons: firstly, the introduction of the cybersecurity regulations by the New York Department of Financial Services (NYDFS) which came into effect in March of this year, and secondly, the introduction of the GDPR which comes into effect in May 2018. PENALTIES FOR INDIVIDUALS Sticking with US regulators, the Commodity Futures Trading Commission (CFTC) has the highest fines levied against individuals globally. Accounting for over USD $422 million over the period. Interestingly, for fines against individuals, the average size of a fine for an individual is over USD $6 million. In the UK, regulators prefer a different tack. Frequently demanding lengthy prison sentences for fraud that have associated confiscation orders. In the US, for senior individuals, settlements for economic crime frequently involve disgorgements (confiscation of assets gained) together with life-time bans from the industry. The Australian Securities and Investments Commission (ASIC) levies more individual fines than any other regulator globally, but the amount of these fines at an average of just over USD $15,000 pales into insignificance when compared to the CFTC fines. The Securities and Futures Commission of Hong Kong (HK SFC) is also beginning to sharpen its claws with two huge fines against individuals in the past 10 months, one with a value of over USD $10 million and another with a value of over USD $11 million. PENALTIES BY JURISDICTION Corlytics has picked up different geographic behaviours from the regulators. In Australia, the UK and Hong Kong the enforcement activity is more focused on individuals. There have been 228 individual cases in total in these territories, versus 29 cases against firms. Although the US has brought the most cases against individuals to date – in the period, there were 110 individual cases – the focus remains on fining firms, with 444 actions brought during the same period. The average fine level for firms were higher than individuals, with every regulator, except in Australia. The United States is at the fore of punishing economic crime with fines. Responsible for almost 97 percent of total fines by value over the period. The most frequent violations were in Anti-Money Laundering or Bank Secrecy Act rules, with cases in all jurisdictions, except Australia. Australian regulators covered mostly fraud. The UK mainly covered fraud and bribery. The United States covered all six financial crime types, with sanctions violations accounting for 40 percent, followed by fraud at 36 percent, and both Anti-Money Laundering or Bank Secrecy Act and tax evasion at roughly 10 percent each by value. PENALTIES BY BANK ORIGIN The top 10 European banks have paid USD $13.25 billion in fines to US regulators since 2012. This means that since 2012, 10 European banks have paid 35 percent of all fines to US regulators. The average value of each fine is approaching USD $0.5 billion per fine; over 10 times the average that US firms pay to US regulators. LARGE FINES HAVE BEEN DECREASING, BUT THAT COULD ALL CHANGE John Byrne, CEO at Corlytics said, “What’s most noticeable across all regulatory categories is the extent to which large fines have decreased. Regulators are beginning to indicate that they are satisfied that financial institutions seem to be addressing economic crime and may have moved their focus to other regulatory categories for the time being.” However, this does not mean that regulatory scrutiny won’t return to this area in the future. Large European financial institutions with a presence in North America need to be extremely careful to ensure that they comply in the area of economic crime. There is clear evidence to suggest that they will be treated harshly if they do not. It looks like regulators are beginning to take a closer look at the senior managers who preside over compliance issues. Byrne continues, “Our data suggests the increased penalties, both financial and non-financial, ensure that senior managers of large financial institutions need to be in full control of the institution’s compliance posture. In relation to financial crime, the future area that organisations need to be most aware of is cybersecurity. “The NYDFS regulations have come into effect and this regulator, even though it’s a state regulator rather than a federal one, has been known to penalise heavily when its regulations are breached. Financial institutions need to ensure that they fully understand their risk exposures in this area.” -ENDS-