Regulation is an opportunity to use new tech

The rigorous data reporting requirement of alternative fund regulation presents the industry with the perfect opportunity to work together and modernize, according to panellists at Tuesday’s 6th AIFM Directive conference in London.

“It’s bizarre that in 2016 we face the problem of data being stored in different places, and in different jurisdictions, that just doesn’t talk to each other,” Tim Andrews, director of The ID Register, a due diligence technology provider, said.

While acknowledging the costs associated with compliance with various regulations including Know Your Customer legislation, an anti-money laundering measure, the Alternative Investment Fund Managers’ Directive, and the Base Erosion and Profits Shifting guidelines, he said it was also an opportunity to challenge the way things are done in the industry.

“The solution isn’t to use pens and paper, we’re still conducting reporting as if it’s 1985,” he said. “This is a real opportunity for the industry to come together and create a standardised solution using technology.”

This isn’t something that should be done at a firm level, rather the industry should work together to create a standardised way of reporting and presenting data, he added.

But sounding a note of caution, PJ Di Giammarino, chief executive officer at regulatory analyst JWG, said that while it is a good target to work towards, it will not happen overnight.

“The data is there, that’s part of the battle, but the challenge is how to present it. It won’t happen straight away, it will take time to agree on all the principles and apply them, for everyone to agree on the process,” he said.

Regulators must also play their part in facilitating change, ensuring frameworks allow for reporting processes to move forward and for the industry to set the standards, Andrews said, but he added some are beginning to update their operations to allow firms to harness technology.

“In the past the Guernsey and Jersey regulators required extensive paperwork from firms when reporting on their KYC compliance. They have now updated their handbooks and allow for electronic submission of due diligence documents,” he said.

(Pictures copyright Frank Schwichtenberg and MsSaraKelly)