Possibilities of Using Regulatory Technologies (Regtech) by Primary Financial Monitoring Entities of Ukraine

The research examines the reasons behind the development of regulatory technologies, the key components of these technologies used by reporting entities in the field of financial monitoring within the global financial market, and the potential for implementing regulatory technologies by primary financial monitoring entities in Ukraine. The subject of this research was chosen due to the inability of financial institutions to effectively meet modern regulatory requirements without utilizing advanced technologies for data collection and analysis. The relevance of the study stems from the heterogeneous application of regulatory technologies across different jurisdictions, the necessity of providing clients with a convenient service experience, and, at the same time, the need for financial institutions to apply effective measures for the protection of personal data. A wide range of global and national regulatory documents have been identified, which significantly increased regulatory pressure on financial entities. This pressure has resulted in the broad implementation of regulatory technologies. In the field of financial monitoring, the most important among these have been innovative processes in customer identification and verification, ongoing analysis of financial transactions, and work with sanction lists. For identification and verification, the use of video broadcasting procedures, electronic identity authentication (e-KYC), and various blockchain technologies has been proposed. For continuous transaction analysis, the use of supervised, semi-supervised, and unsupervised machine learning algorithms based on data classification is recommended. To conduct sanctions screening, it is advisable for financial institutions to generate a generalized score obtained from analyzing data from various information sources. Evidence is provided for the financial capacity of Ukraine’s banking system to implement modern elements of regulatory technologies in the field of financial monitoring. An additional factor stimulating primary financial monitoring entities to implement regulatory technologies is the establishment of a regulatory platform by the National Bank of Ukraine.