Regulation & Standards

Transformation and compliance

Published: Jan 2023

Gautier Mouzelard, Head of Industrialisation for Trade Finance, KYC & Acquiring is also in charge of compliance topics for the cash management business at BNP Paribas and talks about evolution in the compliance and industrialisation space.

Gautier Mouzelard

Head of Industrialisation for Trade Finance, KYC & Acquiring

Compliance and industralisation are an interesting combination for a role, but it’s definitely a reflection of the way the industry has changed over the last decade.

It’s a role that’s never been more relevant. Banks have found themselves working more closely with regulators and governments to tackle issues such as financing-of-terrorism, money laundering and corruption.

Over the last ten years, there has been a gradual evolution of responsibility for the bank – growing from simply ensuring the bank complies with regulations, to helping their clients comply with regulations, and now to working closely with regulators and governments to also protect citizens and society in general.

“At the beginning, it was an important topic for the bank to comply with the regulation,” Mouzelard says. “But more and more, it has evolved as a service that the bank is offering to the clients to help to protect them as a complementary filter. Indeed, it still happens that some small and mid-size corporates are not yet well equipped in terms of compliance frameworks or even for larger corporates to accompany them in the operationalisation of new policies.”

He gives the recent example of stopping payments for sanctioned Russian oligarchs, something that was necessary because of sanctions applied as a result of the Russian invasion of Ukraine.

“It was set up in a few days,” he says. “Ten years ago, it was not even possible to put in place such a mechanism. The financial security framework deployed over the last few years allows the financial institutions to now have a strong, fast and reliable action vis-à-vis of new policies, including urgent measures related to geopolitical topics. That is clearly an important role played by the financial institutions for the citizens.”

One major difficulty for financial institutions is ensuring all the controls put in place to meet regulatory requirements do not become cumbersome from a client’s perspective, deteriorating the customer journey. This has been a big challenge at BNP Paribas, and one the bank has taken seriously.

Mouzelard gives two examples of digital transformation that have improved the client experience: Inquiro, a digital tool to exchange data for compliance purposes between the bank and clients during the transaction lifecycle to fasten the processing; and Welcome, a tool digitalising the client onboarding and make the KYC process faster and easier.

But collecting the information is just the first step – the bank must then process that data. And BNP Paribas is using new technologies on that front as well to enhance the effectiveness of controls and fasten their processing vis-à-vis of clients.

“We use Optical Character Recognition technology, complemented with other artificial intelligence technologies and machine learning,” says Mouzelard. “It’s very powerful. You can securely extract a high percentage of data in a nearly automatic way. That collected data will then be used in parallel for compliance purposes and transaction handling. It’s an improvement from a client’s perspective because the processing time of their transaction can be faster whilst keeping the highest standards of vigilance.

Innovation and transformation go hand in hand, and transformation is impacting and benefitting every area of the bank. Digital transformation is ideal for clients, while the use of new technologies allows more efficient and effective compliance controls.

“I think that the technology over the last years has strongly evolved,” says Mouzelard. “And it has allowed us to improve our compliance setup from a business perspective.”

Ideally, to deal with anti-money laundering and financing-of-terrorism regulations, the bank needs to process and gather a mass of data – not just internal bank data and client data, but also external market data – to find the patterns that indicate illegal activities.

“Sanctions and anti-money laundering are really data topics,” Mouzelard says. “You must be equipped with extremely powerful data analysis systems and with new important roles that are data scientists. And over the last years, we have invested a lot at BNP Paribas, to be able to analyse and to be extremely strong in our data analysis internally but also with Regtechs companies to find money laundering patterns in some riskier businesses.”

Mouzelard says that when it comes to matters of protection and compliance, BNP Paribas has become one of the best in the banking industry.

“The protection that we offer is high,” he says. “And we’ve worked to make sure that this effective level of protection did not become too cumbersome from a client perspective.”

Mouzelard credits the bank’s investment in digitisation for this second point. “That’s why we invest a lot in digital aspects, to make sure the customer journey is smoothly integrated in our processes,” he says.

The final point Mouzelard makes regarding how BNP Paribas stands out from the field is the close relationship the bank has with its clients.

Not only does the bank work hand-in-hand with its clients to co-create solutions – with the previously mentioned Inquiro and Welcome being two examples – but it also helps them keep abreast of the ever-changing regulatory environment.

“We have a very close day-to-day relationship with our clients,” he says. “To anticipate as much as possible any new regulations, or any new topics related to compliance that come up. And that’s frequent. We have to anticipate that, and we have to notify our clients as soon as possible.

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