REG TECH AND COMPLIANCE IN THE DIGITAL FINANCE ERA

Abstract

Regulatory Technology (RegTech) refers to the use of technology, particularly automation and artificial intelligence, to help financial institutions comply with regulatory requirements efficiently and cost-effectively. In the rapidly evolving digital finance landscape, RegTech has become essential for maintaining financial integrity, mitigating risks, and ensuring compliance with complex regulatory frameworks. This paper examines the role of RegTech in the digital finance era, with a focus on its applications in anti-money laundering (AML), know-your-customer (KYC), risk management, and fraud detection. Using data from global and Pakistani financial institutions, the study analyzes the benefits and challenges of adopting RegTech solutions, particularly in emerging markets. The findings show that RegTech has the potential to streamline compliance processes, reduce operational costs, and enhance transparency. However, regulatory uncertainty, cybersecurity risks, and the lack of standardization pose significant challenges to its widespread adoption. The paper concludes with recommendations for financial regulators and institutions to foster RegTech adoption and ensure robust compliance in the digital finance ecosystem.