Distributed ledger technology consortium R3 ups its compliance game

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Distributed ledger technology (DLT) consortium R3 has integrated regtech Accuity’s financial fraud screening capability into its DLT platform, Corda, which went live earlier this month. Accuity says the feature is ready to use, but will likely only become accessible in 2018 when its licensing terms are finalized. The integration is targeted at Corda’s financial institution (FI) users, including ING, BBVA, and HSBC, among others.

Accuity’s functionality will allow Corda users to ensure their regulatory compliance more easily. Corda users will be able to scan transactions conducted on Corda within the platform using an "oracle node," which establishes a secure link between a DLT-based smart contract and external data sources. Normally, users would have to export the transactions to analyze them, causing delays and risking human error. Each transaction will be cross-referenced with regulations such as 4MLD, the US Patriot Act, and guidelines issued by financial regulators to help Corda’s FI users ensure they are compliant, saving FIs time and improving their compliance standards.

Building compliance tools into DLT platforms will likely become a necessity very soon.Although interest in DLT is apparently high among FIs, adoption is still slow, for reasons including regulatory and legal concerns — 40% of FIs consider this an adoption hurdle. As such, if DLT is to be widely adopted by the FI community, platform developers will have to allay such concerns, which integrating regtech features like Accuity’s could achieve. Accuity adds that it plans to strike similar deals with R3 competitors Hyperledger and Ethereum, suggesting that embedded compliance tools will soon become the standard among such providers.

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