Over half of all RegTech companies address AML or KYC regulation

The Global RegTech Review released by FinTech Global highlights increased investments in AML and KYC solutions

Given the increasingly complex requirements placed by regulatory authorities on AML and KYC procedures, along with the heavy fines imposed for inadequate compliance, it is no surprise that 44% of the 416 companies analysed in the Global RegTech Review report address these areas of legislation. The third most commonly addressed regulatory framework is MiFID II, which is the EU-wide set of legislation designed to improve transparency and investor protection. More than 15% of RegTech companies offer solutions addressing this regulation. Basel III, PSD2, Solvency II and AIFMD are the next five most highly addressed pieces of legislation, with 92 companies providing solutions to help their clients address these regulations more effectively.

More money was invested in RegTech solutions that address KYC than any other area of regulation

  • Since 2014, 23.1% of all RegTech investments, which amounts to nearly $878m, can be attributed to investments in KYC solutions.
  • The next two areas of legislation to receive the most capital are AML followed by GDPR, which received over $874m and $437m of investment, respectively.
  • The remaining 42.4% of capital invested was spread across MiFID II, Basel III, PSD2, Solvency II, AIFMD and Other regulatory frameworks.

The top ten RegTech companies that raised external funding gathered nearly $1.2bn in aggregate

  • The ten most well funded RegTech companies since 2012 have raised an aggregate of nearly $1.2bn, averaging approximately $117m each. The size of the capital raised by these providers underlines the faith investors and financial institutions have in the sector and their intent to make substantial commitments to the growth of innovative RegTech companies.
  • Three of the top ten companies offer compliance management solutions and two companies focus on transaction monitoring. The locations of the companies in this top ten listing underlines the dominance of the US where seven are based, with the remaining companies in UK, Ireland and Canada.
  • US-based Avalara received the most capital, almost treble the amount received by the second highest company. The business provides software to help its clients become tax compliant and netted over $300 in seven deals.

The data for this research was taken from the FinTech Global database and was featured in the Global RegTech Review report. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2017 FinTech Global

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