Can RegTech unify ESG and privacy into one framework?
In an era where ESG demands accountability and privacy safeguards trust, these twin pillars of modern governance often stand apart, fragmented by their own intricacies. RegTech, with its bold vision of streamlined compliance, whispers a tantalizing possibility—could it weave these disparate threads into a single tapestry? The question lingers, heavy with promise and doubt, as innovation grapples with the tangled realities of corporate duty and data stewardship. Their convergence, if achievable, might redefine how we navigate responsibility in a digital age.
In the view of RelyComply, financial institutions face regulatory pressures from all angles, including those tied to consumer trust, sustainability, ethics and consent for personal data use.
The firm said, “With the advent of AI adoption in RegTech, this intrinsically draws together data privacy laws and ESG concerns under the compliance banner, where an AML framework for data collection and its usage in a risk reporting context needs to accommodate both.”
RelyComply also detailed that the processing of customer data is paramount for better KYC and anti-financial crime methods. Despite this, is cannot exist if a financial business does not store of utilise it according to data protection and cybersecurity laws.
“The General Data Protection Regulation (GDPR) particularly grants control to consumers and applies to all businesses that process data in the EU, with variations applying to different jurisdictions. No matter where an institution is based, AML compliance is one battle, and maintaining the strict expectations of consumer demand is another,” said RelyComply.
In order to maintain transparency with customers around how their data is stored, RelyComply emphasised more auditable one-view AML systems need to be implemented.
The firm commented, “Siloed data can be inefficient (and therefore energy-draining), and more challenging to maintain security-wise in the face of mounting threats that can compromise sensitive personal and financial data. Singular RegTech platforms can instead be flexible to cater to multiple data privacy regulations, whether customer information is hinged upon to develop ESG-aligned products, or monitored for risk reporting capabilities. While AI’s ethical considerations are also bound to ESG concerns, its auditable data processing (when used in line with growing regulations) indicates accountability and commitment to using customer data safely.”
In addition, better corporate governance can be achieved using integrated data, hence an uptick in cloud service providers.
RelyComply said, “These act as energy-efficient data centres backed by high-grade security, and can scale transaction monitoring, KYC, and reporting capabilities for growing companies. That’s a win-win; financial institutions can effectively manage cross-border payments and onboard to scale, while also housing a singular data repository used purposefully and consensually.”
The firm concluded, “Privacy is a fundamental human right, and the World Economic Forum considers data governance key to displaying long-term value. Unifying ESG and data privacy into AML practice is essential, especially given strengthened scrutiny from AI regulations and digital assets that will render financial firms without ample compliance obsolete in a data-heavy world firmly built on trust and transparency.”
Copyright © 2025 FinTech Global
