APPLICATION OF BLOCKCHAIN IN BANKING COMPLIANCE ACTIVITY
Nedyalko Valkanov
Abstract
Introduction and penetration of blockchain based technologies alongside with the appearance of cryptocurrencies gave financial sector not only a strong competitor in the face of different fintech alternatives but also a powerful possibility for response to complex and burdening present-day regulatory environment. The article examines possible applications of distributed ledger technology for the needs of modern banking compliance. The study emphasizes that this innovation could be treated as a factor that inevitably changes the way modern banks respond the expectations of surrounding regulatory framework. On the basis of presented facts and analysis are proposed several assumptions for future integration of blockchain technologies into banking compliance activities in shorter and longer term.
Keywords
blockchain, banking, compliance, financial regulations
JEL Codes: G21, K20, O30
References
Accenture (2015). Billion Reasons to Bank Inclusively. Accenture Banking. Available online: https://www.accenture.com/se-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_22/Accenture-billion-reasons-bank-inclusively.pdf
Accenture (2016). Block Chain Technology. How Banks are Building a Real-Time Global Payment Network, Available online: https://www.accenture.com/_acnmedia/PDF-35/Accenture-Blockchain-How-Banks-Building-Real-Time-Global-Payment-Network.pdf
Auer, R. (2019). Embedded Supervision: How to Build Regulation into Blockchain Finance, Bank for International Settlements, Available online: https://www.bis.org/publ/work811.pdf
Ciphertrace (2019). Cryptocurrency Anti-Money Laundering Report, 2019 Q2, Available online: https://ciphertrace.com/wp-content/uploads/2019/09/CipherTrace-Cryptocurrency-Anti-Money-Laundering-Report-2019-Q2-3.pdf
Deloitte (2016). Over the Horizon. Blockchain and the Future of Financial Infrastructure, Available online: https://www2.deloitte.com/content/dam/Deloitte/mt/Documents/financial-services/gx-fsi-blockchain-deloitte-summary-mt.pdf
Dentos (2019). Using blockchain for KYC/AML compliance, 28 May 2019, Available online: https://www.dentons.com/en/insights/articles/2019/may/28/using-blockchain-for-kyc-aml-compliance
Fintechnews (2018). IBM Completes Proof-of-Concept Blockchain-Based Shared KYC, 3 January 2018, Available on: https://fintechnews.sg/14420/blockchain/ibm-completes-poc-blockchain-based-shared-kyc-deutsche-bank-hsbc-mufg-cargill-ibm-treasuries/
Hong Kong Monetary Authority (2019). Website. Key functions. Trade Finance, https://www.hkma.gov.hk/eng/key-functions/international-financial-centre/fintech/research-and-applications/trade-finance/
Hurder, St. (2018). The Economics of Tokenization Part I: Not Everything Can (or Should) be Tokenized, Medium, 30 May, 2018, Available online: https://medium.com/prysmeconomics/the-economics-of-tokenization-part-i-not-everything-can-or-should-be-tokenized-ed9b32f5a0f2
Investopedia (2019). Smart Contracts, Available online: https://www.investopedia.com/terms/s/smart-contracts.asp
KBC (2019). We.trade and KBC Trade Club, https://www.kbc.be/corporate/en/article/financing/trade/smoother-secure-international-trade.html
Laurent, P., Th. Chollet, M. Burke, T. Seers (2018). The Tokenization of Assets is Disrupting the Financial Industry. Are You Ready? Inside. Triannual insights from Deloitte. Issue 19, October 2018, pp. 62-67, Available online: https://www2.deloitte.com/lu/en/pages/technology/articles/tokenization-assets-disrupting-financial-industry.html.
Maguire, E. et al. (2018). Could Blockchain be the Foundation of a Viable KYC Utility? KPMG International, Available online: https://assets.kpmg/content/dam/kpmg/xx/pdf/2018/03/kpmg-blockchain-kyc-utility.pdf
Monetary Authority of Singapore (2017). Singapore and Hong Kong launch a joint project on cross-border trade and trade finance platform, Available online: https://www.mas.gov.sg/news/media-releases/2017/singapore-and-hong-kong-launch-a-joint-project-on-cross-border-trade-and-trade-finance-platform
Mesropyan, E. (2018). How European Banks Are Using RegTech Solutions, Medici, 6 June 2018, Available online: https://gomedici.com/how-european-banks-are-using-regtech-solutions
Mire, S. (2018a). Blockchain In Banking: 14 Possible Use Cases, Disruptor Daily, 17 October 2018, Available online: https://www.disruptordaily.com/blockchain-use-cases-banking/
Mire, S. (2018b). Blockchain In Compliance: 6 Possible Use Cases, Disruptor Daily, 3 December 2018, Available online: https://www.disruptordaily.com/blockchain-use-cases-compliance
Monetary Authority of Singapore (2019). Central Banks of Canada and Singapore conduct successful experiment for cross-border payments using Distributed Ledger Technology, 02 May 2019, Available online: https://www.mas.gov.sg/news/media-releases/2019/central-banks-of-canada-and-singapore-conduct-successful-experiment-for-cross-border-payments
Petrov, D. (2018). Application of blockchain and smart contracts in the financial industry. Izvestia Journal of the Union of Scientists - Varna. Economic Sciences Series, Vol. 7, №2, pp. 24-33, Available online: https://ideas.repec.org/a/vra/journl/v7y2018i2p24-33.html.
PYMNTS.com (2019). UBS Leads New Blockchain Settlement Coin Consortia, 3 June 2019, Available online: https://www.pymnts.com/blockchain/2019/ubs-crypto-cross-border
Securities and Exchange Commission, SEC (2019). Spotlight on Initial Coin Offerings (ICOs), Available online: https://www.sec.gov/ICO
Stavrova, E., N. Valkanov (2018). Correspondence Interrelations Between Banks and Systems for Information Discovery in Databases Created for Them. Economics and Management, Vol. XV, Issue: 2, pp. 27-43, Available online: http://em.swu.bg/images/SpisanieIkonomikaupload/Spisanieikonomika2018/CORRESPONDENCE%20INTERRELATIONS%20BETWEEN%20BANKS.pdf
SWIFT (2019). Payments: Looking to the Future, Available online: https://www.swift.com/future-of-payments
Valkanov, N. (2019a). Compliance v pomosht na finansovoto regulirane, Varna: Science and Economics.
Valkanov, N. (2019b). Banking System and Money Laundering. Varna: E-Litera Soft, Available online: https://www.ceeol.com/search/book-detail?id=733930
Valkanov, N. (2019c). Mitigation of Regulations Burden in Financial Sector by Application of High Tech Solutions. Economics and Management, Vol. XVІ, Issue: 1, pp. 19-30, Available online: http://em.swu.bg/images/SpisanieIkonomikaupload/Spisanieikonomika2018/CORRESPONDENCE%20INTERRELATIONS%20BETWEEN%20BANKS.pdf
Full Text: PDF (English)