President Trump has promised and delivered the reduction of some federal regulations on business, but he can’t eliminate them all. As modern life gets more complicated as technology advances, the government’s regulatory agencies have to work overtime to keep up with changes. Plus, Congress keeps passing new laws that require the writing of new federal regulations and guidelines. Courts keep making decisions that affect the laws and regulations, and how the legal system regards them and will apply them to future cases. Learn more at Seeking Alpha about Jeff Yastine
The traditional response of businesses is to appoint compliance officers and hire a department of people, perhaps with the help of an outside law firm of hired gunslingers. That’s because keeping up with the changes is a full-time job in itself. Then the compliance department has to make sure all the other departments in the company are following the regulations and making sure they file the proper forms on time.
All this effort costs lots of money. The business has to pay the compliance employees for the time they spend keeping up with the latest rules and sometimes meeting with regulatory agencies. It may also have to make changes to its business processes, and incorporate the changes into the software it uses. And the compliance employees must also train the other employees on important new laws and how to comply. This costs additional money. By some estimates, financial institutions around the world spend $65 billion making sure they are compliant with all the laws in the countries in which they conduct business. That figure is expected to grow to $118 billion by 2020. Each big bank in Europe spends $1.1 billion on compliance. Read more on talkmarkets.com for more info.
However, a new kind of company is now taking the expense of government regulatory compliance on themselves. They keep expenses low by using advanced software and other technologies advances as Artificial Intelligence and blockchain. Keeping up with required changes is all they do, so they get very good at it. It’s their primary business.
That’s why Jeff Yastine is now recommending regtech readers of his investing newsletter Total Wealth Insider. There are about 100 of them, and most are new and still privately held. They include ComplyAdvantage, OnRule and Taxometry. Most of them now operate in the banking and insurance agencies, but that will expand with time. It makes economic sense for companies to get rid of their old-fashioned compliance departments and just outsource the function to a regtech firm. Watch:https://www.youtube.com/watch?v=YxGq5uBBGEA