iFX EXPO International 2023: Muinmos CEO on Regtech feasibility amid complex regulatory landscape

Remonda is a seasoned expert in regulatory compliance with more than 20 years of experience in financial services. She is a visionary business leader, tech entrepreneur, financial industry veteran, qualified lawyer, and the CEO/Founder of Muinmos. For the past eleven years, Remonda has been dedicated to revolutionizing regulatory compliance and client onboarding in the financial services sector.

To kick things off, we asked Remonda about the attractiveness of the Regtech industry given the complex regulatory environment.

Remonda explained that despite the industry’s evolution and the consolidation of regulations, it remains an attractive sector for business. She added that many of the regulatory changes aim to create clarity and transparency within the framework of existing regulations rather than introducing entirely new rules. In her view, the Regtech industry continues to offer opportunities for businesses despite the regulatory landscape’s complexity.

FinanceFeeds Editor-in-Chief Nikolai Isayev asked about the efforts to achieve uniformity in regulations across different regions and whether market players can expect some level of consistency when entering new regions.

Muinmos CEO identified two key challenges in this regard. Firstly, she observed that many businesses tend to emulate each other’s practices, even when operating in vastly different regulatory environments, without a clear understanding of the reasons behind these practices. Secondly, she pointed out that regulators sometimes adopt regulations from other regions without a deep understanding of local needs and the businesses within their jurisdictions. While learning from one another is valuable, blindly copying and pasting regulations can lead to challenges in achieving regulatory uniformity.

Meanwhile, Remonda provided an overview of the evolution of regulatory developments, which historically started in the United States and then spread to other regions. In particular, we asked about whether this global process has changed over the years, considering recent developments such as proposed restrictions in Spain.

Ms. Kirketerp-Møller acknowledged that regulatory leadership has undergone a shift, with the UK’s FCA taking a more prominent role in recent years. She attributed this shift to the FCA’s proactive efforts in understanding the digital landscape and adapting to the evolving financial industry. The City watchdog was an early pioneer in creating sandboxes, facilitating direct access, and actively engaging with new business models.

In contrast, Muinmos CEO noted that the US took a different approach, initially penalizing businesses operating in their jurisdiction rather than actively seeking to understand and regulate emerging technologies.

The conversation then shifted to discuss Muinmos’ offering, including the company’s KYC and AML solutions, mCHECK™ and mPASS™, and how they differentiate from competitors.

Ms. Kirketerp-Møller emphasized the comprehensive nature of Muinmos’ approach to onboarding, highlighting that it extends beyond KYC and AML to encompass various aspects such as product clearance, cross-border onboarding, suitability, and product distribution and definition. She explained that after these clearances, which fall under the mPASS™ solution, the process seamlessly transitions to mCHECK™, which handles the KYC and AML clearances.

Crucially, Remonda pointed out that while many providers operate within the KYC and AML space, they often address only specific components of the onboarding process. What sets Muinmos apart is its holistic approach that connects all the dots across the entire onboarding journey, creating a transparent framework that caters to institutions’ local and jurisdictional requirements. Additionally, Muinmos’ solution includes a client risk assessment engine, mRX™, that extends throughout the entire life cycle.

FinanceFeeds further queried how Muinmos’ Client Onboarding Platform, helps brokers address the challenges of determining country AML equivalence in the context of geographical expansion.

Remonda acknowledged the significance of cross-border elements in the financial industry, noting that institutions operating in different jurisdictions cannot simply copy each other due to variations in requirements and regulations. These differences include product lines, KYC, AML, and risk management.

To navigate the complexities of cross-border compliance and keep up with regulatory changes, Remonda highlighted the importance of leveraging digitization. She believes that relying solely on a large number of lawyers or hiring numerous compliance officers for manual checks is not a scalable solution. Instead, institutions need to automate these processes and collaborate with solutions like the Muinmos Platform, which have a deep understanding of the complexity involved in regulatory compliance.

In a recent op-ed, Kirketerp-Møller expressed opposition to the increasing marketing restrictions on high-risk derivative products for retail clients imposed by CNMV, the Spanish regulator. These restrictions have been compared to a “nanny state” approach.

Remonda clarified that her opposition was not to the concept of regulation itself but rather concerns how it is approached and implemented, emphasizing the need for a more targeted and collaborative regulatory strategy.

Muinmos CEO argued that simply preventing capable adults from engaging in certain activities is not a viable solution. She believes that regulators should focus on understanding the challenges and finding constructive solutions rather than imposing broad restrictions. In her view, overly strict regulations can lead to regulatory arbitrage, where institutions may choose to conduct business in more lenient jurisdictions. To prevent this, Remonda called for a collaborative approach that maintains a powerful European Union while ensuring harmonization across member states.

In response to Nikolai Isayev’s question about why retail traders are attracted to certain financial instruments, Remonda said it’s important to recognize that retail traders are adults capable of making their own choices.

Interestingly, Muinmos CEO argued that age should not be the sole determinant in assessing a trader’s ability to engage in certain activities. Instead, the focus should be on empowering investors with knowledge and information to make informed decisions. This, in her view, would lead to better compliance, as many brokers genuinely want to ensure compliance with regulations.

Remonda also shared her thoughts on the effectiveness of controlling or preventing individuals from engaging in speculative ventures. She noted that individuals with a penchant for speculative activities will often find ways to engage in them, regardless of marketing efforts or restrictions. As such, she thinks that personal choice plays a significant role in such decisions and that regulating and controlling this behavior can be challenging.

Muinmos CEO, again, highlighted the importance of providing education and transparency while also recognizing that adults have the autonomy to make their own decisions. She concluded that it is essential to strike a balance between these factors.

During the latter part of our discussion, Remonda addressed the impact of trading product restrictions on innovation, saying she believes that the financial industry will continue to see creativity and innovation despite these restrictions.

Instead of resorting to restrictions, Muinmos CEO argues that regulators should focus on ensuring a well-informed market. Ultimately, she suggested that a balance should be struck between educating market participants, providing safeguards like negative balance protection, and improving overall compliance.

As we approach the end of 2023 and move into 2024, our last question was on how she sees the upcoming regulatory challenges for the FX industry. Remonda replied that her biggest concern is the potential for regulators to simply copy each other’s approaches as an easy way out.

Muinmos CEO advocated for regulators to think independently, hire individuals with market expertise, and create guidelines tailored to their specific jurisdictions. She also stressed the importance of collaboration and discussion among regulators to address common challenges. Drawing from successful examples in the stock market, she urged regulators to avoid regulatory arbitrage and maintain harmonization within the European Union, particularly in the context of Brexit. Finally, Remonda called for a more thoughtful and coordinated approach to regulation in order to address the industry’s challenges effectively.