Dan Le Blancq leads Davies’s offshore team, which is based in Jersey and part of our Asset & Wealth Management team, specialising in supporting regulatory operations for offshore financial services firms.
Chillies are awesome! They’re packed with capsaicin, an organic compound that fires our mammalian pain receptors and translates into that characteristic spicy chilli heat.
It seems that the chilli evolved this chemical as a defence mechanism to deter furry creatures from nibbling on their tasty looking fruits. Humans seem to be the outlier in the mammal family, somehow learning to enjoy the pain!
The bright, red chilli fruits are actually intended for the birds, who don’t have the same pain receptors and get no heat kick, just a delicious, nutritious snack. The flip side of this deal is that the chilli gets its seeds distributed far and wide by the birds, who (unlike mammals) have no teeth and so leave the seeds undamaged by their journey through the avian digestive tract.
And in case you’re wondering, it’s those seeds I want to focus on.
At the risk of stating the blindingly obvious, plants need more than just a seed to grow: soil, water, nitrogen, CO2, light, heat. Without these things in place the seed stays a seed and simply refuses to move on to meet its green and leafy destiny.
The chilli seed is (almost literally) bursting with potential fabulousness, but we won’t get to enjoy any of that until the supporting elements are in place. The chilli whisperer needs to provide the environment necessary to coax the seed to germinate, put down roots and grow to delicious maturity.
And regtech solutions, like chilli seeds, need more than just a place to land too.
Back in 2014, I was fortunate enough to be part of the senior team at an independent trustco with a penchant for bright yellow branding and innovative thinking.
This was long before the regtech market was bulging with off-the-shelf E-ID solutions – so we built our own and ran with it to help deliver a much smoother onboarding experience for our clients.
That first-gen solution was the metaphorical chilli seed, and we managed to bring together just the right conditions to help it grow and flourish:
- a receptive regulator, willing to entertain new concepts like E-ID (soil)
- a corporate willingness to innovate and evolve (water)
- the operational capacity and capability to deploy and integrate new tools and processes (nutrients)
- confidence that the solution was in alignment with regulatory requirements (sunlight)
But eight years on, the offshore world still seems tentative to fully embrace what is now a tried and tested regtech mainstay.
The JFSC’s recent consultation articulates the factors at play really well, and shines a light on some reasons why E-ID enabled firms are still in
the minority, in Jersey at least.
In 2023, the regulators are pretty receptive, and firms generally want to take advantage of the tech, so the metaphorical soil and water is in place.
Most of the E-ID solutions now use a software as a service (SaaS) model, which means deployment is just a bite-sized project, so the nutrients are not too much of a problem.
The environmental challenge appears to be around confidence. Firms are still nervous that their chosen E-ID solution might be out of line with regulatory requirements and they may take some painful flack down the line.
This means more sunshine is required!
The JFSC consultation considered three courses of action to support E-ID uptake:
- establishing a central client due diligence (CDD) utility;
- regulator accreditation for E-ID solutions; and
- provision of greater clarity around laws/regs re E-ID.
Option 3, greater clarity, was the course ultimately favoured.
Whilst, this will certainly help to dial up confidence (or sunshine) over time, it’s worth touching on how we got ourselves confident back in 2014, before E-ID even got a mention in the anti money laundering (AML) handbooks.
Naturally, we did our own thorough analysis of the regulations, and made sure we were open with our regulators about our intended new approach. But we also commissioned legal opinions to help give us some added confidence that our analysis was sound and we weren’t straying off-piste.
That extra bit of sunlight makes all the difference.
And so this is why E-ID is like a chilli seed, jam packed with amazing potential for transformational fabulousness, but highly dependent on its environment, and sunshine in particular, to take root and flourish.It’s also why the Davies offshore team has put together a box-set solution to help offshore financial services firms select and deploy E-ID in their business.
To find out how we can assist with E-ID solutions, regulatory operations, offshore compliance, backlog remediations or other challenges, please contact us.
