Understanding Regulatory Data: Why Insights into Third-Party Risk Matter for Banks

When conversations turn to regulatory data in banking, the discussion often centres on internal compliance—capital requirements, loan loss provisions, conduct rules, and other obligations that banks themselves must meet. Those issues are certainly critical. But in an increasingly interconnected world, another dimension of regulatory data has come to the fore: understanding the regulatory status of your partners, customers, and third-party organisations.

_{Regulatory Data: Not Just Internal Compliance}

While most resources focus on a bank’s own regulatory obligations, at BankCheck we address a different challenge: helping financial institutions access, verify, and monitor the regulatory status of third-party organisations. This is particularly essential for assessing risks around financial crime, money laundering, and the evolving market opportunity with high-risk money services businesses (MSBs) and third-party payment providers (TPPPs).

^{Protecting Against External Risks}

It’s easy to focus on internal compliance and trust that your own house is in order. But in today’s interconnected financial landscape, the greatest threat may be the risks that come in through your front door, disguised as trusted partners. Even when your institution is doing everything by the book, just one overlooked gap in a third-party provider’s standards, controls, or compliance status can expose your business to severe regulatory and reputational damage. 

_{What Is “Third-Party Regulatory Status” Data?}

Rather than outlining rules for your own business lines, third-party regulatory status data provides critical, up-to-date information about:

• Licensing: Does the organisation have valid regulatory authorisation in applicable jurisdictions?
• Supervisory action: Has the organisation faced enforcement, penalties, or sanctions?
• Ownership and control: Who controls the business and has there been regulatory scrutiny of beneficial owners?

This data is actionable for onboarding, periodic reviews, and continuous monitoring of customer and vendor portfolios, particularly where indirect risk exposure is significant.

_{Why Does This Data Matter?}

1. Addressing Financial Crime and AML Risk 

For banks serving high-risk MSBs, fintech clients, or growing through third-party partnerships, the ability to verify a partner’s regulatory status is foundational. It’s not enough to rely on initial disclosures or static records; regulatory risk changes fast in this sector.

2. Unlocking New Business Opportunities Safely 

As explored in BankCheck’s analysis of banks and high-risk MSBs/TPPPs, proactive use of third-party regulatory intelligence allows banks to serve challenging, fast-growing customer segments with confidence. By automating regulatory risk checks, banks can tap into new markets while maintaining robust defences against compliance breaches.

3. Meeting Regulator and Auditor Expectations 

Regulators increasingly expect banks to “know their customer’s risk,” going beyond KYC data to assess licencing status and ongoing suitability over time. Third-party regulatory data helps demonstrate proactive and effective due diligence, even in dynamic industries.

_{Common Challenges}

• Constant Change: The regulatory status is dynamic—licenses are gained, lost, or restricted, and enforcement actions unfold regularly.
• Global Variance: Data is often fragmented across jurisdictions and public records, making centralised oversight difficult.
• Manual Processes: Traditional onboarding and periodic review methods cannot keep up with real-time risk signals in fast-moving sectors.

_{Best Practices for Managing Third-Party Regulatory Data}

• Centralise External Risk Intelligence: Incorporate global regulatory data sources into onboarding and monitoring processes for third-party organisations.
• Automate Alerts and Monitoring: Move beyond static point-in-time checks—receive notification of license status changes as they occur.
• Integrate with AML and Risk Systems: Seamlessly link third-party regulatory data with transaction monitoring and customer due diligence programmes.
• Document Decisions: Create audit trails that show how regulatory status data influenced onboarding and ongoing relationship decisions.
• Enable Risk-Based Segmentation: Use regulatory intelligence to separate high- and low-risk partners, focusing enhanced due diligence where it's needed most.

_{The Future: From Regulatory Burden to Market Opportunity}

Third-party regulatory status data isn’t just about staying compliant. As banks compete to serve new and unconventional financial service providers (like crypto platforms and fintechs), the ability to accurately and efficiently assess third-party regulatory risk becomes a powerful differentiator, turning risk management into business growth.

Ready to reimagine your approach to regulatory data and third-party risk? Discover how BankCheck’s Global Regulatory Data can help your organisation unlock new markets safely, stay ahead of emerging risks, and respond confidently to regulatory expectations. Book your demo now!

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