With traditional IT undergoing a digital transformation in a big data ecosystem, the onus of technology and data use now lies with businesses. The technologies driving data use as well as the data itself have both, become business enablers. This has powered business growth, seamless expansion and innovation across industries and applications.

At the same time, scandals related to data use, data breaches, and the ambiguity surrounding data governance, are not new. Such incidents have given rise to public discourse about the “ethics” element of the “digital” – the data and the underpinning technologies that are powering transformation. The ethical consequences for privacy, security, and the uncertainties surrounding “digital” use are being examined critically for the first time. All stakeholders are being involved in the conversation and attempts are being made to drive regulations and policies aimed at “ethical” use of both, technology and data.  According to the 2018 Edelman TRUST BAROMETER, trust in businesses and governments continues to decline sharply, harming business innovation and the economy. The GDPR Bill has also brought to focus issues of data processing and data use in an increasingly connected “digital world”.

This has compelled CXOs as well as risk and compliance officers to take digital ethics seriously to not only keep their customers happy but to also safeguard their businesses reputation and shareholder confidence.

What is a digital ethics officer? What role does a digital ethics officer play in regulation technology?

As technologies become smarter, automated and intuitive; their applications become more and more pervasive and powerful. The lines of conflict, risks and bias start to blur. Often, the potential of damage to a customer or business integrity can be phenomenal. This is where a “Digital Ethics Officer” comes in. The Officer balances the consequences of unethical actions with innovation and business growth.

What does a Digital Officer do?

A Digital Officer formulates the ethical framework of a business based on the nature of work, industry, territorial footprint, internal policies and governing regulations.

Every business or industry is exposed to its own set of risks and regulations. At the same time internal policies of surveillance, data governance, business values and use of technology differ from one company to another. The Digital Officer takes into consideration all these factors to formulate levels of risks (with checks and balances), align strategies to business values (examine whether a step is right), create the parameters of technology use (strategise) and build the compliance model (rules and regulations).

 

The relevance of a Digital Officer in Regulation Technology

Within businesses, professions and industries that are governed by dedicated compliance frameworks and different regulator bodies (AUSTRAC, FICA, EBA, etc.), the Digital Officer plays a pivotal role in regulatory compliance. He controls and regulates the internal compliance systems like AML/CTF, the use of external screening mechanisms like sanctions screening, and adoption of new technologies. As the key person regulating the ethical use of technology, their responsibility goes beyond the vigilance of being compliant, by being up-to-date with the constantly changing RegTech landscape. This means the Officer has to develop ethical best practices that align the business with the latest in RegTech. Their responsibility in taking charge of the ethical practices of the company in tune with changing regulations like the GDPR, means that they are accountable for any legal or financial consequences that may arise from failure in ethical compliance.

Will the adoption of artificial intelligence and machine learning in the compliance function affect jobs?

With artificial intelligence (AI) and machine learning (ML) increasingly being used for business advantage in compliance functions, the question arises whether jobs are getting replaced by automated technologies?

By automating compliance activities such as built-in office software that automatically scans for PEP and Sanctions in the onboarding process, the front-end processes are automated for superior regulatory intelligence, cutting down the manual practice of checks. However, this does not mean the need of a compliance officer can be done away with. Automation simply makes the work easier for the compliance officer, more error-free and seamlessly integrated with back-end processes. In the event of false positives, the need for manual review cannot be done away with, as this process currently cannot be automated with AI or Machine learning, and requires human input to make a decision.

How should companies navigate global regulatory compliance confidently with the most comprehensive and trusted intelligence available?

As companies are faced with the digital transformation of regulatory compliance with real-time sanctions screening, the Digital Ethics Officers need to engage with RegTech providers that integrate the most up-to-date and comprehensive world databases.

• Key points that a comprehensive and trusted intelligence should look out for includes the ability to: Monitor unfavourable outcomes by building feedback systems for the Digital Ethics Officer to review periodically.
• Implement a transparent mechanism, by making sure that the screening technologies used are compatible with GDPR regulations.
• Align technologies with digital ethics, especially where technologies like cloud SaaS, AI and ML are used for digital intelligence in screening solutions, or customer data is gathered through sensors or feeds.