6 Key Factors Impacting the Future of Registers!

6 Key Factors Impacting the Future of Registers!

As the world of registries evolves, we look at the elements affecting change. These changes have prompted the development of a new Target Operating Model (TOM) designed to help registries adapt to the evolving landscape.

Registers and registries are vital in enabling governments and businesses to effectively carry out key functions, provide services, and meet important objectives. However, as this landscape rapidly evolves, regulatory frameworks must adapt to ensure registers remain secure, effective, and trustworthy.

Several significant developments highlight the types of changes shaping today's register environment:

Anti-Money Laundering Regulations


A significant trend is the growing focus on leveraging registers for anti-money laundering (AML) and combatting financial crime. Key initiatives like the Financial Action Task Force (FATF) Recommendations and European Union (EU) Anti-Money Laundering Directives (AMLD) have established extensive register requirements in these areas.

Specifically, FATF Recommendation 24 mandates adequate transparency on the beneficial ownership of legal persons that authorities can access. Meanwhile, Recommendation 25 focuses on preventing the misuse of legal persons for money laundering and terrorist financing. As countries enact these recommendations, significant obligations are placed on registers.

While undoubtedly important objectives, overlapping regulations from FATF, EU, and other authorities around registers create operational difficulties. Registers strive to digest and reconcile the array of new controls and requirements. Further challenges emerge in balancing flexible risk-based approaches with more prescriptive rules-based requirements across different jurisdictions. Finding the optimal blend remains tricky but critical.

Emerging Technologies


Another primary driver of change is new technologies rapidly transforming registers and their use. The digitization of registers combined with application programming interfaces (APIs), cloud computing, and blockchain enables faster, more secure data exchange between registers and other systems. However, these innovations also introduce new privacy, data protection, and cybersecurity risks that regulatory frameworks must address.

For example, as registers move to the cloud, regulations must ensure proper controls around data security, access management, and jurisdictional issues. With increased API integration, authentication, authorization, and connection security become even more critical. As blockchain enables new models of distributed registers, governance, and legal implications need consideration.

As technology continues rapidly evolving, regulations must constantly develop to ensure registers remain secure and effective while harnessing cutting-edge capabilities responsibly. Striking the right balance remains tricky but essential.

Societal Values


Evolving societal norms and values also profoundly impact registers like privacy, transparency, accountability, and responsible use. For instance, enhanced focus on beneficial ownership transparency through registers improves accountability. It raises new privacy considerations and data protection needs. Regulations like the EU's General Data Protection Regulation (GDPR) also continue raising the bar.

Additionally, societal expectations for transparency, open data access, and compliance with ethical norms are higher than ever. However, principles like transparency and privacy often clash, requiring balanced policy approaches. Issues like non-discrimination, proportionality, and serving the public interest add further complexity to the equation.

Navigating these multifaceted dynamics to uphold diverse societal values poses ongoing challenges for policymakers and regulators overseeing registers. Adaptable frameworks that safeguard public interests while enabling innovation will remain crucial.

Legal and Policy Changes


On the legal and policy front, new laws, regulations, and directives related to registers constantly emerge across diverse domains like privacy, AML, access to information, and more. For instance, the frequent updates to the EU's AMLD directives create a turbulent legal landscape for European registers.

Likewise, data protection regulations remain in flux across jurisdictions. New standards and international agreements continue to emerge around beneficial ownership transparency, automatic tax information exchange, and more.

Keeping pace with evolving legal and policy frameworks is critical but difficult for registers. Outdated legal bases can create compliance risks and other issues. Policy coordination across government agencies is also essential to ensure alignment and prevent conflicting rules. Overall, regulatory agility and cross-sector collaboration will remain vital capabilities from now on.

Interoperability Needs


Interoperability and standardization remain key priorities as registers intersect with various sectors, datasets, and jurisdictions. Consistent data formats and quality standards enable this secure, seamless ecosystem integration. However, developing aligned standards across diverse systems and policies is challenging.

For example, what metadata should accompany register data for context? What standard protocols enable linking without compromising security? How to balance standardization with enough flexibility for local needs? Which types of data transfers require transparency? Approaches like data stewardship councils and open standards processes may help navigate these complex waters.

Finding the right balance between harmonization and localized control remains complex but critical for interoperability. Hybrid models that connect localized registers to centralized hubs show promise and warrant consideration.

Data Quality Risks


Finally, data quality and accuracy are paramount. Without reliable, current data, registers lose enormous value while potentially enabling fraud or abuse. Errors, changes in circumstances, and intentional data manipulation threaten data integrity.

Regulatory frameworks must ensure registers have robust validation procedures to mitigate these risks during data intake. Ongoing verification processes are also needed to identify changes affecting data accuracy. Fast, effective methods to investigate and correct inaccurate data also remain crucial.

Technologies like blockchain offer robust, tamper-evident means of preserving data integrity. However, data quality issues can still occur on input. A multi-pronged approach combining vigilant human oversight with technological capabilities remains ideal.

Looking Ahead


Summing up, registers operate in a fast-evolving environment shaped by diverse emerging regulations, technologies, policies, and risks. While not exhaustive, the developments highlighted in this post illustrate some of the most impactful dynamics regulatory frameworks must address to enable registers to remain secure, effective, and trustworthy.

With careful attention and balanced policy approaches, registers' immense value can be fully harnessed while safeguarding public interests. Maintaining this equilibrium through proactive, consultative regulatory processes will be key as the registry landscape rapidly advances.

This post is an excerpt from our white paper: Registers The New Frontier: A Proposal for the Development of a new target operating model for Registers; click HERE for your free copy of the white paper.