Steering through regulatory waters

Saw (left) and Hui: Our vision is to be known for compliance intelligence infrastructure across the region. — LEONG WAI YEE/The Star

THE regulatory landscape today is expanding at an accelerated pace. Not only is the number of laws introduced each year growing, but their complexity and the stakes involved continue to heighten.

And with the rapid advancement of technologies and widespread adoption of artificial intelligence (AI) continually posing new risks, regulatory changes will only intensify further moving forward, according to Crystal Saw and Danial Hui, co-founders of regulatory compliance tech company Otonoco.

“Fifteen years ago in Malaysia, new guidelines from regulators were few and far between. This year alone, we have already seen the Online Safety Act and Consumer Credit Act come into force, and the Cybercrime Bill passed by Parliament,” Saw says.

At the same time, fines for anti-money laundering failures and data governance gaps have risen sharply.

As a consequence, compliance has become one of the most crucial and costly challenges businesses face, and one that a people-based approach can no longer support.

“As the number of regulations increase, organisations can’t just keep hiring more people for their compliance teams. On top of this, when staff leave, their accumulated compliance-related knowledge and experience goes with them, leaving an information gap,” she stresses.

Otonoco’s AI-powered platform, Nakhoda AI, was built to address this growing need among regulated entities by helping them monitor, understand, and comply with fast-evolving regulations.

For example, the system continuously checks regulatory websites, notices, and publications from key authorities such as the Securities Commission, central bank, and stock exchange to detect changes and new developments.

This can be especially relevant for areas like sanction screening, Saw says.

“Sanction lists change daily and require compliance teams to manually and frequently check them against their existing customer base, in addition to new customers. Our solution comes in to automate this monitoring process.”

Additionally, with its AI engine built on a comprehensive regulation library, Nakhoda AI offers a searchable database where teams can easily find specific regulations and extract precise obligations from complex texts through AI.

Hui highlights the system’s “compliance brain” function, which serves as an intelligent knowledge interface that leverages a company’s own data and historical cases.

“When you ask a question, it can bring up all similar past cases in the last 10 years, and the previous actions taken. Then, it suggests possible steps you can take based on its analysis of your current case,” he explains.

The compliance brain also provides references for precedent cases and flags key caveats to empower more informed decisions.

Beyond this, Nakhoda AI’s gap analysis and policy mapping features allow companies to directly link regulations to internal documents, policies, and controls, identifying misalignments or non-adherence gaps. This clarity then enables teams to act before blind spots become risks.

Currently, Otonoco operates on two models: one focused on enterprise-level clients requiring deeper integration into internal systems, and a subscription-based software-as-a-service platform called Nakhoda Lite.

The company has so far anchored itself in the financial sector, where compliance needs are increasingly critical, serving entities from banks and capital markets intermediaries to fintech companies.

However, in the long term, Saw sees opportunities in various other highly regulated industries.

“In the future, we might look into healthcare and cross-border trade, as these will require growingly complex solutions,” she says.

According to the co-founders, Otonoco’s expansion out of Malaysia is already in motion, with plans to access the Guangdong-Hong Kong-Macao Greater Bay Area in the coming months.

“It is the logical next step, as financial products are no longer confined to one country,” Hui notes.

“Transactions, financial instruments, and payment gateways are all now cross-border. Finance companies operate in multiple markets internationally,” he adds.

On this front, the company has also worked with its anchor enterprise client, a government-linked investment company and tier-1 institutional asset manager, to co-develop the Nakhoda Global Index, its core offering that monitors regulations, central banks, stock exchanges, and monetary authorities across multiple countries.

“It enables cross-border regulatory compliance by giving compliance professionals a reliable, current, and honest map of where regulatory intelligence lives globally,” Saw shares.

Another motivation for embarking on international expansion now is the need to stay ahead of growing competition, Hui says.

“We need to take an aggressive approach and plant our flag out there as soon as possible,” he adds.

What sets Otonoco apart from the fray, Saw says, is that its solutions do not aim to replace clients’ established compliance systems, but rather fill in gaps and reduce pain points within these processes.

“Rather than building an entire traditional governance, risk, and control workflow system and placing AI on top, we took a different approach – one that encouraged users to just go in and easily get what they need,” she notes.

To drive its next phase of growth, the company’s focus is on capturing more markets abroad and further developing the Nakhoda Global Index.

The vision, Saw says, is to be known for compliance intelligence infrastructure across the region.

This outward-looking mindset is particularly apt for the company, given the name Nakhoda derives from the local term for captain or master of a ship.

“Just as a skipper navigates the waters, we help clients navigate the complexity of regulations, guidelines and requirements, enabling businesses to stay on course and operate safely.”