Hi Winner, thank you for your post. I have some thoughts...

Hi Winner, thank you for your post. I have some thoughts (absolute speculation at this stage) regarding possible acquisitions in the Regtech space which may be worth sharing with yourself and the wider group for discussion.

Firstly, it is my understanding the decision to extend a credit line to a company and the successful "Know your Customer" (KYC) approval are two separate considerations.

I would assume and certainly hope that Invigo assess the creditworthiness of a potential new customer through a third party credit rating agent such as Euler Hermes, Atradius, Dunn & Bradstreet, Coface, etc etc.

Once finance has been approved, the regulator's requirement (ASIC) is the finalization of the KYC check i.e. any Beneficial Owner's (the natural person/s that own >25% of the business) are to be named and their personal details provided in the contract between the corporate and Invigo. The personal details are run against a database of known Politically Exposed Person's, Terrorists etc. The signatory of the contract is also required to be a Director as listed on the ASIC Register OR another natural person who has been issued with Power of Attorney to sign certain documents on behalf of the company. The signatory is also required to be formally verified e.g. 100 points check.

The reason for the KYC check is to ensure the finance is not going to be used for nefarious purposes e.g. Trafficking, Money Laundering, Terrorism Financing etc. Invigo also has a duty to ensure their KYC checks are maintained through the life of the agreement, so if a Beneficial Owner or Director is replaced, Invigo is required to know otherwise there can be big penalties from ASIC. This is where the Regtech comes in.

There are two ASX listed companies offering automated KYC checks both at time of contracting that also perform updates through the life of the agreements. They do this by integrating into the ASIC register as well as the equivalent registers for countries all across the world. B/O's and Directors are named on these Registers. The companies are Kyckr (ASX: KYK) with a market cap of $16 Mil and Identitii (ASX: ID8) with a market cap of $14 Mil. SimpleKYC is a private company that also offers this feature. There are likely plenty more. Understanding CRO has approx $20 Mil cash these could be potential acquisitions.

If any of these companies were to be acquired, CRO would be ensuring their legal obligations are performed, though what additional revenue would an acquisition like this provide for CRO? Offering the service to other Banks/ Financial Institutions or other non-bank lenders? Or would it be better for CRO to simply become a customer of one of these Operators?

Food for thought. Thanks for the post Winner, it certainly got me thinking... Happy to hear anyone else's thoughts on this topic.