Compliance Is Key — Believe It Or Die!

Published on
26 Jun 2015
Final Author
Jan C. Wendenburg

We love great Fintechs, like Paypal, Apple Pay and Stripe. We love to see them rise. We love using them.

But we all will dump them within a second if they will fail — fail to be trusted, fail to be secure or fail to comply with local financial regulations. Compliance to legal financial regulations is not sexy, but mandatory. Mandatory for each Fintech to build a secure, trustworthy service — regardless of geography and legislations. Almost every nation has its own individual financial regulation — based on their culture, financial system and historic good or bad experiences.

If Fintechs disregard compliance for their services they may be shut down by supervisory authorities and will receive very bad reputation from press. If a Fintech overcomplies with regulations it will not move forward fast enough and die by competition.

Extensive knowledge of international and local, national financial regulations is mandatory for most financial services. I.e. to prevent money laundering, P2P payment services are heavily regulated by governments almost everywhere. The FATF (Financial Action Task Force on Money Laundering), an international joint organization of more than 34 member countries and located at the global OECD offices in Belgium, issued in 2012 a comprehensive framework against money laundering and financing of terrorism. This international accepted framework has been converted into very specific national money transfer regulations, which are essential to know when operating an international or global money transfer or payment service. Beyond this one, there are many other very detailed and specific regulations, enforcing compliance with local structures, laws and limits.

This article will discuss and show some ways how to overcome the dilemma of being non-compliant and overcompliance; using compliance as a competitive advantage and USP; something Fintechs shall use to build much faster sustainable services for their customers.