Five Practices for FinTech Compliance

Financial technologies are created to innovate former approaches to solve challenges within the realm financial services. FinTech is rapidly developing, and due to this rapid growth, the regulatory process has had difficulty keeping pace.

  • Mar 11, 2020
Five Practices for FinTech Compliance

Financial technologies are created to innovate former approaches to solve challenges within the realm financial services. FinTech is rapidly developing, and due to this rapid growth, the regulatory process has had difficulty keeping pace. Existing financial industries are subject to strict regulations, FinTech companies now need to stay informed and look further into how regulations apply to their business. There are existing and new components of compliance that all FinTech companies need to be aware of. Here are a list of four regulations to be aware of:

  1. Digital-only Enterprises- In the coming years there will be new regulations set forth for how FinTech and digital-only banking services operate. Last year the OCC released a new proposal for a national chapter for FinTech. This will allow Fintech companies to offer full banking services but will cause them to be subject to more scrutinized regulations in the future. 
  2. AML Scrutiny- Banks and other financial institutions have had to comply with anti-money laundering compliance or AML and now FinTech companies also will need to comply with these standards. 
  3. CFPB- The Consumer Financial Protection Bureau has targeted financial institutions for years over violated consumer rights and FinTech companies will now also be subject to CFPB in relation to how they treat the consumer. 
  4. KYC – Know Your Customer compliance prioritizes fraud and terrorist protection.  Knowing your customer base is key in any business but will also become a factor in the way in which FinTech compliance is adapted. 

As demonstrated by this list, FinTech companies need to begin planning ahead for the future of compliance and regulations that have traditionally only been for banking institutions. As the FinTech industry grows the need for such regulations will, as well. FinTech companies should stay ahead of the curve and understand the future of compliance, so they can be adequately equipped when the time comes to adhere to new standards and practices.

 

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