FinTech Compliance and Regulatory Best Practices for Financial Professionals


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There are mutual benefits traditional financial institutions and FinTech companies collaborate. However, there is a need for careful adherence to regulatory practices. Here are the key points:

Digital-Only Enterprises:

The regulatory landscape for FinTech and digital-only banks is evolving, with proposals for national FinTech charters. A famous online lending company is seeking FDIC approval to become a digital-only bank, showcasing a potential shift in the industry. The FDIC’s ruling could influence other digital-only operators contemplating a move into full-service banking.

AML Scrutiny:

FinTechs, like traditional banks, must comply with anti-money laundering (AML) standards. Failure to do so can result in severe penalties, as evidenced by a case where a digital currency operator faced a $700,000 fine for inadequate AML measures. Banks engaging in FinTech partnerships must conduct thorough due diligence to avoid regulatory repercussions.

Consumer-Centric Approach:

The Consumer Financial Protection Bureau (CFPB) is vigilant in targeting consumer rights violations by established financial institutions and FinTechs. A consumer lending company famous for its digital nature faced a $6 million fine for violating consumer lending laws. Financial institutions partnering with online lenders need to be cautious and ensure compliance with consumer protection laws.

Know Your Customer (KYC) Compliance:

FinTechs face challenges in meeting the demands of KYC compliance. With banks intensifying efforts to combat fraud and terrorist financing, robust KYC practices in FinTech partnerships are crucial.

Planning Ahead:

FinTech regulation is still in its early stages and evolving. Regulators are adapting to the unique characteristics of FinTech companies to ensure compliance without stifling innovation. Collaboration with regulators and staying informed about the latest compliance developments is crucial for FinTechs to maintain regulatory compliance while providing consumers with innovative financial services.

When collaborating with regulators, staying abreast of evolving regulations is important. They also should maintain compliance to ensure the continued success of bank-FinTech partnerships while meeting the needs of consumers.

Read More: Five best fintech compliance and regulatory practices for financial professionals

TalkFintech Bureau
TalkFintech Bureau
TalkFintech is focused on the latest financial sector technologies and tools- covering all tech used by banks, investors, insurance, and wealth management sectors- and also conversations on retail financial management tools.


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