Last week we were at TechCrunch Disrupt in Berlin where CEO and Founder of ComplyAdvantage, Charles Delingpole, was on the ExtraCrunch stage with insights into delivering radical change through fintech.

Threat of AML

Just a few kilometers from the remains of Checkpoint Charlie, budding tech entrepreneurs and early-stage Venture Capitalists were gathered to discuss the latest issues in technology. And how their products can solve the problem. The issue many of them face is that a great number of products tend to be financial and are currently focused on one geography.

Fintech is the movement of money. It’s doing it in interesting and new ways, but it’s still just the movement of money. That’s why anti-money laundering regulations, which impede the seamless transition of money, are an existential threat to fintechs.

That threat is a real and present issue to fintechs who plan to expand outside of their home territory. Anti-money laundering (AML) is an international endeavor, but having expertise that’s localized to one geography means you can lose sight of the criminal threats that your fintech is exposed to.

No single company can handle compliance by building everything in-house. Compliance is obscure and not everybody understands it so you have to knowledge-share to achieve regulatory goals.

A decade ago, when the elder fintechs were starting up, you had to reinvent every component of a company. It’s why so many took so long to implement new features or products. But now we’re in a new era for fintechs.

There’s an established playbook now – there’s a wealth of knowledge available regarding best practice to scale. It’s why startups are able to grow so much faster today and scale. It’s effortless compared to what the pioneers had to do a decade ago. But moving at that sort of speed leaves companies vulnerable to falling foul of regulatory hurdles.

Before a bad actor launders money, there’s always a predicate crime and identifying money from a predicate crime is incredibly difficult. There’s a reason why compliance consumes 5% of cost, it’s hard to eliminate evil from the financial system.

Don’t be Exploited

There are always people looking to exploit your product to enter the financial system legally. and looking at their transactional behavior is a strong indicator. For example, if a customer is regularly buying flights from an impoverished nation but then only buys a single flight and books no hotels then there’s a risk for human trafficking. A predicate offense that your system needs to able to flag.

At ComplyAdvantage, in our first six months, we were working with clients in the highest risk jurisdictions in the world. Five years on, with clients in over 70 countries, we’re global and best-placed to assist with your fintech’s AML needs. And we know how to handle money moving into the most problematic areas.

Some countries present overwhelming challenges, the population sizes in Asia are massive. Payment rails have a small presence, so every bank has its own network. Compared to western finance it’s a parallel universe with its own set of concerns.

Those concerns are going to be a significant barrier for any fintech looking to move into the space, especially without a strong understanding of the unique regulatory requirements found throughout the APAC region.

Fintechs need to make sure that they avoid becoming victims of their own success by accounting for the regulatory requirements necessary to succeed at a global scale.


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