In the world of financial services, anti-money laundering (AML) compliance plays a crucial role in ensuring the integrity of financial transactions. AML is a set of laws and regulations designed to detect and prevent financial crimes such as money laundering and terrorist financing. While traditionally associated with banks, as a part of the Bank Secrecy Act (BSA), these regulations are no longer limited to just traditional financial institutions. Financial technology companies (fintechs), as key players in today’s digital economy, are also under increasing scrutiny when it comes to AML compliance.
Naturally, many fintech leaders – who, as a group, are often focused on innovation, technology and scaling their businesses – are less familiar with the complexities of AML.
You may understand the basics: know your customer (KYC), reporting suspicious activity, and maintaining meticulous records. But beyond that, the nuances of an effective AML program can be overwhelming. It’s no surprise that many fintechs rely on basic Internet templates or even outdated, generic solutions. Unfortunately, this can be a costly oversight, especially now that regulators are ramping up enforcement actions in this space. Read more in the article by our partners from Baker Tilly International network.
Why AML compliance is more crucial than ever
As you know, fintechs and banks share an important relationship. Fintechs facilitate the flow of financial transactions through innovative platforms, but they rely on banks to process and settle those transactions. In many ways, the success of fintechs is tied to the ability to establish and maintain solid partnerships with banks. However, this relationship is very much a two-way street, as banks have a responsibility to ensure that the businesses they partner with comply with regulatory requirements, including AML laws.
This means that in order for fintechs to expand and form partnerships with banks, they need to demonstrate that they have a robust AML compliance program in place. But here's the catch: Many fintechs think they’re compliant simply because they’ve put basic measures in place. However, fintech leaders are learning quickly that the bare minimum is no longer good enough. In the past, regulators may have overlooked these shortcomings, but that's no longer the case. The days of a "check-the-box" approach to AML are over, and regulators are now scrutinizing fintechs with much more precision.
AML and fintechs: A critical component to revenue growth
Taking it a step further, the consequences for non-compliance can be severe. Without a well-structured and customized AML compliance program, fintechs risk losing valuable banking partnerships, facing hefty fines, or even being blocked from the financial ecosystem. While banks do have an obligation to ensure compliance, the ultimate responsibility falls on the fintechs. Many contracts between banks and fintechs do include AML clauses, but historically, they haven’t been enforced strictly. That’s changing now, though, as regulators are increasingly holding both parties accountable.
What you need to do next
If you think AML compliance sounds overwhelming – or at least that it’s outside your area of expertise – the reality is that you’re not alone. The good news is that you don’t need to become an expert in the nitty-gritty details of AML regulations. What you need is a reliable team of specialists that understands the ins and outs of this space. That’s where Baker Tilly comes in.
Whether you're starting from scratch or enhancing an existing AML program, our AML specialists will guide you through the process so that you don’t have to waste countless hours researching this complex topic or taking online courses. Let us simplify it for you. We’ll provide actionable insights on how to build a program that will not only meet regulatory requirements but will also set you up for long-term success.
At Baker Tilly, we specialize in all things AML, whether you need a fully outsourced managed services to design, implement and even handle the ongoing maintenance of your AML program, help resolving or validating a regulatory enforcement action, or any other AML/CFT and sanctions support you may need. From risk assessments to transaction monitoring, we have you covered. Additionally, we can assist with any related digital services and tax work you require.
To schedule an individual consultation on this matter, please contact our team.
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