Vladislav Solodkiy’s Post

Compliance really matters in fintech, which is why KYC/KYB/AML and the whole stack is one of the most exciting startup areas. It turns out for $3.1B you can investing (and purchase) a lot of modern software but if your culture is not compliant, no software can fix that. https://lnkd.in/gD6d8m9v

What happens when a startup grows too quickly but doesn't have the right safeguards in place? This question has become relevant following Starling Bank's recent fine of £29 million for failing to implement adequate financial crime controls. The Financial Conduct Authority's scrutiny of challenger banks has intensified since 2021, especially in light of previous pitfalls faced by other fintechs, such as Wirecard. Starling's rapid customer growth from 43,000 to over 4 million has been remarkable, yet the lapses in its anti-money laundering processes illustrate potential challenges in balancing scale with compliance. The FCA’s findings pointed out serious weaknesses that permitted thousands of high-risk accounts to slip through. In response, Starling is taking steps to rectify these issues, emphasizing that these failings are part of its history as they strive for a strong future. It's a reminder for all financial institutions about the critical importance of robust risk management practices. What implications do you think this situation holds for the future of fintech regulation and the safety of customer funds? https://lnkd.in/ddYCWcNs

Interesting read on the perils of inadequate KYC

Just in case you aren't sick of my take on #BaaS, #fintech, and bank partners... here is a recent interview with the great team at the The Paypers. Thanks to Oana Ifrim and her team for taking the time to ask me some questions. If you are a #bank or a fintech looking for some good first steps in creating and maintaining a long bank partner relationship, take a read below: https://lnkd.in/eYSWRAwb #ifollowdirtymoney #AML #sanctions #risk

Is your fintech company prepared for the risks of money laundering?  Discover the top money laundering vulnerabilities fintech faces and strategies to combat them in our latest blog. Our blog covers it all, from the inter-relationship between fintech and money laundering to specific money laundering methods targeting fintech, as well as AML compliance measures and their impacts on the fintech industry.  Learn how to safeguard your fintech business with effective AML measures and stay ahead of financial crime. Read the full article now: https://lnkd.in/dABhrAWW #AML #AMLCFT #AMLCompliance #AntiMoneyLaundering #DNFBPS #Compliance #Risk #FinTech #FinTechs #AMLSoftware #RiskManagement #FinTechSecurity #RegTech

Fintech News 🚨: Goldman-backed Starling Bank fined $38.5 million for ‘shockingly lax’ financial crime controls U.K. financial regulators hit British digital lender Starling Bank with a £29 million ($38.5 million) fine over failings related to its financial crime prevention systems. In a statement on Wednesday, London’s Financial Conduct Authority said it had fined Starling “for financial crime failings related to its financial sanctions screening.” Starling also repeatedly breached a requirement not to open accounts for high-risk customers, the FCA said. “Starling’s financial sanction screening controls were shockingly lax,” It left the financial system wide open to criminals and those subject to sanctions. It compounded this by failing to properly comply with FCA requirements it had agreed to, which were put in place to lower the risk of Starling facilitating financial crime.′ In response to the FCA penalty, Starling said it was sorry for the failings outlined by the regulator and that it had completed detailed screening and an in-depth back book review of customer accounts. “I would like to apologise for the failings outlined by the FCA and to provide reassurance that we have invested heavily to put things right, including strengthening our board governance and capabilities,” David Sproul, chairman of Starling Bank, said in a statement Wednesday. “We want to assure our customers and employees that these are historic issues. We have learned the lessons of this investigation and are confident that these changes and the strength of our franchise put us in a strong position to continue executing our strategy of safe, sustainable growth, supported by a robust risk management and control framework,” he added. Starling, one of the U.K.’s most popular online-only challenger banks, has been widely viewed as a potential IPO candidate in the coming year or so. The startup previously signaled plans to go public, but has moved back its expected timing from an earlier targeted an IPO as early as 2023. The FCA said in a statement that, as Starling expanded from 43,000 customers in 2017 to 3.6 million in 2023, the bank’s measures to tackle financial crimes failed to keep pace with that growth. The FCA began looking into financial crime controls at digital challenger banks in 2021, concerned that fintech brands’ anti-money laundering and know-your-customer compliance systems weren’t robust enough to prevent fraud, money laundering and sanctions evasion on their platforms. After this probe was first opened, Starling agreed to stop opening new bank accounts for high-risk customers until it improved its internal controls. However, the FCA says that Starling failed to comply with this provision and opened over 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023. 👉 Subscribe for more insights https://lnkd.in/d94JgWBU Source CNBC #fintech #neobanking #aml

Fintechs want to make their sponsor banks happy and they also want to create a culture of compliance. Entrenched solutions don’t really help with a culture of compliance because the content is outdated and very broad for a financial services ecosystem, not a modern fintech ecosystem. But, the sponsor banks are generally happy because they can point to an entrenched solution when the regulators ask. What we’re seeing is more critique of the content from the banks as they realize a shift in the tides of the entrenched solutions checking (an older) box, but not providing their fintechs with the knowledge to be set up for success in 2025 and beyond. Because of this, our own partnerships with banks have begun to get deeper and accelerate. We’re at a unique position since we offer products that can be used by both banks and fintechs. We sit on both sides and help enable a culture of compliance for the bank and the fintech, making the relationship stronger. And, banks and fintechs are noticing, which is great. A goal of ours when we started was that we make Affinity 1) feel like it was built just for you, and 2) your life should get easier when you use our product. Goals are easy to say and hard to do. But, we are doing, meeting, and exceeding them. It certainly makes our outreach conversations more exciting to be able to show off a product that checks 95% of what someone needs. It also makes it easier for fintechs to choose to switch from an entrenched providers, like BAI or OnCourse to Affinity. Why does this matter? Why should you have a great compliance training solution? There are many reasons, but topmost is that your ability to enable your employees to actually internalize knowledge from training, instead of training being a race to finish, makes your own product stronger. When different teams at your company can build state of the art products that meet regulatory guidelines, and everyone building knows those guidelines, you end up being a company that moves faster and lasts longer. Additionally, you end up saving money over time by having a compliant team. It's not the headline grabbing fine I’m talking about, rather when you no longer accidentally send a marketing email saying something like “Everyone gets an 8% loan” and then you need to spend 10 people’s times and a few days to undo the damage from that email so you can avoid the fine that would come with it. Yes, you avoided the fine, but now you’ve spent thousands in person hours fixing it, plus the opportunity cost is lost on the fix. Choosing a solution like Affinity, which you can customize to your organization, has relevant trainings your learners can internalize, makes it easy to report and analyze data on the trainings all in an effort to create and measure a culture of compliance makes your organization faster and stronger and lead to better products. That’s our belief. And, it’s being backed up by what we’re seeing across the banking and fintech markets as we head into 2025.

For fintechs, where innovation is the foundation of success, striking a delicate balance between creativity and regulatory compliance is vital. Firms such as Monzo Bank, Revolut and Plum have redefined how we think about banking, payments and investments, but with great innovation comes an equally great responsibility to safeguard customers from money laundering, fraud and financial crime, ensuring that these cutting-edge platforms are secure, trustworthy and resilient against misuse. In an increasingly digital world, Anti-Money Laundering (AML) regulations are a crucial requirement to combat bad actors and dirty money. Still, they can also be a challenging hurdle even for the nimble startup. Fintechs are prime targets for money laundering and financial crime. The rapid pace of innovation often outstrips regulatory updates, creating gaps that malicious actors can exploit to facilitate illicit transactions and obscure illicit funds. How can fintechs balance driving innovation and adhering to stringent regulations? The answer lies in embracing a proactive, tech-powered approach to AML compliance, argues Andrew Doyle. https://lnkd.in/gpjcMmh3

This is Marc's 10-minute segment on debanking, which is causing a lot of discussion in the fintech world. There are 2 points of view in the debunking conversation: - people who *actually* innovate and build products - people who don't Most of it comes down to what founders have to deal with when building a company. Unfortunately, nothing is black and white in banking (and credit), and practitioners face immense challenges when building companies. Marc's comments are conflated across 3 things: - PEPs (Politically Exposed Person(s) - Closing high risk accounts (eg. crypto or risky transactions) - What can CFPB do (as an agency) There's nuance across these things. Below are just a few lines on each of these: 1. PEP has a specific definition. But sometimes, people use "Senior Political Figure" and "Politically Exposed Person" interchangeably. Article 4, Section 28, of the Anti-Money Laundering Law as a natural person who is or who has been entrusted with prominent public functions. It applies to only a small number of people. 2. High risk accounts have a broad definition (which also include PEPs). The goal of this flagging is to limit/prevent high risk clients like money launderers, arms dealers, gamblers, etc from using bank/financial system. Crypto accounts were considered high-risk accounts because of which they could've been *debanked*. But it doesn't mean they were PEPs or were debanked because of their political views. 3. Rules and responsibilities of CFPB—The agency does not individually pursue PEP or high-risk accounts. It's not in their charter. It was formed after the financial crisis, and its creation was led by Elizabeth Warren (under Obama). The stated goal of CFPB is to "protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law." Agencies like the FDIC, OCC, etc., audit banks for compliance with their regulations. For example, if a bank doesn't have strong compliance to limit high-risk accounts as their regulations define them, it could be fined. We have seen a lot of consent orders for a dozen banks that partnered with fintechs because of shortcomings in their compliance programs.

📢🚨 Flashback to 2022: A Fintech Earthquake! Revolut’s Top Brass Steps Down 🚨📢 🎯 In a stunning turn of events, Revolut’s UK risk and compliance chiefs have resigned! This news is shaking up the fintech world and raising questions about the future of this banking powerhouse. 🏦💼 Five Revolut executives have handed in their resignation including UK chief risk officer, #VictoriaStubbs; UK Head of Regulatory Compliance, #JustineWootton and UK Money Laundering Reporting Officer (MLRO) #MathewSeneviratne, a source close to Revolut told City A.M. 👉 Key Points: 🔥Leadership Exodus: Five top executives, including the UK chief risk officer and head of regulatory compliance, have resigned from Revolut1. 🔥Regulatory Rifts: These departures come amidst growing tensions with regulators and delays in obtaining a UK banking license1. 🔥Crypto Concerns: The absence of key officers could impact Revolut’s pursuit of full authorization to provide crypto services in the UK1. 📈 Implications: 🔥Regulatory Repercussions: The churn in the regulatory team may cause further anxieties at the regulator over Revolut’s suitability to provide crypto services1. 🔥Market Movements: This news could have significant implications for Revolut’s valuation and its ambitious global expansion plans1. 🌐📊 #Leadership #RegulatoryChallenges #FintechNews #RevolutReshuffle #BankingFuture #Revolut #Fintech #Compliance #RiskManagement #BankingLicense #CryptoServices https://lnkd.in/epuMuX8R