In terms of regulatory compliance, fintech have a double risk. On the one hand they must prevent and detect irregular operations on their platforms, on the other hand, they must also protect the safety of their customers.
Fintech or financial technology institutions have become indispensable in the global economy
Among the advantages of its existence we observe that they facilitate financial transactions and bring innovation to the system; Among the disadvantages we see that they are more likely to be out of regulation and increase the likelihood of suspicious transactions or related to unlawful acts.
The fintech can not be considered as enemies in the fight against money laundering or fraudulent operations provided they are under an efficient and specialized regulatory framework, agreed fintech regulatory compliance experts gathered in the AML Compliance 2019 organized by the FIBA (Florida International Bankers Association) in Miami.
The construction of this regulatory framework is the greatest challenge for global and national financial systems
In Mexico, a major step was taken in terms of operating standards for Fintech companies, acknowledged the experts cited by FIBA. This was due, mainly, to the approval of the so-called fintech law that seeks that the technology companies of means of payment, collective financing and virtual assets have a good functioning, security of information, protection of interests and prevention against financial crimes. But after the law fintech what’s next?
According to the conclusions of the specialists, among them Carl Fornaris, specialist of regulatory compliance of the law firm Greenberg Traurig, and Andrew Barnard, co-founder of the BitStop exchange, it is not only that there are national regulations under which the fintech must operate. , but also that these regulatory frameworks have the best and most specialized techniques and that, in addition, the integration of companies into these regulatory frameworks is promoted.
The investment also matters
The participation of the public sector is essential, but the private initiative must also change the chip.
In the panel that analyzed the compliance trends of fintech in AML Compliance 2019, it was concluded that institutions of this type need to make investments to improve their systems for the prevention and detection of suspicious transactions.
For fintech companies, the challenge is greater than for the financial system in general, because not only should they be protected from preventing their platforms being used for acts related to money laundering or financing of terrorism, but they should also seek protection for its users.
Both institutions and their clients present greater risks of being victims of other crimes such as fraud, extortion, identity theft, human trafficking or intrusion into operating systems. And this is particularly more serious with fintech that act as means of payment, such as PayPal or Mercado Pago.
Due to the high risk that is presented in the platforms and often due to their very size, the analysts emphasize that the fintechs must reorder their priorities and improve their regulatory compliance schemes.
Digital perspective on regulators
Another important aspect to improve the functioning of fintech not only in Mexico but throughout the world is the training of regulatory compliance agents.
It is necessary that they be certified, that they pass exams, that they be trained constantly, but it is also mandatory that all knowledge is acquired with a digital perspective. That can make a difference, experts agreed
Until the new technological phenomena and innovation in the modus operandi of offenders are considered, the systems under which the transactions and operations of financial institutions, both banks and Fintechs, are supervised can not be improved.
Also published on Medium.