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Fintechs are facing tumultuous times. While industry growth abounds—projected to be worth USD 394.88 billion in 2025—a range of challenges continue to emerge when it comes to compliance.
Just recently, the Department of Justice reached a settlement with Aux Cayes FinTech Co. Ltd., an affiliate of the cryptocurrency exchange OKX. Due to serious allegations of violating United States anti-money laundering regulations and ignoring U.S. restrictions, the company agreed to pay over $500 million, comprising an $84 million penalty and forfeiting approximately $421 million in fees earned from U.S. customers due to past compliance gaps.
In addition, the Economic and Financial Crimes Commission in Nigeria is increasingly stringent when it comes to anti-money laundering, calling companies to strengthen their compliance efforts and ensure a tighter grip over transactions.
In Europe, big changes are coming to fintech, with a stronger focus on digital security, consumer protection, and smoother operations. As financial services grow, EU regulators want to keep transparency, accessibility, and security as top priorities.
As a professional at a fintech startup, you must see compliance as more than just a rule to follow—it needs to be a key part of your business strategy, especially as regulators around the world increase their oversight.
With bigger penalties and a higher risk of business disruptions, startups that don’t keep up could face serious financial losses and harm to their reputation. Read on to explore:
How to get compliance right from the get-go
The role of technology and the importance of selecting the right partners
Important directives to keep an eye on
Embed Compliance Into Your Processes
Since the fintech boom, data has become much more important—and much more sensitive. With new, strict privacy laws created regularly. That’s why you need a solid risk assessment process.
Identify where your company might be vulnerable—be it data breaches, money laundering, or even new tech risks—and keep that risk framework updated as your business grows.
More pressingly, you shouldn’t approach compliance as a dusty manual you file away. Instead, make it a living, breathing part of your day-to-day operations. Make sure to host regular workshops and hands-on training sessions to help everyone from fresh talent to seasoned execs stay in the loop.
In a nutshell, fintech startups must integrate compliance into their overall strategy. It should not be an afterthought or a separate department. Embed compliance into your product design, customer service, and every business decision you make. This makes your operations smoother and builds trust with partners and customers alike—and set the standard in the industry.
When regulators see that you’re ahead of the curve, they’re more likely to view you as a partner in innovation rather than just another risk.
Go to Market with the Right Technology
Joyce Mehlman, Owner of iLex Consulting Group and a pioneer in the fintech and financial services industry believes that: “You can have a great app and the best systems behind you, but if you’re not compliant, you’re going to last about two days—and you’re going to get shut down”.
That’s why you need a partner who not only gets the tech but also understands the complex world of regulations, ensuring that their systems can easily plug into yours. Use tools like machine learning for smart risk monitoring, and offer strong data protection like encryption and multifactor authentication.
Moreover, when you work with a top-notch tech provider, you’re setting yourself up to automate compliance checks, streamline data collection, and quickly update systems as new threats or regulatory changes emerge, which means you’re not only reducing the risk of fines and security breaches but also building trust with your customers, and ultimately, securing a solid foundation for growth in a competitive market where innovation and strict compliance must go hand in hand.
In addition, vetting vendors is critical. If you use a cloud provider, ensure they’re Service Organization Control Type 2 compliant. Contracts should mandate compliance with your standards and grant audit rights. For instance, If a Buy Now Pay Later partner skirts affordability checks, you’re liable.
Maintain Compliance with Critical Mandates
1033
Section 1033 of the Dodd-Frank Act requires that consumer financial service providers, following rules set by the Bureau of Consumer Financial Protection, must offer consumers any information that the provider controls about the product or service they received, ensuring transparency and accountability across the board.
The Bureau is now issuing an Advance Notice of Proposed Rulemaking to gather comments and ideas, which is essentially like inviting the entire fintech community to weigh in and help shape future regulations that not only protect consumers but also keep the industry moving forward in a smart, responsible way.
Digital Operational Resilience Act
The Digital Operational Resilience Act is now in effect, rolling out a fresh set of strict standards designed to boost the resilience of financial institutions against today’s modern threats, and it’s not just about the EU—non-EU companies that provide services to EU financial entities are also on the hook, which really underscores how wide-reaching and crucial this regulation is; in a world where the threat landscape evolves at lightning speed, financial institutions are under constant pressure to ramp up their defenses and keep operations running smoothly, making DORA a game changer for everyone in the industry.
The Financial Data Access Regulation
On 28 June 2023, the European Commission put forward a proposal that lays down a framework for Financial Data Access, setting clear rules on how customer data in financial services should be accessed, shared, and used, and it also spells out the requirements for authorizing and running financial information service providers, all with the aim of tackling the current patchwork of data sharing in the EU. The idea is to fix a system that’s long been fragmented and full of obstacles—where uneven data sharing and a general reluctance to go beyond just payment accounts have left customers without the personalized, data-driven products they really need. This regulation aims to support the digital economy by clearing away the barriers in the internal data market, which, in turn, should empower consumers to make better, informed choices and drive innovation in financial services.
Conclusion
Compliance is the core of survival and long-term success in fintech, so you have to weave it right into the fabric of your business. This means setting up proactive risk frameworks that grow with you, spotting vulnerabilities like anti-money laundering gaps or data exposure before they spiral out of control, and partnering with tech providers who bring resilience to the table by offering the right capabilities.
It also means building a culture where compliance isn’t confined to one department but is owned by every team member, from product design to customer support. Ultimately, the key is to see regulations as guardrails that fuel innovation—startups that nail this balance by combining cutting-edge technology with rock-solid controls will dodge disaster and earn real loyalty.
