By Jani Gode, Chief Compliance Officer at global payments leader and eCommerce enabler Payoneer

For fintech and money transmitting service providers, meeting your compliance objectives in 2021 is an increasingly complex process involving constantly changing regulations in different global territories. To stay compliant in the countries in which your business operates, there are a number of steps you’ll need to take, including locating a reliable banking partner, establishing risk assessment protocols for both customers and politically exposed persons (PEPs) you might be working with, and dealing with different global statutes.

At Payoneer, our ability to meet these challenges has given us a clear insight into ‘what works’ when overcoming these challenges and what requires special attention and focus. As you grow your business, here are steps you can take to help meet your 2021 compliance objectives and avoid unnecessary mistakes

Finding the Banking Partner to Meet Your Business Needs  

Locating a banking partner that understands both your business model and your company culture should be the first step towards tackling your compliance objectives. At Payoneer, we can attest that this is easier said than done. 

One of the lessons we learned as we were growing is that partnering with a bank that supported us as we innovated and dove into new verticals was only part of what we needed. To form a healthy partnership, we needed someone who also aligned with our core values so that we could successfully expand with the knowledge that our partner would be with us every step of the way. 

To ensure that your banking partnership is a good match for you and your shareholders, it’s helpful to sit down and conduct a proper analysis of your business goals. Once established, you’ll need to maintain a consistent open line of communication with your partner so that you both are always on the same page while navigating your expansion plans. 

Start-ups tend to move a lot faster than traditional financial institutions, sometimes your growth and expansion may seem alarming to an FI you partner with, as you grow and expand be sure to have some check in with your FIs to explain product launches, changes and keep them informed of changes to your product/customer use cases.

Developing a Risk Assessment Policy to Drive Compliance Efforts

Using an established risk assessment and Customer Due Diligence policy to properly vet new customers according to local regulatory requirements is critical to both maintaining your compliance status with different regulatory bodies and ensuring your business reputation stays intact. Additionally, you’ll need to consistently monitor customers after onboarding to make sure their actions are consistent with expected activity and don’t present unacceptable risk.  

Creating an effective vetting process that can track customer behavior in real time is no easy feat. The sheer volume of information available in the public sphere makes it difficult to filter out the relevant information that can then be translated into actionable insights. Your first step towards overcoming this is the creation of your Risk Assessment process. By completing this you will be able to understand what risks you are exposed to and how to mitigate these through due diligence, thus ensuring the people you want to do business with are approved and the ones you do not want are rejected.  The key is investing in programs that leverage AI and machine learning to provide you with the information you need as quickly as possible and offer continuous learning and improvement, enabling you to segment your customer portfolio and focus on customers you should be taking another look at, and letting your ‘good customers’ transact in peace.

Just be aware that an effective risk assessment policy needs to be continuously fine-tuned as your business grows. It’s important to constantly be on the lookout for technological developments that can speed up the vetting process, thereby ensuring your business remains compliant.        

Properly Vetting Politically Exposed Persons (PEPs)

In addition to assessing new and existing customers, you’ll likely need to take additional measures to ensure PEPs, who are often susceptible to illegal acts like bribery and fraud, are properly vetted. PEPs often draw extra scrutiny from regulators, making it imperative to check their status to ensure you remain compliant. 

When vetting PEPs, there are a couple of things you’ll want to consider:

1. Beyond a person’s job title, what is it that they actually do? What third party relationships do they have? What sorts of sensitive information are they privy to?
2. Where are they located? A PEP in England might need to be assessed differently than one in Singapore. Make sure your risk assessment policy takes different countries’ regulatory schemes into account.
3. How your product fits into the PEP profile?  Does your product have a real-life use case, we tend to focus on a PEPs role in office and forget that they are normal people too, who own vacation rentals and send their kids to college overseas. Take the time to complete the necessary due diligence and understand if the PEPs purpose of transaction/account usage is specifically what your products are designed for? 

Similar to your other customers, it’s important to consistently monitor PEPs using smart tools that include AI and machine learning to ensure you get the most relevant, real time information. By remaining up to date as to their status, you’ll be able to effectively justify your relationship to regulators and compliance officers. 

Navigating Global Compliance Schemes & Regulation

As you grow your business and expand into more and more territories, you’ll need to make sure you remain current with the compliance schemes in the countries where your customers are based. To complicate matters, oftentimes compliance measures in one country will conflict with those in another.

To avoid any complications that could impact your compliance status, it’s recommended to onboard a trusted partner that is knowledgeable about international regulatory statutes. This will help you stay agile and take appropriate measures when you start operating in a new country or in the event that a compliance scheme is changed.

Underpin this with a regulatory change management process, so that when you have identified a new regulation or a regulatory change you can ensure you can assess the scope of the impact, what needs to be changed? And how to implement it, even tying it back to the risk assessment mentioned above. Sometimes fintech’s get so caught up in the development work, such as changing a UI and focusing on the CX that we sometimes miss the ‘spirit’ of the regulation, for example addressing the risk the regulation was focusing on.

To summarize, while meeting your compliance objectives in 2021 might appear to be a daunting task, businesses that plan ahead and work with reliable partners are likely to succeed. By executing processes that enable the proper vetting of customers and the monitoring of various compliance schemes, you’re helping to ensure your business’s global expansion is successful.