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The FinTech industry has been developing quite rapidly over the last decade or so, and in so doing, FinTech companies managed to completely reshape the modern financial landscape. Regardless of whether you are making a petty online purchase, paying for a cup of coffee in your favourite coffee place, receiving money from your client, or performing convoluted management-related tasks for your company’s entire financial plan – all these processes are now performed quickly and painlessly thanks to the evolution of FinTech solutions.  

However, the Financial Technology environment – in terms of both business and legal aspects – is fairly dynamic when it comes to legal compliances that these FinTech companies need to tackle in order to stay ahead. The legal ecosystem of various compliances, regulation and potential threats in terms of data security is a rather complex one, which means that FinTech companies must take it seriously and be sure to always approach these issues in a professional manner.  

Now, even though the awareness is relatively high about how critical it is to have a proper compliance strategy in place, there is still an alarming number of organizations (that either belong to the FinTech industry or utilize some aspect of it in order to operate) that lack the knowledge or resources to have an effective compliance strategy implemented within their workflow and legal-based company structures. 

This article tackles 5 useful tips for tackling compliance concerns that should most FinTech organisations find useful. 

Bring Your Data Security to Top-tier Levels

Whether we are talking about the data that belongs to your clients, employees, or the information about invaluable company secrets, protecting these types of information should be one of the highest priorities when running a business. This is especially true for FinTech companies as they need to approach data protection with even more attention to detail, given all the security rules and regulations that often differ depending on the country and/or region their business operates in. Additionally, this compliance landscape also tends to change fairly frequently within the same region, making it that much harder for these businesses to comply.  

For instance, the European Union features its own rules established and implemented through GDPR across all EU states, while the United States Of America has its own set of rules and laws that are implemented and managed by the Federal Trade Commission (FTC), as well as the Consumer Financial Protection Bureau (CFPB), etc, This is why FinTech companies, regardless of their geo location, must tackle data protection with utmost seriousness and close attention to detail when coming up with their own security policies and data protection layers.  

Implement Proper Email Retention for Improved Data Accessibility

A huge part of the aforementioned data protection layers includes emails. Email-based information is an enormous part of the data flow of any modern company. Sensitive data is circulating through email platforms on a daily basis, and that data needs both protection and high levels of accessibility. Being able to manage, store, and retrieve critical pieces of data is of paramount importance, especially in scenarios where (due to legal-based reasons) you need to access specific information pertaining to the case at hand. Otherwise, a single lawsuit for which you are unable to collect appropriate data can severely damage your company, in terms of both ROI and the overall reputation.  

A great way to take care of these issues is to have your own email retention policy and have an optimal data archiving plan. This can be very helpful for proper handling of data security and accessibility (especially in terms of how long certain files are being kept available), especially if an organization must quickly get a hold of the data requested by a regulatory body. 

Get a Firm Grasp of Payment Protection 

Since modern payment methods are the lifeblood of both the business and the current global economic landscape, making sure that these systems are regulated and highly protected is done via numerous regulatory regimes. These regulations can vary depending on the geolocation, and one of the most talked-about sets of regulations includes the second Payment Services Directive (PSD2) that regulates these payments across the EU. 

Ensuring the preservation of payment security and consumer privacy is among the basic goals of PSD2. This directive also has an objective to design and implement a regime of rules that are much more balanced and user-friendly, but without jeopardising the necessary strictness. 

Peer to Peer (P2P) Lending

The UK companies manage peer to peer lending through the Financial Conduct Authority, or FCA. The FCA requires P2P lending services to inform investors about any potential risks and does so by providing fairly detailed and granular data on this aspect of overall compliance. 

The US, however, has seen peer to peer lending services slowly turning into a somewhat controversial matter, especially after numerous fraud-related cases have occurred in China over the years. In the light of these events, countries around the world have been renewing the P2P rules and regulations in order to remove all the potential gaps and tighten up these regulations.

FinTech organizations should ensure they are complying with all the necessary peer to peer lending rules that are currently within the regions they operate in.  

Mitigate Any Fraud-Based Activity and Money Laundering 

The FinTech companies are, unfortunately, often in the centre of numerous frauds of various magnitudes. FinTech products and services can be exploited by frauds, lawbreakers and terrorist groups by performing misconducts like money laundering, identity thefts, terrorist attacks, etc. This is why the companies should inform themselves about all the rules and regulations that deal with these malicious attacks and opt for proper solutions that can secure both the customer data and the information belonging to the company itself. 

The businesses operating in the UK could be subject to oversight from the Financial Conduct Authority (FCA), Aussie organisations by the Australian Transaction Reports and Analysis Centre (AUSTRAC), while the US-based companies are being looked at by federal regulators, including the Office of Foreign Assets Control (OFAC), the Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC). 

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Emma Crabtree

Emma Crabtree

Providing our clients with first class service and helping our candidates take the next step in their career is what gets us out of bed every morning.