The landscape for Payment Service Providers (PSPs) is rapidly evolving, with a pressing need to scale operations effectively while managing Anti-Money Laundering (AML) compliance risk. RegTech company Fenergo has released a report outlining how payment service providers can reduce AML compliance risk.
As PSPs aim to bolster their growth trajectories, the compliance challenges that accompany scaling become increasingly prominent. It’s essential for these providers to assess whether their current position is conducive to accelerated growth, it said.
PSPs are navigating through a complex regulatory maze, with requirements varying significantly across major regions such as the European Union (EU) and the United States (US). A granular understanding of these regulatory landscapes is pivotal. The absence of such understanding introduces additional risk, especially for PSPs that are in the process of enhancing their compliance frameworks.
Amidst this backdrop, the traditional banking networks are seeing a wane in their dominance. Concurrently, the escalation of operational costs is leading some banks to shed less profitable customers. This trend poses a risk to FinTech companies operating on thin or nominal profit margins, as they face the threat of being de-banked. Such a situation underscores the urgency for FinTechs to reduce superfluous costs by refining and streamlining their often cumbersome and expensive compliance processes.
A recent investigation by the European Banking Authority shed light on the inadequacies in the AML and terrorist financing processes within PSPs. This highlighted critical areas of risk that require attention, particularly concerning transaction monitoring controls, system implementation, and internal governance.
To sustain growth, meet regulatory standards, and cater to growing demands, PSPs must future-proof their businesses. Implementing effective compliance controls and focusing on revenue generation are key to this strategy.
In Fenergo’s latest eBook, it delves into how PSPs can achieve this delicate balance. The eBook offers insights into automating compliance procedures, enhancing client onboarding efficiency, and swiftly adapting to emerging regulatory requirements. Additionally, it explores strategies to navigate the various other obstacles that PSPs commonly encounter in managing AML compliance within the payments industry.
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