The Ultimate Fintech Compliance and Regulatory Checklist

What is Fintech compliance?

Fintech compliance is intended to regulate companies providing solutions in the financial industry and protect consumers. The growth of Fintech, partnerships between fintech and legacy financial institutions, and regulation of the financial industry creates protection for consumers and increases competition in the market. However, with advancing technologies and solutions, regulators are scrutinising banks, credit unions and fintech companies progressively. Regulators face challenges in developing regulations due to the agile development of the fintech industry and on the other hand, startups mostly lack the capacity to comply with regulations.

Consumer needs and preferences are a priority for any company in the financial sector seeking to gain market share and grow sustainably. This is why it is important to manage and lower their risk profile by aligning their objectives with regulatory requirements. 

Compliance strategies are often tied to budgetary allocation, labour and talent to create scalable and airtight compliance strategies which may be manual or automated. Importantly, hybrid processes balance the human touch and technology such as faster transaction rates to  promote seamless customer experience and operational efficiency as well.

While Fintech companies may provide similar approaches per sector, they are also different in terms of structure, providing solutions to market and objectives thus the need for a customised approach both in creating and implementing compliance strategies .

Some of the recent regulatory measures involving fintech have been in areas such as; AML/KYC/BCA, consumer protection, intellectual property, credit/lending , cyber protection, deposits, securities and trading violation, virtual currencies, and data protection.

Fintech compliance checklist

The difference between understanding fintech regulations and compliance is vital for companies interested in growing market share and revenue. Additionally, appropriate management of  stakeholders such as customers, company’s management, analysts from rating agencies and regulators  in the industry enhances these objectives.

Overall, whether it’s a company or a fintech partnership, lack of compliance exposes companies to three main areas of risk: reputational, regulatory and unpredictable risk due to the fast-paced growth of the fintech industry. Whether companies are start-ups or expanding, considering different regulations such as labor, data protection or taxation laws is vital.

Every company needs to understand its objectives, assess its vulnerabilities, develop a compliance program in line with the aforementioned. The compliance program needs to be efficient and effective on monitoring, screening and activity processes. Additionally, training employees on the compliance programs, integrating automated processes and scaling programs in line with regulations.

Fintech regulatory compliance checklist
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Fintech Regulations Around the World

Not only are the regulations in different countries, but fintech startups are also providing cross border services and expanding globally requiring them to align with different regulations and manage exposure to legal action or sanctions.

Hong Kong SARFranceUnited KingdomKenya
Innovation facilitatorsSandboxInnovation HubSandboxSandbox
Anti-money launderingDrug trafficking (recovery of proceeds) ordinance (Cap. 405)
Organized and serious crimes ordinance (Cap. 455)
5th Anti-money laundering directiveProceeds of Crime Act 2002( POCA), the Information on the Payer Regulations 2017Proceeds of Crime and Anti-Money Laundering Act Chapter 59B
Data protectionThe personal data (Privacy) Ordinance (Cap. 486) (Ordinance)The legislation regulating data protection in France was amended in June 2017Data Protection
Act 2018
Data protection Act 2019
Electronic payment
Electronic Transactions (Amendment Ordinance 2004)Law No 2000-230 of March 13, 2000Electronic Communications
Act 2000
Kenya Communications
(Amendment) Act, 2008
CybersecurityNo legislation identifiedLaw No. 2004-575, For confidence in the Digital Economy
Computer Misuse
Kenya Information and Communications Act

Fintech compliance and regulatory best practises

 Under compliance in the Fintech marketplace, best practises include:   

  1. Company and industry knowledge: To create a strong compliance program, a company needs to identify its vulnerabilities from onboarding customers to payment points. These areas ensure that there are customised approaches for compliance and company objectives. By creating and enforcing a risk based approach that tailors compliance responses to individual situations, companies can scale and innovate in line with regulatory requirements.
  2. Digital only enterprises: The new rules on fintech and digital-only banks operations are an opportunity for companies and regulators to forge a way forward on leveraging regulation and innovation so as to enhance the industry.  
  3. Know your Customer: Fintech companies and banks may be used for criminal activities thus the need to root out fraud and combat terrorist financing through measures to detect and deter suspicious activity thus the importance of due diligence among professionals and within companies.
  4. AML scrutiny: Banks and Fintech companies have to comply with anti money laundering compliance. Lack of compliance may attract fines for example, in 2015, when the Financial Crimes Enforcement Network (FinCEN) levied a $700,000 penalty against a digital currency operator, as it did not have sufficient AML compliance measures.  
  5. Consumer protection: Companies exist to serve consumer interests, in a growing industry, protecting consumers is a duty for both regulators and companies. However, companies that do not align their objectives with consumer safety are at risk, for example, in 2016, a consumer lending company was fined $6 million by the Consumer Financial Protection Bureau for not offering borrowers a chance to improve their credit or get loans at lower rates. 


Ideally, banks and fintech companies should collaborate with regulators to ensure technology advancement and consumer protection are more or less aligned. 

Professionals seeking to understand the complexity of regulations, adopt sustainable compliance strategies and manage real-time transactions monitoring can harness Regtech for easier compliance and keep abreast of the industry regulatory trends to continuously improve their compliance programs. 

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