Fintech Startup AML Checklist: Compliance Challenges and Issues

Since the RegTech industry is on its steady growth, we may see a constant upturn in entrepreneur's attempts to establish disruptive and distinguished fintech startups. At this point, we would like to begin with some clauses clarifying why an adequately established compliance framework is vital for the early-stage fintech initiative.  

Firstly, compliance at a startup fintech is essential to the business thriving over the long term.

Secondly, compliance personnel at a startup fintech have to view/understand their role as integral to the business succeeding and augment/adapt their skill sets accordingly.

Thirdly, compliance has to lean into engineering; both the people and technology.

While a fintech startup is making its first steps in forging a profitable project, it is not reasonable to drop anti-money laundering (AML) and counter-terrorist financing (CTF) obligations since it may incur major losses in the future. ZeroTolerance can assist and cover all the obligations the starter is required to follow from the very beginning.

Components of AML framework 

AML Compliance Officer. Let’s commence with the relevant officer who is in charge of guarding the fintech’s AML defense. As soon as the company is growing, it is hard to allocate plenty of funds for assembling the proper AML team. It would be reasonable to appoint a designated AML Compliance Officer and initially mandate him with relevant responsibilities. At this stage, ZeroTolerance is also happy to assist the starters with competent and qualified AML analysts to expand the startup’s compliance team cost-effectively.

Engage the Board about the compliance framework. The fintech startup ought to engage the Board in drafting the compliance framework for setting the company’s expectations, budget and framework with the Board. 

Write policies & procedures in various areas. Having in mind the materiality of the compliance framework, our experts can help the starter to draft policies and procedures fully tailored to the request and risk appetite of the client. Such documents should also cover material risks and regulatory requirements of the applicable jurisdiction. 

Train and inculcate compliance behavior. Training technology anda compliance team as per the drafted company’s compliance documentation are vital for the deployment of a fully reliable AML framework that would work for years. Apart from the documents provided, ZeroTolerance also equips the starter with tools required to successfully conduct customer identification processes toward individuals and entities as well as KYT towards fiat and crypto.

Establish independent testing (audit & assurance practices). There is no way for further development without proper assurance practices established to uncover and tackle the possible business drawbacks. By involving in the testing of new processes & project plans, the startup reduces its failure rate.

A sample policy checklist

We outline below the most applicable policies each startup is required to employ to be in line with AML rules and regulations. 

1. Regulatory & Licensing Policy 
2. Authorities & Segregation of Duties 
3. AML Policy 
4. Risk Assessment Policy 
5. Know-Your-Customer Policy 
6. Customer Identification Policy 
7. Enhanced Due Diligence Policy 
8. Customer Disputes & Complaints 
9. Whistleblower Policy
10. Governance & Oversight Policy
11. Conduct & Culture Policy
12. Anti-Bribery & Corruption Policy
13. Fraud Policy
14. Surveillance & Monitoring Policy
15. Sanction Policy
16. Compliance Training

Be aware that the list is not exhaustive, but used for illustrative purposes. Difference jurisdictions and regulators may require additional policies & controls.

Compliance Project Management Area

To comply with AML rules is not easy and requires a startup to take pertinent actions on behalf of the company’s board and senior management. Such steps must be adequately thought through and measured as to the intended business profile and service delivery. We display here the basic points the founders must have in mind when launching a fintech project.
1.      Governance – management oversight over the business AML performance.
2.      System & Technology – establishing the support of proper AML systems capable of catching deviations in transactions, KYC profiles, etc.
3.      People & Resources – professionals play a crucial role in implementing and controlling the work of AML systems and technologies.
4.      Policies & Procedures – development of relevant policies and implementation of them into the systems.
5.      Training & Culture – ongoing education is a key element to the successful identification and risk mitigation in delivering financial products.
6.      Independent Testing – an integral part of the company’s compliance framework to ensure the quality assurance and proper fulfillment of the AML obligations.

We would be happy to know more about your fintech startup and assist you with drafting and tailoring AML policies as to your risk appetite and applicable jurisdiction. Our AML platform will be configured according to the documents prepared, so in just a few weeks you will be ready to start making proper AML checks without risk of non-compliance. ZeroTolerance will complete your AML requirements for you, so you can stay entirely focused on your business.
For further information on how we can assist you on this matter, reach us at