A FORMER MONEY LAUNDERER EXAMINES THE SPECIAL MONEY LAUNDERING PROBLEMS THAT ARE FACED BY SPONSOR BANKS

What are the knotty problems sponsor banks encounter when seeking to insure that fintechs they are working with have effective AML compliance programs in place, so that the financial institution can reduce its money laundering risk? As a money launderer for a decade, when my task was to create methods and tactics that would effectively deceive bank compliance officers, while running successful laundering operations into, and through, commercial banks, I note that there are unique issues related to fintechs that must be factored into banks' approach to guiding them.

First of all, you must create a culture of compliance in fintechs, whose central objective is to deliver a specific type of financial services from a non-financial company. The fintech perspective is skewed towards the unique service it provides, and a compliance mindset must be instilled, frequently in a corporate environment focused on delivery, and which typically views compliance as an annoyance, or worse.

Second, with the rapid advances in the development of new technologies, your compliance challenges are complicated by the presence of start-up and newly formed entities, with little or no corporate history. Your fintech client didn't exist last year; how can you expect to see seasoned, experienced employees measuring up to your banking best practices expectations?

Finally, fintech goals often cause its leaders to have tunnel vision, narrowly moving towards both product and client development as breakneck speed towards profitability and anticipated success. Such an environment may not be conducive towards management wanting to be diverted from its immediate goals, by strict adherence to the policies and procedures that your bank requires, as part of your Banking-as-a-Service plan.

The complicating factor, in my opinion, is that money laundering through Payments and Payment Processing is an advanced subject that many compliance officers are not fully competent to identify in real time, let alone interdict, as there are a number of unusual, esoteric and unique techniques in current use, which are neither taught nor published, and variations to those methods are being created by laundrymen, to further confuse and deceive.

If this area of anti-money laundering compliance is of interest to you, you would like to hear this old laundryman's take on solutions that work, and you are in a sponsor bank, you might want to seek an invitation to the SOCURE BANK SECOND ANNUAL LEADERSHIP FORUM 2025, September  23-24, 2025, where yours truly will be the Keynote Speaker.

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