DO SPONSOR BANKS HAVE AN AFFIRMATIVE DUTY TO BRIEF THEIR FINTECHS ON NEW DEVELOPMENTS IN COMPLIANCE REGULATION, AS WELL AS NEXT-GENERATION INDUSTRY PRODUCTS?

Given that sponsor banks are being held by regulatory agencies to insuring that their fintech clients maintain a level of effective AML/CFT compliance, meeting banking best practices standards, should they not routinely and regularly brief the compliance staff in the fintechs on changes in relevant laws and regulations, and have those compliance professionals acknowledge, in writing, receipt of such information? This will go a long way towards mitigating any allegations of sponsor bank deficiencies, in the event that regulators seek to come down hard on them, for issues related to matters that originated at the fintechs.

Just as important, it is humbly suggested that the sponsor banks conduct on-site sessions at fintech compliance offices, to educate those staff on emerging developments, meaning new products and platforms available, to upgrade and make their compliance more effective, fintech customer identification procedures, as well as transaction monitoring operations. The new programs being adopted by the sponsor bank compliance department should be explained by bank compliance officers, and even demonstrated by the vendors involved, so that their utility will be fully understood.

As regulators continue to hold sponsor banks fully accountable for the actions of their fintechs, such a proactive program of education and guidance will not only reduce risk, it will cement a closer relationship between them.