SHOULD SPONSOR BANKS, STRICTLY LIABLE FOR THEIR FINTECHS' COMPLIANCE FAILURES, DELIVER CIP AND TRANSACTION MONITORING PLATFORMS TO THEM, AS A PROACTIVE MEASURE?

Given the response I have received to my previous articles, confirming that many fintechs are simply not there with effective AML/CFT compliance programs, how can sponsor banks protect themselves from that dreaded regulator inquiry? It is a knotty problem, and it is humbly submitted that the best solution is to be totally proactive, and, at sponsor bank expense, obtain and deliver to their fintech clients and partners, the same platforms that the banks themselves use for Customer Identification Procedures, and Transaction Monitoring.

This is a risk reduction measure; provided that sponsor banks' compliance departments periodically stage unannounced visits, to insure that the programs they have donated are in daily use. I am aware that this will increase compliance costs substantially, particularly at sponsor banks with a large number of fintech clients, but the alternative, the negative publicity generated by regulatory actions, which will drive fintechs out of the bank, is not something that any sponsor bank interested in in creasing their portfolio of fintechs will want.

It may be possible to negotiate some sort of reduction in annual costs with software providers, advisors and consultants, to keep the expo uses down, but in the long run, it is suggested that, if your fintechs' compliance house is in order, you greatly reduce the risk of adverse regulatory action at your sponsor bank.