SPONSOR BANKS CAN REDUCE RESIDUAL RISK FROM THEIR FINTECH CLIENTS THROUGH THE ESTABLISHMENT OF A LIAISON OFFICER TO MONITOR THEIR AML COMPLIANCE

Sponsor bank oversight of CIP and transaction monitoring, required by our regulatory agencies, which is remote by its very nature, therefore results in residual risk. In order to reduce that risk, it is suggested that each sponsor bank designate on one of its experienced frontline compliance officers to be liaison to the respective fintech compliance departments. He or she would be responsible for close monitoring the AML/CFT compliance programs in the offices of each fintech client, with specific orders to check the effectiveness of their Customer Identification and Transaction Monitoring programs.

Such an arrangement contemplates regular visits by the liaison to each fintech compliance office, not just to confirm that the programs were in place, but to actually sit in on daily operations. Reports to senior sponsor bank management would not only alert the bank's executives to potential problems, it would also serve to document an oversight program for regulators, and to potentially mitigate civil fines and penalties that those agencies might be interested in imposing in the future.

Given the level of oversight responsibility that sponsor banks now face, it is prudent to initiate proactive support programs such as this, to minimize AML risk on all possible fronts. It is humbly suggested that such a program will assist fintech compliance officers to achieve effective operation.