DO SPONSOR BANKS HAVE A DUTY TO BUILD AN EFFECTIVE AML COMPLIANCE PROGRAM FOR THEIR FINTECH PARTNERS?

Given the fact that regulators seem to be moving in the direction of holding sponsor banks strictly liable for the money failures of their sponsor bank partners, it would seem logical, from a risk management point of view, that they take the initiative, and actually have their director of compliance assist with the set up of fintech compliance departments. This would mean locating staff talent who can be effective on AML/CFT, and seeing that the software that is installed there and in active use, (with adequate training) attains that favored banking best practices level.

I know this sound like a budget-buster, but it there really any choice, in what is becoming a strict regulatory world, as to be honest, fintech business at a bank enlarges it business volume, results in additional accounts and new consumer clients, and is, in essence, lucrative.

Therefore, from a purely risk standpoint, it is the right thing to do, even if the sponsor bank must pay for the essential software, which it itself is already using in-house. Money launderers most certainly are aware of the AML deficiencies fintechs, especially the startup variety, possess, and go right for those obvious vulnerabilities; don't give them the opportunity to use the fintechs to launder the proceeds of crime through them, and into your bank.