Compliance Measures Must Match Growing Partnerships And Innovations in Financial Services
A major barrier to expanding financial access to the underserved and excluded — 1.6 billion individuals worldwide and millions of businesses and organizations — is meeting regulatory standards of risk and compliance historically constructed for traditional bank-centric financial activities. To date, compliance measures have not kept up with the innovation and modernization that today’s financial technologies have developed and which continue to offer substantial inclusion benefits. But it need not be this way.
At the Stellar Development Foundation’s recent Meridian 2020 Conference, I joined a broad range of speakers to explore the future and regulation of blockchain technology. Together with Candace Kelly, General Counsel for Stellar, and Tom Robinson, Co-founder of Elliptic, I discussed ways to provide equitable access to the financial system to more individuals and organizations. In particular, with growing opportunities for the back-end infrastructure provided by Stellar to complement fintech companies like FinClusive, we have more tools at our disposal to provide these financial access gateways while ensuring necessary compliance protocols are that much more effective and efficient.
As a non-profit organization, the Stellar Development Foundation (SDF) supports the development and growth of the Stellar network — an open-source protocol for creating digital assets and moving economic value securely and quickly. FinClusive’s growing relationship with Stellar means companies like ours can utilize Stellar’s infrastructure, and with our bank partners, we can facilitate on/off-ramp activities into the U.S. and reinforce necessary controls through our Compliance-as-a-Service (CaaS) platform to empower businesses, drive mainstream adoption, and ultimately promote financial inclusion. Not only does Stellar provide an alternative infrastructure for cross-border remittances and payments, it also reduces the cost and complications of setting up an anchor and allows engaging in activities that are otherwise considered ‘highly regulated’ globally.
Through CaaS, FinClusive offers anchors in the Stellar ecosystem a comprehensive compliance solution to guard against fraud, money laundering, terrorist financing, and other illicit activities to meet regulatory requirements. Our CaaS platform enables anchors to better assess actual risk and ensure safe, transparent, and secure access, from diligencing and onboarding clients to ensuring every transaction is appropriately monitored. Further, FinClusive has led a growing industry task force, including SDF itself and its many ecosystem partners, to provide a comprehensive Rulebook of best practices and guidance. The Rulebook helps the sector ensure regulatory compliance requirements are understood and implemented in a way that reflects new operating protocols in an already globally connected financial ecosystem. Together, FinClusive and the Stellar ecosystem offer the twin benefits of an efficient compliance solution and a low-cost, modern payments rail accessible to more around the world.
Partnerships and innovation involving private and public sector companies are growing at a rapid pace. To facilitate much-needed financial inclusion and bolster fintech companies working towards that goal, compliance will continue to be an important issue within a continually growing and evolving financial services sector. As such, regulatory measures to address financial system integrity must keep up with these changes and pave the way for equally continual modernization of regulatory frameworks that will govern new and emerging fintech companies and alternative financial services providers to adopt.
Amit Sharma is CEO of FinClusive, a hybrid fin-/reg-tech company that provides a full-stack financial crimes compliance platform that facilitates inclusion (access to secure accounts and payments) for the world’s financially underserved and excluded. Follow FinClusive and Amit on Twitter: @FinClusiveCap and @ASharma_VT. Learn more at finclusive.com
