The State of FinClusive
As we witnessed the devastating health and financial impacts of the COVID-19 pandemic, FinClusive’s mission to bring secure, compliance-centered banking to the financially excluded or underserved was reinforced last year. As we begin to see vaccination numbers accelerate, we know the importance of making progress on key financial health objectives to rebuild our communities and economies and better insulate the most vulnerable populations from future economic and health shocks. To meet our mission in service to our customers, partners, and stakeholders, FinClusive has been hard at work improving our Compliance as a Service (CaaS) and Accounts & Payments (A&P) platform, and deploying these capabilities to more companies in the U.S. and globally. As always, we continue to push for policymaking and regulatory compliance modernization that builds a more inclusive and globally accessible financial ecosystem.
Providing Comprehensive and Modernized Financial Crimes Compliance
FinClusive’s ecosystem is built to support any financial service provider with unique regulatory compliance needs. New technologies are constantly entering the sphere which was previously under the sole purview of traditional banking operations. As such, emerging providers must stay up-to-date with evolving regulatory requirements that can differ across jurisdictions or areas of operation. FinClusive embeds CaaS as a comprehensive and seamless financial crimes compliance (FCC) solution that enables organizations to service clients otherwise underserved by the traditional banking system — thereby driving greater inclusion while ensuring essential regulatory risk and compliance protocols.
In addition to its existing organizational verification capabilities, with third party partners and growing direct linkages to jurisdiction-based registries, FinClusive has broadened its global coverage for Know Your Business (KYB) by recently partnering with the Global Legal Entity Identity Foundation (GLEIF). With this integration, FinClusive becomes a certified verifier and assignor of legal entity identifiers (LEIs), which streamlines KYB during onboarding and for ongoing monitoring, and expands this ‘utility’ to both traditional and alternative financial service providers.
CaaS brings additional efficiencies through its CDD Check application and the assignment of unique FinClusive IDs (FinCIDs) for all individuals and organizations coming through our KYC/KYB processes. FinCID’s can assist in auto-verification/validation of clients by corresponding financial intermediaries and be attached to transactions of any type to ensure adherence to the travel rule — whether those payments go through traditional bank rails or virtual asset rails. FinCIDs are being built with sovereign identity principles to preserve and protect underlying personal identifying information and to ensure control by end-users.
Enabling Individuals and Organizations into Secure Accounts and Efficient Payments
Our Accounts and Payments (A&P) application enables organizations to create and manage accounts hosted with one or more of our growing U.S. bank partners. These accounts provide a secure store of value in an insured deposit for our partners and customers as well as their clients, and from them, A&P can facilitate the movement of funds globally across multiple compliant and secure payment rails. FinClusive’s anchor services on the Stellar network are connected to multiple virtual asset exchanges and liquidity providers and serve as an on/off ramp that facilitates the conversion between fiat and multiple virtual assets issued or transacted within the Stellar ecosystem for cross-border payments, such as individual/household remittances and corporate payments.
In addition, FinClusive’s CaaS provides comprehensive FCC coverage for anchors on the Stellar network — ensuring a secure, accessible, and globally compliant digital payments rail and ease of engagement for customers and clients of all types. This leads to increased customer engagement globally not only with existing Stellar anchors but others who are interested in engaging in that network via their own anchors in the future.
Stellar also recently incorporated USDC — one of the world’s leading U.S. Dollar stablecoins — for payments. The integration of USDC on Stellar means that businesses can leverage the stablecoin immediately, and with embedded compliance through CaaS, we can open the door to true financial inclusion. USDC’s strong liquidity, reputation, and volume leads to confidence in settlement times and the value of transactions. Thanks to USDC’s strong market characteristics, businesses using FinClusive can worry less about enduring prolonged settlement times or fluctuations in the value of their transactions.
We are building out in new networks, including Celo/C-Lab, to support their growing ecosystem with both CaaS and as a transaction facilitator (on/off ramp) for their Celo dollar and Valora wallet application, with a link to secured accounts and payments capabilities. As this ecosystem grows, FinClusive is pleased to provide an embedded compliance solution and support for individuals and merchants to seamlessly transact as Celo adoption continues. Expanding our ecosystem includes the engagement of more banks of record to strengthen our deposit institution base and drive additional value to our banking partners across the U.S. We look to further develop similar bank relationships outside the U.S. later this year.
Regulatory Outreach and Modernization
Integral to our product and service developments, we continue to expand our work with U.S. and global regulators on advancing financial inclusion through modernized regulatory compliance practices and enabling new financial services providers in fintech and virtual assets in particular. The Biden administration has expressed great interest in addressing inclusion challenges more broadly, including exploring ways to leverage new technologies and capabilities to enable financial access.
U.S. Treasury Secretary Janet Yellen recently told the Senate Finance Committee, the “issues of diversity, inclusion and racial equity are incredibly important, particularly at this moment in history when the pandemic has taken an unbelievable and disproportionate toll on low-income workers and especially people of color,” and the Secretary has subsequently met with representatives of racial and economic justice groups to better understand their needs and align near term U.S. policies to be more attentive to them. We will double our efforts with our industry peers to encourage further modernization of current regulatory frameworks to be better-oriented toward inclusion and we will continue to push for concerted action by U.S. policymakers in the near term. We have several initiatives underway to advance these important efforts.
FinClusive, in partnership with the Sovrin Foundation and other global organizations, leads the Compliance and Inclusive Finance Working Group (CIFWG). The CIFWG works to ensure new and growing financial services providers in the virtual-asset space understand essential FCC controls and drive a comprehensive framework for incentivized self-governance.
The CIFWG has developed and promoted the Rulebook, an innovative and dynamic best practices framework that extends traditional banking compliance and payments guidance to emerging fintech and Virtual Asset Service Providers (VASPs). The Rulebook lays out a modernized compliance governance framework for virtual asset-related value transfer activities and their intersection with traditional banking — and we are seeing more companies and networks incorporate this framework into their operations and supporting FCC policies. Importantly, as financial services continue to digitize, decentralize, and become more peer-to-peer, CIFWG will continue to grow its membership and advance adoption globally.
What’s Ahead
2020 pushed FinClusive to adapt and grow; our product developments have positioned FinClusive to better support partnerships and customer engagements. As we move into the next phase of fundraising, we will pursue investments that allow FinClusive to provide secure and compliant financial access that enables the future of banking for all. At this pivotal moment, we are excited to be in a position that will drive sustainable commercial growth while promoting a modern, compliance-centric approach to inclusion in a continually evolving financial services ecosystem.
FinClusive is a hybrid fin-/reg-tech company that provides a full-stack financial crimes compliance (FCC) platform that facilitates inclusion (access to secure accounts and payments) targeted to the world’s financially underserved and excluded. Follow FinClusive on Twitter: @FinClusiveCap and learn more at finclusive.com.
