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Key Trends in Financial Crime Compliance for Payments Firms

Learn from global payments companies about trends in the industry and how to address them while remaining compliant.

Elise Thrale
September 15, 2023

Rapid advances in the digital payments ecosystem as well as the introduction of new products and services to meet consumer demand have introduced new money laundering vulnerabilities in the payment sector. Whilst issuers, acquirers and payment processors have developed robust fraud controls in order to control losses, many have underestimated the change in financial crime risk from new alternative payments and certain fraud vectors. Synthetic and stolen identities, as well as mule accounts increase the success rate for all kinds of financial criminals including money launderers.  

We spoke to global payments companies about trends in the industry, and three key common customer expectations arose, placing financial crime compliance at the top of the priority list.  

1. Choice: Instant, Flexible, Seamless and Secure

Today's customers demand choice in their payment options. They expect instant, flexible, and seamless services that cater to their evolving needs, while being secure. Regulatory mandates on banking and payments have veered in favour of these demands in recent years, prompting changes such as the Payments Service Directive 2 in Europe (PSD2) which improved customer authentication processes, and therefore smoother payments experiences and improved consumer protection.

These consumer-focused services have been made possible for payments companies to offer through open banking. It is regulated in the UK by the Financial Conduct Authority (FCA), giving consumers the right to ask payments companies and third-party providers to make payments on their behalf, and access their financial data through APIs. Other markets have different regulations and has opened the door for payments companies to enter a new market.  

However, increased customer flexibility leads to more opportunities for financial criminals to exploit. In turn, payments institutions are increasingly under regulatory pressure that was previously only seen by banks to have stringent checks in place. Payments firms must now invest in data and infrastructure to meet these demands, while reducing risk. However, customers also expect low costs, putting pressure on organisations to strike a balance between enhancing services and maintaining affordability.

Learn more about balancing compliance with profit for payments companies  

2. Speed: Transactions, Information, Onboarding  

Speed is of the essence for payments firms. Customers are expecting payments to be processed in real-time, information to be easily accessible 24/7, and onboarding to be smooth.  

India leads the global stage since the mandate of its instant payments system, the United Payments Interface (UPI), to ease sending money digitally. In the month of June 2023 alone, nearly 9.3 billion transactions were made through India’s UPI. These changes are taking place globally and at scale, with global instant payments expected to exceed 235 billion by 2027, according to Juniper Research. With the emergence of instant payment schemes, achieving compliance around the clock is critical. Decisions need to be made with speed and accuracy to report suspicious activity in accordance with regulatory standards.

Speed is not limited to transactions alone; it extends to information access and onboarding processes. Know Your Customer (KYC) procedures must happen in real-time to ensure the swift onboarding of customers while still adhering to regulatory requirements. AML regulations require client screening as part of KYC checks at onboarding to ensure that during the KYC process, customers are not on a sanctions list or will not expose the organisation to financial crime risk.  

Learn about how to manage financial crime risk when connecting to FedNow in the US   

3. Transparency: Customer and Payments Firm

Transparency has become non-negotiable for modern customers. They seek complete visibility into their financial activity and expect the same from their payment providers. This demand for transparency extends to Environmental, Social, and Governance (ESG) reports and messaging. Customers want assurance that their payments are not associated with financial crime or unethical practices so and expect security and transparency.

Consumer demand for transparency coupled with rising interest rates and the looming threat of a global recession, has led to a shift in focus on ESG from investors too. Sustainable growth, recurring revenue, and careful management of customer risk profiles are now seen as key competitive advantages in securing investment.

Investors are increasingly interested in businesses that demonstrate robust risk management practices, including comprehensive financial crime compliance. Thus, payments firms should look to invest in technologies and practices that provide comprehensive visibility into their operations, ensuring that their customers and investors can trust them implicitly.

Learn about how Starling Bank upholds its ethical banking ethos through anti-money laundering technology  


Staying ahead in a competitive market

The payments industry is undergoing rapid transformation, driven by evolving customer expectations and changing investment dynamics. Firms that prioritise choice, speed, security and transparency in their services while also focusing on robust financial crime compliance measures will stand out in this competitive landscape. As the market continues to evolve, adaptability and a commitment to effective risk management will be key to success in securing both customer trust and investment opportunities. Compliance is not a burden for payments firms, but an opportunity for growth.  


Learn more about how proactive investment in financial crime prevention and compliance can equip payments firms to get ahead of trends in the market and expand revenues in our latest whitepaper.

Photo by Jonas Leupe on Unsplash