Banking and Financial Services are critically important to the global economy, and to ensure the stability of global financial networks and exchanges, these services are highly regulated by various governments on a worldwide basis. As a result, any Platform that wants to add financial services as part of their product and service offerings needs to not only be aware of this regulation, but be actively involved in its oversight, mitigation and compliance.

Regulations

Governments around the world enact laws seeking to ensure that global financial markets are safe, secure and reliable. These regulations range from helping to prevent banks and markets from collapsing, to protecting consumers from deliberate or unintentional financial harm. In the United States there are a number of key regulations that will have a definite impact on any bank or fintech enterprise. These include the following:

BSA

The Bank Secrecy Act (BSA) of 1970, also known as the Currency and Foreign Transactions Reporting Act, is a U.S. law requiring financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laundering

AML

The Anti-Money Laundering Act (AMLA) of 2020 was enacted to modernize how federal agencies fight money laundering and other financial crimes. It's the most significant overhaul of U.S. AML regulations since the Patriot Act was passed in 2001, and it builds on the Bank Secrecy Act, the first anti-money laundering enforcement law

UDAAP

Unfair, Deceptive, or Abusive Acts or Practices (UDAAPs) are legal standards that protect consumers from unethical or misleading marketing practices and tactics by financial product and service providers. UDAAPs are regulated under the Federal Trade Commission Act (FTC Act) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act.)

CIP and KYC

A Customer Identification Program (CIP) is a US requirement that financial institutions must follow to verify the identity of customers before they can conduct financial transactions. The CIP is part of the USA Patriot Act and Know Your Customer (KYC) guidelines. The CIP's minimum requirements for onboarding new clients can vary depending on the size and location of the organization. For example, a large bank with many products and services will have different steps than a local community bank.

GLBA and PII

The Gramm-Leach-Bliley Act (GLBA) requires financial institutions – companies that offer consumers financial products or services like loans, financial or investment advice, or insurance – to explain their information-sharing practices to their customers and to safeguard sensitive data.

While not a regulation, Personal Identifiable Information (PII) is defined as: Any representation of information that permits the identity of an individual to whom the information applies to be reasonably inferred by either direct or indirect means.

CCPA and CPRA

When the California Consumer Privacy Act (CCPA) was signed into law in 2018, it created an array of consumer privacy rights and business obligations related to the collection and sale of personal information. Less than a year after the CCPA went into effect, California voters approved the California Privacy Rights Act (CPRA), which amends the CCPA. As the first comprehensive consumer privacy laws in the U.S., the CCPA and CPRA set the standard for the way many businesses are approaching privacy and data security.

GDPR

The General Data Protection Regulation (GDPR) is a European Union regulation on information privacy in the European Union and the European Economic Area. It protects personal information. It outlines several requirements businesses must follow to process that data legally

Truth in Savings Act (TISA) - Reg DD

The Truth in Savings Act (TISA) is a federal law that requires banks to provide consumers with accurate information about their deposit accounts so they can make informed decisions. The law was passed by Congress in 1991 as part of the Federal Deposit Insurance Corporation (FDIC) Improvement Act and is implemented by Regulation DD.

Regulation D

Regulation D also restricted the frequency of certain types of withdrawals and transfers you could make from a savings deposit account during a statement cycle. The Fed removed the limit in April 2020 so banks no longer have to limit the number of certain withdrawals from a savings deposit account to six, but most do still restrict withdrawals on these accounts.

Electronic Funds Transfer Act - Reg E

The Electronic Fund Transfer Act (also known as Reg E) was passed by the U.S. Congress in 1978 to establish the rights and liabilities of consumers as well as the responsibilities of all participants in electronic funds transfer activities. It covers certain electronic banking and financial services such as debit card transactions, electronic withdrawals, transfers, and deposits.

Truth in Lending Act - Reg Z

The Truth in Lending Act (TILA), also known as Reg Z, is a federal law that requires lenders to provide borrowers with standardized information before extending consumer credit. The law was created in 1968 to promote honesty and clarity in consumer credit, and to protect consumers from unfair and inaccurate credit billing practices.

ECOA

The Equal Credit Opportunity Act (ECOA) of 1974 is a federal law that prohibits creditors from discriminating against applicants for credit based on certain factors. The ECOA applies to all types of credit, including credit cards, car loans, home loans, student loans, and small business loans.

FCRA

The Fair Credit Reporting Act (FCRA) is U.S. federal legislation enacted in 1970 to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. It was intended to shield consumers from the willful and/or negligent inclusion of erroneous data in their credit reports.

MLA

The Military Lending Act (MLA) is a Federal law enacted in 2006 and implemented by the Department of Defense (DoD), protects active duty members of the military, their spouses, and their dependents from certain lending practices like capping interest rates on many loan products.

SCRA

The SCRA (Servicemembers Civil Relief Act, (SCRA) enacted in 2015, is a federal statute that allows military personnel, and sometimes military dependents, to postpone or suspend some civil obligations so they can
devote their energy and attention to the defense needs of the nation.

Compliance

It is one thing to draft up laws, rules, codes and regulations to securely manage the global financial markets, but the rule does no good unless it is implemented, and the benefit of the rules will never be realized unless they are complied with. Compliance, as the word suggests is the practice of making sure that the rules are followed and adhered to. This requires a thorough understanding of the rules and regulations as well as having tools in place to measure how well the rule is being adhered to. Many of the regulations require that the financial services company or bank maintain records of both the rules being followed but also detailed records of when a regulation has not been adhered to and why.

Compliance as a Service

Of course for a fintech startup platform to hire experts in all these regulations would be financially cumbersome at the least and would eat up a big chunk of the Platform's start up capital. That is where Mbanq's Compliance as a Service comes in. Mbanq’s Compliance solution adapts and scales to meet the needs of your business as it grows and regulatory requirements change. Additionally, by outsourcing with Mbanq, you will better manage regulatory risk and reduce the likelihood of non-compliance penalties. By partnering with Mbanq, the Platform can take full advantage of all the tools and years of professional experience that Mbanq's Compliance Experts bring to the table.