Navigating compliance challenges: a guide for startups

The year 2022 witnessed a significant spike in anti-money laundering penalties, sending a stern warning to businesses, including startups, about the financial perils of non-compliance.

Although these fines saw a decline in 2023, startups now face new regulatory challenges amid broader economic uncertainties.  

Here, Antoine Cuypers, Director, Strategic Alliances and Key Accounts at Intix discusses the growing need for startup companies such as neobanks and payment institutions to adopt business solutions that help them to address compliance inquiries promptly and highlights the considerable business risks that come with failing to do so.  

In this moment, it is critical for companies of this size to find ways to sidestep compliance-related financial sanctions, which are largely preventable but often costly. Some noteworthy examples from recent times have underlined this issue, and highlighted the level of damage that regulatory failures can cause for early-stage businesses.  

Within this context, it’s clear that startups are under increasing pressure to produce and submit compliance reports more rapidly than before. Unlike larger corporations with specialised compliance teams, startups must balance compliance with other critical business operations, leading to potential neglect of compliance tasks and subsequent failures.  

Assessing the challenge 

In the past, startups might have considered compliance fines a regrettable yet unavoidable business expense. Today, the heightened severity of these fines and their long-lasting impact on reputation make avoidance crucial. Fortunately, new solutions are available to streamline the compliance process, rendering it more feasible for emerging businesses. 

Providers such as Intix offer advanced tools to analyse transactions comprehensively, which is invaluable in the event of an investigation. These solutions transform vast amounts of data into actionable intelligence for operational efficiency, compliance, and auditing – a feat once challenging but now achievable with modern technology.

Making data count 

Efficient data management is essential not only for long-standing regulatory requirements but also for adapting to new or changing market practices and laws, such as the diverse interpretations of ISO 220022 across Europe. Against this backdrop, startups must establish data management systems that ensure data accessibility to meet varied regulatory demands. 

The advent of open banking and the introduction of PSD3 present additional compliance challenges for startups in financial services. To address these, building robust data management infrastructures should be a priority, enabling the sourcing, collection, and aggregation of pertinent data. 

Fail to prepare, prepare to fail 

Many startups currently operate with subpar data management systems, struggling under the pressure of immediate regulatory reporting requirements. Penalties often result not from a lack of data but from the inability to report it swiftly and comprehensively. In response, startups need data management systems that make this data accessible and instantaneous.  

Solutions that dismantle organisational and technical barriers are key here, providing a holistic overview of data to facilitate rapid and complete reporting. This approach provides companies with a complete picture across a myriad of data quickly, and makes search and visibility far easier, enabling companies to find the needle in transaction haystacks.  

Real-time access to messaging data further enhances search capabilities and reporting efficiency, allowing companies to pinpoint specific transaction details swiftly. Agile data management systems that can trace transactions at any stage in the processing chain are also vital for maintaining visibility and control over operations. 

Making the shift 

Startups that adhere to outdated data warehouse management models are beginning to see their limitations in a regulatory landscape that demands quick data retrieval. Businesses relying on systems like this put themselves at risk of compliance woes. Therefore, a transition to real-time data management systems is not only advantageous but essential. 

The path forward requires an acknowledgment of the need for agility in data management and the commitment to invest in the necessary technologies and strategies. Intix offers innovative solutions to meet the challenges outlined, and can assist startups in overcoming compliance hurdles, and establishing future-proof data management systems.