Slovenia’s Fintech Sector Confronted with Rising Financial Crimes Risk

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Balancing Compliance with Anti-Money Laundering Regulations and Addressing Growing Financial Crimes Risk

As fintech companies in Slovenia continue to partner with traditional banks or offer their own financial products and services, they are facing an increasingly complex challenge: balancing the need for compliance with anti-money laundering (AML) regulations while also addressing the growing risk of financial crimes.

Key Developments Driving the Challenge

The COVID-19 pandemic has driven a surge in digital banking adoption, creating new opportunities for illicit actors to exploit vulnerabilities and engage in fraudulent activities.
The Financial Crimes Enforcement Network (FinCEN) is planning to issue new priorities and requirements that could require fintechs to adapt their compliance routines.

Compliance Challenges Faced by FinTechs

Delegating key control roles and responsibilities to fintech companies, including implementing controls for AML regulations such as:
- Know Your Customer (KYC)
- OFAC watchlist screening
- Suspicious activity reporting
Ensuring that these controls are supported by risk-based BSA/AML and OFAC regulatory compliance programs

Implementing Effective Compliance Measures

KYC is a critical component of financial crimes compliance, as it enables fintechs to verify the identity and legitimacy of their customers. To mitigate the risk of identity theft and fraud, fintechs are adopting various tools and methods, including:
- Multi-factor authentication
- Algorithmic analytical tools that incorporate machine learning and artificial intelligence
OFAC watchlist screening is another critical component of financial crimes compliance, as it enables fintechs to identify individuals and entities named on OFAC watchlists. FinTechs must implement tools and processes to interdict these individuals and entities, including:
- Fuzzy logic algorithms designed with rules, weights, and thresholds
Suspicious activity reporting is also a critical component of financial crimes compliance, as it enables fintechs to detect and report potentially fraudulent activities. FinTechs must implement methods and tools to prevent and detect suspicious activity through:
- Automated and manual transaction monitoring methods

Information sharing between fintech companies and their partner banks is critical for effective financial crimes compliance.
FinTechs must develop and implement comprehensive policies, procedures, and processes for responding to section 314(a) requests and protecting the security and confidentiality of FinCEN requests.

Conclusion

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As Slovenia’s fintech sector continues to evolve and grow, it is essential that companies prioritize financial crimes compliance to mitigate the risk of illicit activities and maintain public trust. By adopting robust controls and implementing effective compliance programs, fintechs can ensure a safe and secure environment for their customers and stakeholders.