Financial Crime World

Here’s the converted article in markdown format:

Polish Fintechs Face Regulatory Challenges Amidst Growth Potential

Warsaw, Poland - As Polish fintech companies continue to expand their reach into international markets, they are faced with significant obstacles navigating the complex regulatory landscape of foreign jurisdictions while aligning it with Polish legal requirements.

Harmonized EU Rules vs. National Flexibility

Despite harmonized EU rules governing financial services, each country maintains a degree of flexibility in implementing directives, leading to divergent applications and interpretations by local authorities. In Poland, for example, the supervisory authority’s approach to e-money differs from that of other EU countries, while consumer credit is relatively overregulated.

Regulatory Compliance Challenges

To ensure regulatory compliance, Polish fintechs must invest in meticulous research, legal expertise, and often establish local partnerships. The country’s retention of its national currency, rather than adopting the euro, adds an extra layer of complexity for financial operations, necessitating consideration of exchange-rate risk.

Growth Potential Despite Challenges

Despite these challenges, Polish fintechs have demonstrated their resilience and adaptability, showcasing substantial potential for growth and success in international markets.

Crypto-Assets Regulation

==========================

The draft Polish act on crypto-assets has sparked controversy since its publication earlier this year. While the proposed law aims to establish a legal framework for the functioning of the crypto-assets market in line with EU regulations, sector representatives have expressed concerns about insufficient support from lawmakers.

Cybersecurity

  • The Polish Financial Supervision Authority (KNF) has been vigilant in monitoring cybersecurity threats to emerging fintech solutions and services.
  • A separate cybersecurity department has been established within the authority to address this issue.
  • The implementation of the Digital Operational Resilience Act (DORA) regulation is also a major concern for fintechs and financial institutions.

Artificial Intelligence and Hyper-Personalisation

AI and hyper-personalization are transforming the financial sector, enabling tailored offerings and delivery of services to customers. However, regulatory requirements must be carefully considered to ensure compliance with data privacy regulations such as the General Data Protection Regulation (GDPR).

  • Financial institutions must also monitor upcoming regulations, including the AI Act, to ensure that their projects align with these new standards.
  • The integration of AI and automation introduces new dimensions to personalized financial services, requiring transparency and explainability in decision-making processes.

Fraud Prevention

Despite a slight increase in fraudulent card transactions in Q3 2023, overall fraud cases in Poland are declining, according to statistics published by the National Bank of Poland (NBP). However, social engineering tactics such as phishing and spoofing continue to pose a threat to consumers.

  • The Office of Competition and Consumer Protection (UOKIK) has initiated proceedings against 15 banks for alleged infringements of PSD2 rules governing liability for unauthorized payment transactions.
  • UOKIK may impose penalties on each bank of up to 10% of its annual turnover in such cases.

Conclusion

As Polish fintechs navigate these complex regulatory challenges, they must strike a balance between innovation and compliance while maintaining customer trust. With the right approach, however, this market is poised for significant growth and success in international markets.