Financial Crime World

Fintech Security Measures Against Financial Crime in Saint Pierre and Miquelon

As the financial landscape in Saint Pierre and Miquelon continues to evolve, fintech companies operating in the region must prioritize security measures against financial crime and fraud. In this article, we will explore the evolving regulatory focus, interplay with consumer protection, and best practices for fintech companies to combat financial crime.

Evolving Regulatory Focus

Regulatory bodies in Saint Pierre and Miquelon are placing increasing emphasis on anti-money laundering (AML) and counter-terrorist financing (CFT) frameworks. To mitigate the risk of financial crime and fraud, regulators will focus on:

  • AML/CFT frameworks and risk mitigants to prevent illicit exploitation of access to the financial system
  • Fraud models, operations, and investigation processes
  • Insider corruption and cybercrime

New areas of expanded regulations include:

Crypto and Digital Assets

Regulators will look to combat threats and vulnerabilities posed by digital assets and strengthen financial safeguards. This includes:

  • Combating money laundering and terror financing risks associated with NFTs and DeFi platforms
  • Strengthening controls for crypto transactions and digital asset management

Increased Attention to AML for NFTs and DeFi Platforms

With the rapid growth of NFTs and DeFi platforms, regulators indicate there is an elevated risk of money laundering and terror financing. To mitigate this risk, fintech companies should:

  • Implement robust KYC and CDD processes for customers interacting with NFTs and DeFi platforms
  • Monitor transactions and suspicious activity in real-time

Interplay with Consumer Protection

While regulators recognize the need for fraud controls to manage potential losses and identify suspicious activity, they will remain focused on potential violations of consumer compliance regulations. This includes:

Use of Account Holds and Freezes

Fintech companies should ensure that account holds and freezes are used in connection with the application of Reg E, EFTA, and UDAAP.

Model Development and Validation

Model development and validation utilized by fintech companies should include analysis of disparities and anti-bias to prevent unfair or discriminatory practices.

Evolving Risks

Regulators face the challenge of mitigating complex and evolving risks that may threaten or have been identified by the Administration as issues of national security. Areas of national security risks include:

  • Domestic and international terrorist financing
  • Increased focus on OFAC and Sanctions
  • Transnational criminal organizations

Best Practices for Fintech Companies

To combat financial crime and ensure customer protection, fintech companies in Saint Pierre and Miquelon should consider the following best practices:

Add Analytics and Automation to Client Onboarding

Implementing analytics and automation in client onboarding can help identify potential risks and prevent financial crimes.

Eliminate Antiquated Technology

Fintech companies should eliminate antiquated technology that may be vulnerable to cyberattacks or data breaches.

Establish a Mature Conduct Risk Program

Establishing a mature conduct risk program can help fintech companies identify and mitigate conduct risks associated with financial crime.

Strengthen Controls in Regulatory Focal Areas (FinCEN Priorities)

Fintech companies should strengthen controls in areas identified by FinCEN as priorities, including AML/CFT frameworks and risk mitigants.