Financial Crime World

Regulatory Areas Applicable to Foreign Fintech Companies in the United States

The United States has a complex regulatory framework that applies to foreign fintech companies operating within its borders. From data privacy laws to anti-money laundering regulations, businesses must navigate a multitude of rules and requirements to ensure compliance.

Data Privacy Laws

U.S. federal and state privacy laws apply to organizations established outside the U.S. if they collect personal information from residents of the U.S. jurisdiction. The General Data Protection Regulation (GDPR) does not restrict international transfers of data, but companies must still comply with applicable laws and regulations.

  • Consequences for non-compliance range from civil penalties and statutory damages to criminal sanctions and injunctive relief.
  • Civil liability may extend to statutory damages, punitive damages, and private rights of action available to private persons with proper standing.

Cybersecurity Laws

The federal Gramm-Leach-Bliley Act (GLBA) is the primary source of laws regulating the use of consumer financial information. Other laws, such as:

  • The New York Department of Financial Services’ Cybersecurity Regulation
  • The California Consumer Privacy Act

may also apply specifically to cybersecurity and other information protection.

Anti-Money Laundering Regulations

The USA PATRIOT Act requires financial institutions and lenders to obtain customers’ identifying information and have internal due diligence policies in place. Institutions must report suspicious activity and comply with international account record requirements.

Other Regulatory Regimes

  • Comprehensive privacy laws, such as:
    • California Privacy Rights Act (CPRA)
    • Virginia Consumer Data Protection Act (VCDPA)
    • Colorado Privacy Act (CPA)
    • Federal regulations like the GLBA may apply to data not already preempted by federal law.
  • There are currently no specific laws directed at artificial intelligence (AI), but proposals for legislation are expected in the near future.

Accessing Talent

In the U.S., employment laws are determined by state, with most states having “at-will” employment laws allowing employers to terminate employees for any reason (except violating state or federal law). Mandatory employment benefits include:

  • Social Security and Medicare contributions Employers must also provide verification of employment authorization for prospective employees.

Technology Protection

Innovations and inventions can be protected in the U.S. through:

  • Patent and trademark filings
  • Copyright protections under statutory law
  • Confidentiality agreements Companies typically protect their innovations and inventions through:
  • Confidentiality Information and Invention Assignment Agreements (CIIAA)
  • Non-Disclosure Agreements (NDAs)

For foreign fintech companies looking to operate in the United States, it is essential to understand these regulatory requirements and take steps to ensure compliance. Failure to do so can result in severe consequences, including fines, penalties, and damage to reputation.