FinTech Meets Financial Crime

Investors eyeing fintech investments may want to redouble on financial-crime due diligence. The risk is that venture deals are debased by capricious regulation. Authorities may be too quick to jump to conclusions; venture capitalists may not be properly attuned to compliance demands. Selected evidence indicates that payment services and cryptocurrencies have been used to advance terrorism. Yet broad accusations are ill-formed. Gaps in regulatory oversight exist because monitoring standards center on traditional bank-transfer systems. That level of control is now inadequate. Consequently, we expect officials will push the burden of proof back to fintech companies. Silicon Valley no doubt will reach to artificial intelligence for supervisory solutions. Aside from questions about effectiveness, that approach will create an outsized tax on those companies operating in the business.

Our Vantage Point: Investors can see international deals through rose-tinted glasses, especially when those opportunities are cloaked in bling. Using common sense is just as important as meeting legal requirements.

Learn more at The Straits Times

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