Financial regulation is perhaps the most demanding and dynamic field of all. Even more confusion and complexity can be expected when we talk about FinTech. This technology has changed the way we think about financial operations and digital banking but, most importantly, how we perceive trust. Compliance and AML/CFT specialists now play an immensely important role in helping FinTech companies with these new challenges.
In the second interview of Bankera’s “Meet the Team” series, we talk to our lawyer, Paulina Šliumpaitė, about the biggest issues in FinTech regulation, differences in regulatory landscapes, and the importance of AML policies.
Hi, Paulina! We noticed that you are proactively involved in social initiatives, so could you tell us more about yourself, your engagement in NGOs and pro bono activities?
Hi everyone, my name is Paulina Šliumpaitė and I am a lawyer focused on compliance and AML/CFT here at Bankera. I was born and raised in Lithuania but have always possessed a particularly global outlook. I left Lithuania immediately after finishing school and started working towards the LLB (Bachelor of Law) degree at the University of Durham (UK).
My University years were quite fruitful in terms of the variety of projects I had a possibility to put my hands on. In 2015-2016, I worked on a Syrian Legal Development Project – a pro bono initiative aimed at addressing complex Syrians’ legal needs which emerged as a result of the Syrian conflict. In 2016, I founded a pro bono project on my own, called A-Team Durham. As part of the A21 organisation, this initiative aims to raise awareness about human trafficking and modern slavery, and (could not be more proud) will soon count its third year. I was also honoured to have been chosen as one of the first students on the student committee of the Durham University Centre for Criminal Law and Criminal Justice.
On a slightly different note, a lot of great experiences came from my work at TEDxDurhamUniversity, where I was one of the three speakers’ managers for two years in a row. I would not be lying if I said that each of these projects, in their own unique ways, prepared me for my work at Bankera.
You started out in criminal law — could you tell us what led to your transition to FinTech compliance and AML?
I used to consider myself an aspiring criminal lawyer but this path, at its broadest, was not precisely what I wanted to do – that is, assisting corporate entities in combating financial and corporate crimes. I realised this relatively quickly after spending some time in London courts. Regulatory compliance is a more accurate definition of my preferred area of expertise; however, I still see myself as a criminal lawyer at least in some sense. FinTech then came naturally – I simply saw an opportunity for myself here and so far it has been worth the risk. I spent my last year at University working on a dissertation on money laundering through cryptocurrencies, participated in the London Blockchain Week, and finally decided to kick-start my career in this area.
My duty at Bankera is to ensure that our current and future products and services comply with the national and supranational regulatory requirements. This includes a wide range of responsibilities, from obtaining licenses and authorizations from financial regulators across the world to fulfilling ongoing regulatory compliance requirements and monitoring changes in the global regulatory landscape.
Major problems/opportunities facing FinTech and Legal Industry?
I guess the main problem with FinTech regulation is miscommunication between the parties involved in the regulatory compliance process. Whilst many regulators struggle to catch up with the growing FinTech influence, many FinTech businesses and their customers struggle to understand the idea behind the reasonable regulation.
It is thus important to emphasize that regulation initially stands for legal certainty (which is crucial for business growth and customers’ trust) just as much as it is important to talk about FinTech advantages. In other words, there should be a bilateral interest to create a tech-friendly regulatory landscape, which does not always feel like a priority at the moment.
Which countries currently have the most liberal and which have the most restrictive regulatory environment for digital banking?
FinTech regulation is continuously developing so it is crucial that regulators understand the differences between institutions like Bankera and neo-banks and traditional credit institutions. Malta, British Virgin Islands, Vanuatu and other financial centers have a strong advantage here. These countries take a rather welcoming approach when it comes to financial innovations. Compared to them, other jurisdictions are not as flexible.
Do you expect the availability of Bankera’s products to be geographically constrained due to different jurisdictions? (i.e. no service in the USA) Or will the products themselves be reduced in scope to make them available worldwide?
I would expect the full scope of Bankera products and services to become gradually available across the world. Legal requirements for financial institutions differ vastly across different jurisdictions and, unfortunately, there is no ‘all-in-one’ solution that could make Bankera universally available straight away. However, I have to say that our legal team is really well-equipped in terms of experience, knowledge and skills, so I would expect results of the best quality.
I strongly dislike going through KYC/AML. How can Bankera reduce the annoyance factor? Will one KYC screening be enough for all products?
I definitely get your point, it is a fairly common complaint. Two points can be addressed here. Firstly, KYC (and Customer Due Diligence in general) is a requirement laid down vertically, i.e. as a financial institution, Bankera undertakes a special regulatory and moral responsibility to protect the integrity of its own and of the financial industry as a whole. A lot of our effort is put into developing an advanced fraud prevention system.
I would like to draw attention to the fact that, even though a lot of regulators across the world have not yet made up their mind in terms of what AML policy to apply to the crypto-related businesses, more and more of them are explicitly placing them into the existing AML policy frameworks (see e.g. the upcoming 5th EU Anti-Money Laundering Directive).
Secondly, disregarding its complexity and time-consumption, the KYC process is really needed. It does protect companies and the industry, but customers matter the most here. No one wants to lose their money. Having said this, I think the main issue is the process itself. For now, to verify our customers’ identities, we must rely on the information clients and competent third sources provide us with. In the future, I believe, a lot of assistance can be expected from developing technologies such as biometrics and the blockchain.
Until then, Bankera will leverage the experience from its partners at Pervesk and its MVP, SpectroCoin, to make our user experience as good as possible. What is more, we will certainly aim for a single KYC screening here at Bankera; however, to emphasise it once again, integrity and customers’ trust are our main priorities.
We hope this interview with Paulina taught you some new things about Compliance and AML. Our Meet the Team series return next week with a new guest.
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