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Category: Banking and Fintech Policies Templates

Banking and Fintech Policies Templates refer to a collection of pre-designed and customizable documents that outline policies, procedures, and guidelines for financial institutions and fintech companies to comply with regulatory requirements, mitigate risks, and maintain operational efficiency. These templates cover various areas, such as cybersecurity, data protection, anti-money laundering, consumer protection, and more, and are designed to help organizations save time and resources by providing a starting point for creating their policies and procedures.

AML compliance in the remittance industry

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The money remittance industry is growing. In 2018, global remittances reached $689 billion: a figure that is expected to reach $746 billion in 2020. The trend is driven, in part, by digital remittance services, which are expected to see a growth rate of 11.75% between 2019 and 2024. As the remittance industry has developed, so have the methodologies that criminals use to exploit it. In a report on the industry, the Financial Action Task Force (FATF) identified specific vulnerabilities to money laundering and terrorism threats, emphasizing the need for suitable AML compliance in the remittance industry.

Accordingly, when it comes to the risk of AML, remittance firms must ensure their compliance solution can detect and prevent criminal activity and satisfy the relevant regulatory obligations (such as those imposed by FATF) on an ongoing basis.

Money laundering risks in the remittance industry 

Money remittance is an attractive target for criminals for a variety of reasons, including global inconsistencies in regulation and the criminal opportunities offered by digital remittance services. In order to detect and prevent money laundering activities, it is important that compliance teams understand the key risks posed by money remittance:

  • Digital services: The growth of digital remittance services and technology has led to the emergence of new money laundering risks. Online money remittance services are not only harder for the authorities to supervise but make it easier for criminals to circumvent identity verification processes, especially in non-bank remittance firms.
  • Prepaid cards: Some prepaid payment cards can be used to send and receive money and to withdraw cash from ATMs with funds loaded anonymously over the internet. Some open-loop cards are integrated with global ATM networks and can be used to transfer money around the world, pay for goods and services or simply withdraw cash with no face-to-face transaction requirement.
  • Money mules: The anonymity associated with remittance services means that money launderers can engage third parties to conduct transactions on their behalf. These third parties are also known as money mules and may be coerced or financially incentivized to send or receive money via remittance services in order to protect the identity of the launderers.
  • Ownership: Given the proliferation of remittance services, money launderers may seek to obtain ownership of a remittance firm in order to circumvent AML/CFT compliance regulations. Money launderers may set up a remittance firm themselves or by using an agent or may seek to leverage the owner of an existing firm.
  • Regulatory disparity: Regulatory supervision of remittance service providers varies depending on jurisdiction, and money launderers may seek to exploit that disparity by moving illegal funds between territories. The AML risks of that disparity may involve a lack of communication between supervisory authorities in different countries or the efforts of money launderers to avoid, for example, reporting thresholds or suspicious activity reporting requirements.
  • Structuring: In order to better disguise the origin of illegal funds and thwart investigations, money launderers may attempt to engage in multiple remittance transactions using multiple outlets. This practice is known as structuring and makes it harder for both remittance AML compliance teams and financial authorities to track illegal funds.

AML compliance for remittance organizations

FATF requires financial institutions within member countries to implement risk-based AML compliance programs. In practice, this means that firms, including remittance service providers, must conduct risk assessments of their customers to determine the level of money laundering risk that they present. In alignment with FATF recommendations, remittance service providers must put a risk-based AML program in place with the following features:

  • Customer due diligence: Remittance firms should conduct CDD checks to ensure that customers are being truthful about their identities. Customers that present a higher risk of money laundering, such as politically exposed persons (PEPs), should be subject to enhanced due diligence (EDD).
  • Transaction monitoring: Firms should use transaction monitoring tools to check their customers for suspicious activity that might indicate money laundering, including transactions above reporting thresholds, unusual transaction patterns or transactions with high-risk countries.
  • Screening: Firms should screen customers and transactions against international sanctions lists and watchlists. Customers should also be monitored for involvement in adverse media stories.
  • Compliance officer: Remittance firms must appoint a compliance officer with enough authority and expertise to oversee their AML program.
  • Training: As part of AML compliance, remittance employees must receive AML training in order to be able to spot potential money laundering activities.

Certain transactions or types of behavior may indicate that customers are using remittance services to conduct money laundering. These red flags include:

  • Unusually high frequencies of transactions or unusual transaction patterns.
  • Transactions above reporting thresholds.
  • Customers that attempt to conceal their identities.
  • Customers that know few details about the transaction or the payee.
  • Transactions that are connected to other transactions in a manner that might indicate structuring.
  • Transactions involving politically exposed persons or individuals on sanctions lists or adverse media stories involving customers.

Ongoing AML compliance in remittance

In order to deliver ongoing AML compliance in a remittance business quickly and efficiently, service providers should consider implementing smart AML software to handle their data collection and analysis needs. An AML software solution not only adds speed and accuracy to the compliance process but can scale with a firm’s needs and adapt to changes in legislation and emergent criminal methodologies on an ongoing basis.

AML compliance in remittances: Case studies

Global trading remittance firm (Customer A) 

Customer A offers money transfers to over 150 countries in over 70 currencies
Regulated by
  • FCA
  • DNB
  • FINTRAC
  • AMF
  • AUSTRAC
  • Hong Kong Customs and Excise Department
Screening workflow Customer A doesn’t run AML checks at onboarding but instead screens both the payer and beneficiary for every transaction run
Data Sanctions – all lists
Fuzziness setting 20%
Match rate 1-1.5%

Remittance firm (Customer B)

Customer B allows individuals from the UK and US to send money to Africa
Regulated by an FCA-authorized agent working for a payment provider in the UK
Screening workflow Customer B screens its customers at the point of onboarding, via an app used to sign up for its platform. Customers first go through an identification verification process, then AML checks
Data Customer B uses a search profile and has selected: 

  • Sanctions – all lists
  • Warnings – no lists selected
  • Fitness and Probity – no lists selected
  • PEP classes – all 4 classes
  • Adverse Media – no lists selected
Fuzziness setting Exact match
Match rate 4-5%

Global payments firm (Customer C)

Customer C offers B2B payments and individual payments to over 160 countries
Regulated by
  • Central Bank of Ireland
  • FINTRAC
  • FCA
  • AUSTRAC
  • Mexican National Banking and Securities Commission
  • Ministry of Business Innovation and Employment – New Zealand
  • Hong Kong Customers and Excise Department
  • Monetary Authority of Singapore
  • Dubai Financial Services Authority
  • Association Romande Des Intermédiaires Financiers (ARIF)
  • Jersey Financial Services Commission (JFSC)
  • Bank Negara Malaysia
  • FINCEN
Screening workflow Customers are screened at the point of onboarding
Data Customer C has set up a search profile and has picked lists from countries it is operating in: 

  • Sanctions – 72 lists selected
  • Warnings – 765
  • Fitness and Probity – 106
  • PEP’s – all 4 levels
  • Adverse Media – 7 categories
Fuzziness setting 20%
Match rate ~20%

 

The importance of compliance in the remittance industry

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It should be no surprise that financial services are among the most heavily regulated industries. Any business that involves the management and transfer of money, particularly across international borders, requires careful monitoring and control. Moreover, as a result of the 2007-2008 financial crisis and the rise of cybercrime, the regulatory environment has become far more stringent.

While banks and other traditional financial organisations have been in the money transfer business a long time and have mature compliance models, there are many new players, and the remittance landscape is now far more diverse and competitive. Money transfer operators have developed quickly thanks to digital technology and are reaching more parts of the world with a wide variety of new services that are fast and convenient. And with the growth of these services comes the fundamental requirement to be safe and secure.

That’s why compliance is a top priority for the remittance industry. Every year, remittance volumes increase, and today’s global money transfer operators are connecting more corridors through sophisticated networks. All organisations are subject to local, national, and international regulations. The remitter is subject to long-standing due diligence and compliance obligations, regardless of whether it is a bank or a money transfer operator. For example, all remitters must be licensed; otherwise, they will be deemed underground and outside the law.

It is a good thing that mobile money and digital technology are transforming transfer infrastructures and remittance flows. It means more people worldwide now have access to versatile and cost-effective remittances. But new technologies and practices bring vulnerabilities as well as opportunities, so compliance must match the pace of change. This is evidenced in the recently enacted second Payment Services Directive (PSD2), which is bringing European payments up to date with online transactions and the mobile revolution.

Compliance means greater operational efficiency and better customer service. Without regulation, there would be no accountability to ensure money moves safely and securely from sender to receiver or to identify and block transactions that are not legitimate. Now that transactions are increasingly digital, regulations such as know your customer (KYC), anti-money laundering (AML), and anti-terrorist financing (ATF) must also extend to the new world of digital remittances. Irrespective of whether a transaction is completed through a mobile app or by a bank, the same levels of compliance are required.

While technology has added to the complexity and demands of compliance, it also offers very effective solutions for compliance. The technological advances powering the remittance industry are also driving big advances in visibility and security. The industry is embracing compliance technologies such as automated identification, real-time transaction scanning, data analytics, data enrichment, and artificial intelligence. Collectively, these and other digital developments provide a more complete understanding of transaction flows and counterparties, which is vital as transfer pathways grow in scope and complexity.

Because online remitters don’t meet clients in person and mobile money is spreading worldwide, KYC is a very important compliance issue. One solution is biometrics, which is growing in popularity as a reliable and frictionless method of verification for financial services. Biometric methods, such as fingerprint IDs stored on phones, are helping to authenticate transaction parties and reduce fraud. This is just one example of how technology can set the rules as well as provide the infrastructure for fast and efficient money transfers.

Compliance is also important because of a trend that could restrict growth in the remittance industry. This is the practice of de-risking, and it means that some financial institutions are assessing the cost-benefit of certain operations and deciding to withdraw from high-risk activities so that they can improve their risk profiles.

The more preferable option is active compliance rather than compliance by cutting commitments because when you remove a financial service, unregulated, non-compliant underground operators may fill the void. In addition, it does nothing to alleviate financial exclusion. Instead of de-risking, it is ideal to focus on prudent risk management. It is important for remittance providers to inspire confidence in their correspondent banking partners, and this is something they can do by demonstrating that they are risk-aware and have robust security and clear audit trails.

The remarkable expansion of the global remittance industry is due to technological progress, which also provides the foundation for greater security. Looking to the future, money transfer operators will continue to use new and emerging technologies to refine their services while ensuring that the latest technologies also keep remittance networks regulated and compliant.

Understanding the Basics of Remittance and Money Transfer Business

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The remittance market refers to the global market of money transfers between individuals or businesses across borders. It is a significant and growing market, with an estimated 200 million migrants sending money back to their home countries, according to the World Bank.

According to Juniper Research, ​​digital cross-border remittances will grow from $295 billion in 2021 to $428 billion in 2025. With the increase in demand for remittances, there are opportunities for the development of money transfer companies to meet the needs of users. In this article, we consider the basics of the remittance business, and its benefits for payment companies, and present the fintech solution to speed up the money transfer app development process.

What is remittance?

Remittance refers to the transfer of money or funds from one place to another, usually across international borders. This transfer of money is typically made by a person who is working in a foreign country and sending money back to their home country or to their family and friends. Remittance is often used as a way for migrant workers to support their families and loved ones who may be living in a less economically developed country.

Remittances can be sent through various channels such as banks, money transfer companies, and online platforms, and they can be received in various forms such as cash, bank deposits, or mobile wallet balances. The process of sending remittances typically involves a fee or commission that is charged by the service provider, which can vary depending on the amount of money being sent, the destination country, and the method of transfer. Remittances are an important source of income for many families in developing countries, and they can contribute significantly to a country’s economy.

How does remittance work?

The process of sending a remittance usually begins with the sender depositing money into a financial institution, such as a bank or a money transfer service. The recipient then receives the money in their home country, either through a bank account, cash pickup location, or mobile money account. The exchange rate used to convert the funds from one currency to another can have a significant impact on the amount of money received by the recipient.

What is the difference between remittance and money transfer?

The term remittance refers to the money that is sent or transferred by an individual (usually an immigrant) living in one country to another individual (usually a family member) living in a different country. Remittances are often sent to support the financial needs of family members back home, such as paying for education, healthcare, and daily expenses.

Money transfer, on the other hand, refers to the process of moving money from one account to another. This can be done through various means, such as wire transfers, online transfers, or mobile transfers. Money transfer services can be used for a variety of purposes, including paying bills, making purchases, or sending money to friends and family within the same country.

So, while remittance involves sending money across borders to support family members, money transfers can be used for a wider range of purposes and may or may not involve cross-border transactions.

Things to know before starting a remittance or money transfer business

Starting a remittance or money transfer business can be a lucrative venture, but it’s important to do your due diligence and prepare thoroughly before launching your business. Here are some things to consider before starting this type of business:

Regulations and compliance

Research and understand the regulations and compliance requirements for money transfer businesses in your country and any countries you plan to operate. This includes regulations related to anti-money laundering (AML) and Know Your Customer (KYC) requirements.

For example, to start a remittance business in the US and offer your solution to all US residents, you will be required to obtain a money transfer license in all 50 US states. Once you have obtained your license, the next step is to secure a bank account for depositing funds. Additionally, you will need to partner with a payment processing provider that enables end users to fund their accounts using ACH or cards.

Technology and infrastructure

You will need to invest in the right technology and infrastructure to ensure smooth and secure transactions. This includes developing a user-friendly app or website, integrating payment gateways and security measures, and building partnerships with banks and financial institutions.

Fees and pricing

Determine your pricing model and fees carefully, taking into account your costs and the fees charged by competitors. Offering competitive rates and transparent pricing can help you attract and retain customers.

Customer service

Provide customer service and support to build trust and loyalty with your customers. This includes offering multiple channels for customer support and being responsive to customer inquiries and issues.

Ensure a quick response time for customer queries or complaints. This can help mitigate customer frustration and improve overall customer experience. As a result, 24/7 customer support to address urgent queries or issues. This can be achieved through automated chatbots or by outsourcing support to a third-party service provider.

How does the payment business benefit from remittance?

Remittance services are important for payment businesses for several reasons:

Diversification of revenue streams

By offering remittance services, payment businesses can diversify their revenue streams and reduce their reliance on traditional payment processing services. This can help to increase their overall profitability and reduce their exposure to market fluctuations.

Increased customer base

Remittance services attract a diverse range of customers, including migrant workers, expatriates, and individuals who need to send money to family members or friends in other countries. By offering remittance services, payment businesses can tap into a new customer base and expand their reach into new markets.

Cross-border payments

Remittance services allow payment businesses to offer cross-border payment solutions to their customers. This can help to facilitate global trade and commerce, which is becoming increasingly important in today’s globalized economy.

High transaction volumes

Remittance services typically involve high transaction volumes, which can generate significant revenue for payment businesses. This can help to offset the costs of offering these services and provide a stable source of income over time.

Customer loyalty

By offering remittance services, payment businesses can build customer loyalty and trust. This can lead to repeat business and positive word-of-mouth referrals, which can help to grow their customer base over time.

In summary, remittance services are important for payment businesses because they offer a new source of revenue, a diverse customer base, cross-border payment solutions, and high transaction volumes.

Wrapping up

The remittance market is significant and growing, with digital cross-border remittances expected to increase over the next few years. Before starting a remittance or money transfer business, it’s essential to understand the regulations and compliance requirements, choose the right technology and infrastructure, determine pricing models and fees, and provide excellent customer service. FintechPolicies.com can help you speed up the development of the remittance application business model.

How To Start A Money Transfer Business: Everything You Need To Know

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Establishing a money transfer business may be quite challenging due to numerous regulations and requirements. That is why it demands meticulous preparation, compliance with regulatory standards, and strategic collaborations. In this guide, you will find out about the fundamentals of money remittance and strategies on how to start a money transfer business.

Overview Of International Money Transfer Industry

Starting and expanding a money transfer business presents a highly profitable opportunity. A substantial amount of money is transferred globally daily, almost $4.8 trillion. Mobile device expansion in recent years has accelerated the global adoption of digital technology for international payments and remittance services. Since digital remittance services offer improved privacy and security along with time and cost savings, consumers are increasingly shifting toward them.

Is the money transfer business profitable? Well, it can be highly profitable, especially considering the substantial growth and transaction volumes observed in the international money transmission sector. With $530 billion in yearly transfers, this sector has expanded significantly since 2000, with a CAGR of 10.4%. Therefore, money transfer services are advantageous to businesses and customers alike, especially considering the significant amounts associated with international financial operations.

Remittance services offer enterprises revenue diversification, an expanded client base, and the ability to provide cross-border payment solutions. With high transaction volumes and opportunities to foster customer loyalty, remittance services become essential to payment operations, offering stable income sources and growth opportunities.

What Is A Money Transfer Business?

This enterprise enables the transmission of funds between individuals or entities through various channels, such as banks, web pages or conventional methods. The purpose of this financial transaction may be sending money to relatives or conducting business transactions across different geographical locations.

What Is A Money Remittance Business And How It Works?

The international money transfer business involves interacting with several participants, each performing different duties. Here is the list of primary players involved in the money exchange system:

  • Sender/Remitter: Initiates transfer of funds.
  • Beneficiary: Acquires money from remitter.
  • Sender’s Bank: Helps to transfer funds.
  • Beneficiary’s Bank: Receives the transferred funds.
  • Money Transfer Operators: Accredited entities facilitating money transfers.
  • Payment Processor: Make it possible for MTOs to carry out transactions via various payment options.
  • Payment Network: Arranges for the settlement of transfers via various networks.
  • Transmitter Platform: Special software like Money Transfer App that handles transfers.
  • KYC: Tool utilized for authentication and verification of IDs.

 

Forms Of Money Transfers

Suppose you are willing to learn how to become a money transfer agent. In that case, you will need to familiarize yourself with various accessible methods for transmitting funds. Below, you will learn about the most common forms of transfers and their characteristics.

Bank Transfer

This process is managed through online banking platforms or mobile apps. Several solutions are accessible in the UK, including CHAPS or Bacs, while SEPA payments are commonly utilized in the European Economic Area.

Wire Transfer

This option is an optimal solution for international money transfers, which involve the seamless movement of funds between two separate bank accounts, typically across different countries or regions. By serving as an intermediary, the bank speeds up the transfer procedure and guarantees a safe and effective money transfer between the sender and the recipient.

In-Person Transfer

Specialized money transmission services, such as Western Union, facilitate this method. It offers a convenient option for individuals who prefer face-to-face transactions and enables recipients who may not have bank accounts to receive funds in cash at adjacent agent locations. 

Types Of Remittance Or Money Transfer Businesses

Several types of money remittance businesses exist, each designed to accommodate different demands and preferences of individuals and companies. Here is a brief outline of them.

Traditional Brick-and-Mortar Services

These services allow users to send money in person through physical places, such as banks or specialized remittance hubs.

Online Money Transfer Platforms

These platforms allow users to manage transactions easily through websites or mobile apps.

Mobile Money Services

These services use mobile phone networks to streamline mobile money transfers, especially in areas where conventional financial services are inaccessible.

Peer-to-Peer (P2P) Payment Platforms

They allow money transactions directly between users by means of bank accounts or online wallets. Peer-to-peer transfers eliminate the need for intermediaries, lowering transaction expenses and enhancing operational efficiency.

Cryptocurrency-Based Remittance Services

These services leverage blockchain technology to ensure secure and decentralized transactions, providing an alternative to conventional methods.

How To Start A Money Transfer Business Step-By-Step

Suppose you are wondering how to open a money transfer business successfully. In that case, you will discover detailed instructions below, which will guide you through every crucial stage and equip you with essential information.

Conduct Thorough Market Research

Before setting up a mobile money transfer business, you must perform an extensive analysis of the current market to define your unique selling proposition (USP) and identify your target audience. Your USP distinguishes your offering from others, and understanding the specific demographic you intend to serve will guide your business strategy.

Establish A Suitable Business Structure

This step entails determining the legal framework for your venture, whether it is a sole proprietorship, collaboration, or corporation. Each structure comes with its own set of pros and cons, and the most suitable option depends on your situation and objectives. For instance, a sole proprietorship might be ideal if you are a sole proprietor seeking simplicity, whereas a corporation could offer better asset protection for multiple owners.

Obtain Required Licenses And Permits

Gather all the papers needed for regulatory compliance, comprising financial invoices, proofs of identity, papers proving business registration, and any other paperwork requested by the regulatory authorities in the countries where you wish to run your business. Acquire the regulatory licenses or registrations required to run your remittance business to navigate the regulatory framework successfully. Adherence to national and international regulations is crucial for maintaining your business’s legality and reputation.

If you are wondering how to start a money transfer business in the USA, you will need to comply with federal, state, and local regulations. This includes filing a FinCEN Form 107 with the US Treasury Department’s Financial Crimes Enforcement Network for fraud prevention. As far as the UK is concerned, the remittance business requires obtaining a Payment Institution license. Businesses can opt for either an SPI or API license based on revenue. SPI licenses cost £500, while API licenses range from £1500 to £5000. Applicants must register on the FCA Connect Platform and provide FRNs and IRNs for processing.

Implement Robust Money Transfer Software

To comply with money transfer business requirements, establish a robust money transfer software infrastructure that includes stringent Know-your-customer (KYC) and Anti-money laundering (AML) protocols. Put compliance first to guarantee user confidence and transaction security. Consider employing compliance-as-a-service for remote and outsourced compliance services.

Additionally, investments in the appropriate infrastructure and technology are crucial to guarantee seamless and safe transactions. This entails creating user-friendly software and websites, incorporating safe payment mechanisms, and forming alliances with banks and other financial organizations.

Establish A Business Bank Account

The next stage in launching a money remittance business is setting up correspondent bank accounts to facilitate easy cash transfers. Choose trustworthy banking or financial service providers aligned with your business goals. Building a solid financial connection and promoting effective transaction flow require transparent interaction.

Determine Competitive Pricing And Fee Structure

Carefully establish your pricing strategy and fees, considering both your expenses and the rates charged by competitors. Providing competitive and transparent pricing models can enhance your ability to attract and retain customers.

Implement Effective Marketing Strategies

This step is crucial for promoting your money transfer business and attracting clients. Utilize various advertising channels, including social media, to appeal to your target audience.

Maintain Regulatory Compliance And Vigilance

Continuously monitor and ensure compliance with applicable laws, financial regulations, and regulatory requirements to uphold the legality and reputation of your business. It involves staying updated on any changes or revisions to regulatory requirements. This may entail regularly reviewing and revising internal policies and procedures to ensure they align with current standards. Also, it is crucial to stay vigilant against fraud and illicit activities by implementing robust compliance measures and monitoring systems.

In addition, give your customers outstanding assistance and treatment to gain their trust and loyalty. This entails providing several options for customer communication and swiftly reacting to problems and inquiries. To reduce customer annoyance and raise overall satisfaction, strive for quick response times. When handling critical issues, consider establishing around-the-clock customer care, using automated chatbots, or outsourcing to outside service providers as needed.

Future Trends And Opportunities In The Remittance Business Market

Innovative technology constantly impacts the remittance business industry, and digital platforms continue to rise in popularity. These platforms offer secure, quick, and effective money transfer services using advanced technology like blockchain and artificial intelligence. Because of this development, traditional operators need to transition to remain viable in the digital market.

The increased emphasis on financial inclusion is a recent development in the money transfer industry. Many people without bank accounts or limited banking access depend on remittance services for financial needs. Market players are examining innovations like mobile money and agent networks to assist them. Businesses have many opportunities to take advantage of this trend to expand into new regions and help achieve the global goal of improving financial inclusion.

The money remittance business sector is likely to face more compliance requirements in the future. Governments and oversight organizations are stepping up their efforts to eliminate money laundering, funding terrorism, and other illegal acts associated with international money transfers. As a result, companies operating in this industry need to maintain a close eye on the regulatory landscape and implement robust compliance protocols to mitigate risks and preserve their image.

Final Thoughts

In summary, the remittance sector has expanded recently. Technology integration into remittance platforms is becoming a top priority for banks worldwide to facilitate more swift and smooth payments. If you are wondering how to become a money transfer agent, remember that before embarking on this business, you will need to grasp the regulations and compliance standards, select suitable technology and infrastructure, establish pricing strategies, and prioritize customer service.

How to start a money remittance or money transfer business

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Starting a remittance or money transfer business is a venture that requires careful planning, adherence to regulatory frameworks, and strategic partnerships. In this article, we explore the concepts of money remittance and transfer, examining various types of remittance services. Additionally, we offer a guide outlining the step-by-step process to establish a successful remittance or money transfer business.

What is money remittance?

Money remittance involves sending money from one location to another, typically across borders, to meet financial needs or fulfil payment obligations. This financial service is vital for individuals who must send funds to family members, friends, or others in different regions or countries. Money remittance can occur through various channels, such as banks, dedicated remittance providers, online platforms, or mobile applications.

The sender initiates the transfer by providing necessary details about the recipient and selecting the preferred transfer method. The recipient can access the transferred funds through local financial institutions or designated payout locations. Money remittance is crucial in supporting global financial connectivity and addressing the diverse financial requirements of individuals and businesses worldwide.

These services contribute to financial inclusion by providing accessible and efficient channels for individuals to send and receive money globally, overcoming geographical barriers and enhancing overall economic well-being.

What is a money transfer?

A money transfer refers to moving funds from one individual or entity to another. This financial transaction can occur through various channels, including banks, online platforms, money transfer services, or traditional methods. Money transfers are commonly utilized for diverse purposes, such as sending funds to family members, making payments, conducting business transactions, or meeting financial needs across borders.

The process typically begins with a sender initiating the transfer, specifying the recipient, and selecting a preferred transfer method, such as wire transfers, online transfers, mobile payments, or remittance services. The term ‘money transfer’ also encompasses credit/debit card transfers, where funds move from one card to another credit/debit card, a bank account, or a merchant.

How remittance works

Remittance is a financial process that enables the transfer of money from one location to another. The sender initiates the transaction through a remittance service provider, a traditional brick-and-mortar agency, an online platform, or a mobile application. The sender provides necessary details, such as the recipient’s name, location, and transfer amount.

The remittance service processes the transaction, converting funds into the desired currency if necessary and transfers the money to the recipient. The recipient can then collect the funds through various channels, including cash pickup points, bank accounts, mobile wallets, or even opt for home delivery, depending on the chosen service and the options provided by the remittance provider.

The entire process is facilitated by a network of financial institutions and payment service providers to ensure a secure and efficient transfer of funds across borders.

Forms of money transfers

What are the types of money transfers?

1. Bank Transfer:

Easily facilitated through online banking or apps, bank transfers are common. In the UK, Bacs, CHAPS, or Faster Payments, and in the EEA, SEPA payments support both one-off and regular transfers.

2. Wire Transfer:

Ideal for international transfers, wire transfers move money between two unlinked bank accounts, with the bank serving as an intermediary.

3. In-Person Transfer:

Specialized money transfer services like Western Union facilitate in-person transactions. This method accommodates recipients without bank accounts, allowing them to collect funds in cash at a nearby agent location.

How can money remittance be executed?

Money remittance can be executed through various methods, providing consumers with diverse options to suit their preferences:

1. Through a bank or financial institution:

Funds can be transferred from the sender’s bank account to another using online banking, digital services, a banking app, or visiting a branch. Essential details include the recipient’s account name, sort code, and account number. Customers may need the recipient’s IBAN or SWIFT/BIC code for international transfers.

2. Through a Specialized Money Transfer Company:

Companies like Western Union offer multiple methods for transferring money within many countries. Customers can choose between online transfers or visiting an agent’s location for an in-person transaction. Depending on the transfer type, customers will need the recipient’s details and possibly a government-issued ID for verification, ensuring a swift and secure delivery.

3. Through a Payment App:

Remittance can be provided through a payment app for convenient on-the-go transfers. Customers can seamlessly send money directly to a loved one’s bank account using their debit or credit card. Alternatively, funds can be transferred for pickup at a local or international location.

4. To the Receiver’s Phone:

Money can be sent directly to their phone to provide the recipient with immediate access to funds. Depending on their location and mobile operator, funds can be directed to the recipient’s mobile wallet, allowing for instant spending.

Types of money transfer or remittance businesses

Money transfer or remittance businesses encompass various types, each tailored to meet individuals’ and businesses’ specific needs and preferences. These include:

1. Traditional Brick-and-Mortar Services:

Operating through physical locations such as banks or dedicated remittance centres, these services allow customers to send money in person.

2. Online Money Transfer Platforms:

These platforms have gained popularity, enabling users to initiate transactions through web-based interfaces or mobile applications, providing convenience and accessibility.

3. Mobile Money Services:

Leveraging mobile phone networks, these services facilitate transfers, particularly in regions with limited access to traditional banking.

4. Peer-to-Peer (P2P) Payment Platforms:

Individuals can send funds directly to each other using digital wallets or bank accounts through these platforms.

5. Cryptocurrency-Based Remittance Services:

Utilizing blockchain technology for secure and decentralized transactions, these services offer an alternative to traditional methods.

The diverse landscape of money transfer businesses reflects the financial services sector’s evolving preferences and technological advancements.

Traditional brick-and-mortar remittance services

Traditional brick-and-mortar remittance services have served as the cornerstone of cross-border financial transactions for an extended period. These physical establishments, commonly situated in local communities, serve as a familiar and accessible channel for individuals to send and receive money. Customers typically visit these locations to initiate transactions, relying on face-to-face interactions with service agents. Renowned for their reliability and trustworthiness, these establishments offer a comforting in-person experience, especially for those less familiar with digital transactions. Although lacking the convenience of online platforms, brick-and-mortar remittance services remain indispensable in catering to populations with limited access to technology or those who prefer the tangible and personal nature of in-person transactions.

Online money remittance businesses

Online money remittance businesses have revolutionized the financial landscape, offering individuals a convenient and efficient way to send money globally. These digital platforms utilise web-based interfaces or mobile applications, enabling users to initiate transactions from the comfort of their homes or on the go. With secure and streamlined processes, online remittance services provide speed and accessibility, diminishing the reliance on traditional brick-and-mortar methods. Users can fund transfers using various payment options, including bank accounts, credit cards, or digital wallets. Furthermore, real-time tracking features empower senders and recipients to monitor the status of their transactions. The growth of online money remittance businesses underscores the industry’s commitment to leveraging technology for enhanced financial inclusion and seamless cross-border transactions.

The International Money Transfer Industry Overview

The international money transfer industry is pivotal in facilitating global financial transactions and fostering connections among individuals, businesses, and economies across borders. Technological advancements have significantly reduced traditional barriers, enabling faster, more accessible, cost-effective remittance services.

As of 2020, the global remittance market was valued at $701.93 billion, and it is expected to reach $1,227.22 billion by 2030, projecting a Compound Annual Growth Rate (CAGR) of 5.7% from 2021 to 2030. Major players in the remittance market include Bank of America, Citigroup, JPMorgan Chase & Co., MoneyGram International, RIA Financial Services, Wise, UAE Exchange, Wells Fargo, Western Union, and XOOM. These players have implemented diverse strategies to strengthen their market presence, such as expanding product portfolios, engaging in mergers and acquisitions, forming agreements, extending geographical reach, and fostering collaborations.

Money remittance in Africa

Money remittance in Africa is experiencing significant growth, marked by the emergence of numerous companies eager to provide remittance services in this vibrant and dynamic region. Remittances play a crucial role in Africa, with migrants living and working abroad frequently sending money back to support their loved ones.

According to the latest World Bank Migration and Development report, Sub-Saharan Africa received an estimated influx of US$49 billion in remittances in 2021. With a substantial diaspora population, Nigeria leads in remittance inflows, followed by Ghana, Kenya, and Senegal. Conversely, South Africa is the largest sender of remittances to other African nations.

Companies aiming to start their money remittance or money transfer business are seeking comprehensive solutions that encompass core banking software, licensing, or special MSB registration to facilitate these services. Contact FintechPolicies to discover what we can provide for companies looking to offer remittance services to Africa.

What you need to start a digital money remittance or money transfer business

1. Define Your USP and Target Audience:

Defining your unique selling proposition (USP) and identifying your target audience are crucial initial steps before starting a money remittance business. Your USP distinguishes your service from others, and understanding the specific demographic you aim to serve will shape your business strategy.

2. Prepare All Required Documents and obtain Special Registration or License

Prepare all necessary legal and regulatory compliance documents, including business registration documents, identification proofs, financial statements, and any other paperwork required by regulatory authorities in the countries where you intend to operate.

Navigate the regulatory landscape by obtaining the necessary registrations or licenses to operate your remittance business. Compliance with local and international regulations is crucial to establishing the legitimacy and credibility of your operation. Alternatively, you can enlist the assistance of companies to facilitate the licensing process. Contact us to learn how we can support your remittance business plan further.

3. Prepare All Processes, Including Compliance:

Develop a robust framework that includes stringent anti-money laundering (AML) and Know Your Customer (KYC) procedures in alignment with regulatory guidelines. Establishing a solid foundation in compliance is essential for ensuring the security of transactions and building trust among users. Consider leveraging compliance-as-a-service, which provides remote and outsourced compliance services by professionals according to regulatory requirements.

4. Open Correspondent Bank Accounts:

The next step to starting the money remittance business is to ensure the smooth movement of funds by establishing correspondent bank accounts. Select reputable banking or financial services partners that align with your business goals. Transparent communication is key to building a strong financial relationship and ensuring the efficient flow of transactions.

5. Set Your IT System or Core Banking Software:

Invest in a secure, efficient IT system or core banking software. This system will be the backbone of your remittance operations, covering transaction processing, customer management, and data security. Additionally, consider implementing white-label mobile banking or web banking applications to deliver an exceptional experience to your customers.

6. Make Partnerships with Financial Institutions:

Forge strategic partnerships with financial institutions to expand your remittance network. Collaborate with banks, credit unions, remittance providers, or other financial entities to facilitate smoother transactions and extend the reach of your services.

7. Make Required Integrations with Your Main Partners:

Integrate your core banking system with key partners, including banks, payment gateways, or other financial service providers. Seamless integrations ensure interoperability and create a streamlined flow of funds between your remittance company and partnering entities.

Conclusion:

In conclusion, starting a money remittance or money transfer business demands a comprehensive approach that integrates strategic planning, regulatory compliance, and a robust technological infrastructure. By defining your unique value proposition, securing the necessary licenses, prioritizing compliance, and establishing crucial partnerships and integrations, you can position your remittance business for success. This guide serves as a roadmap for entrepreneurs seeking to contribute to the global financial ecosystem while addressing the needs of their target audience.

FintechPolicies at stake:

How can FintechPolicies assist you in launching a money remittance or money transfer business?

Explainer on the Electronic Fund Transfer Act & Regulation E for Fintechs

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If you’re launching a card program, you may have heard terms like the EFTA or Reg E being thrown around in legal or compliance discussions.

The Electronic Fund Transfer Act (EFTA) is important to fintechs because it establishes the rights, liabilities, and responsibilities for parties involved in an electronic transaction (like a debit card transaction). It’s what allows consumers to challenge transaction errors (disputes) or get their money back when an investigation reveals a legitimate error or wrongdoing (chargeback).

It also does other import things like setting caps on interchange debit card fees, giving merchants choices on how to route card transactions, and requiring you to provide certain notices and disclosures to consumers.

In this blog, we break down the EFTA and Regulation E.

Founder TL;DR

If you’re launching a debit card product, here’s what you need to know:

  • The EFTA is a federal law that protects consumers when they transfer funds electronically.
  • Every product has its own considerations, so talk to a lawyer!
  • The EFTA establishes certain requirements, like:
  • You need to disclose certain terms.
  • You may be required to provide monthly statements.
  • You may need to give advance notice before you change important terms.
  • You need to address claims there were unauthorized transactions, which may include having to cover the costs of fraudulent transactions.
  • Lithic’s legal team knows many fintech lawyers and we’re happy to point customers to recommendations.

What is the EFTA?

Debit cards and other electronic payment methods are primarily regulated by the EFTA. The law sets a high-level framework, but Regulation E (or Reg E) fills in a lot of the details, so you may hear “EFTA” and “Reg E” used interchangeably.

The EFTA was originally passed to give consumers protections from then-new ATM and electronic payment technologies. But as new tech developed, it evolved to cover much more.

While the requirements may seem like a hurdle, many fintech entrepreneurs can navigate them. So let’s walk through some of the main considerations.

Who does the EFTA apply to?

The EFTA applies to certain financial institutions, including banks. When a fintech that offers cards works with a bank (as is typical in card issuing), the bank delegates much of its EFTA obligations to the fintech. This post focuses on how the EFTA applies to fintech companies that partner with banks to offer cards, though the law applies to many other types of businesses.

What does the EFTA cover?

The EFTA applies to “electronic fund transfer” services, which generally means any transfers by electronic means that debit or credit a consumer’s bank account. However, it does not apply to electronic fund transfers for businesses, just consumers.

Practically, the EFTA applies to transfers via debit cards, prepaid cards, ACHs, ATMs, online payments, point-of-sale (POS) transfers, and other electronic payment methods. While the EFTA covers prepaid and gift cards, those types of cards have special rules, which we’ll discuss in later posts. The EFTA also sets special rules for remittances.

In contrast, credit cards are primarily regulated by a separate law, the Truth in Lending Act.

Disclosures

If the EFTA applies to a product offering, you may need to disclose certain terms, like fees, limits on transfer frequency, liability limits, contact information, and others.

While card providers need to tailor agreements and disclosures to their situation, Lithic is happy to provide basic templates.

Statements and notices

The EFTA requires that companies offering cards and certain other financial institutions provide monthly statements outlining transactions, applied fees, and other account events from the relevant month. You also need to give advance notice if you’re changing important terms like fees or allowed frequency of transfers.

Consumer protections

The EFTA sets limits on how much consumers can be liable for unauthorized transactions (like fraud or card theft):

  • Up to $50 if they notify their card issuing company within 2 business days after learning of the loss or theft of an access device.
  • Up to $500 if they notify their card issuing company between 3 days after learning of the loss or theft of an access device and 60 days after the financial institution sends the monthly statement that includes the unauthorized transaction.
  • After that, they can be fully liable for the unauthorized transactions that happen until they notify their card company that the transfer was unauthorized.

Also, the EFTA requires that companies investigate billing disputes within 10 days of being notified, and must report their findings and correct any errors. The 10-day timeline may be extended if the consumer is provided with provisional credit for any disputed amount.

Network liability policies

While the EFTA gives consumers some liability protections, the card networks Visa and Mastercard have their own “zero liability” policies for unauthorized transactions on certain cards. Those policies offer more protection than the EFTA; cardholders aren’t liable for any amount if they use reasonable care to protect their card and promptly report any loss or theft.

So if there’s a fraudulent charge, in practice this means that the card issuing company (or bank) eats the cost.

Additional resources

For more information, you can check out:

Overview of compliance fundamentals for fintechs in the US

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Introduction

This guide is meant to provide a basic overview of compliance for fintechs in the US and should not be treated as legal advice. In addition, compliance and regulations are constantly evolving, so this guide does not provide an exhaustive overview. Please consult a lawyer and compliance expert when evaluating and creating a compliance program for your fintech.

Startups that offer financial services—such as business expense cards, monetary accounts, and loan access—are governed by a long and complex set of regulatory requirements essential to protect the startup’s business, customers, and the US financial system.

Compliance touches every aspect of a financial product, from marketing to onboarding to account closures. For example, you need to communicate all terms about a financial product (such as fees, interest, payment requirements, and other details) clearly and upfront in your marketing materials. When you are onboarding users, you must properly conduct Know Your Customer (KYC) checks and sanctions screenings, and comply with all fair lending laws if you are extending credit. And if users are delinquent on their repayment of a credit account, you may be required to comply with certain debt collection requirements that govern the frequency and times you may communicate collections reminders. And that covers just a fraction of the compliance regulations you may be required to follow.

The below diagram is for demonstrative purposes only and should not be considered an exhaustive list of fintech compliance requirements.

Common regulations 900w R3

Compliance with various regulations is essential to building a fintech: Fail to get it right, and—at best—you’ll be faced with large fines that can hurt your business. At worst, your business can be shut down.

However, ensuring compliance isn’t just about avoiding fees or legal repercussions. Investing in compliance means that your startup can create safer, more durable products for users while making money movement and financing products safe, which provides a competitive advantage for your business in the long term. In the end, you’re acting in the user’s best interest, helping them get access to a secure, stable, and beneficial product.

This guide provides an overview of how financial services in the US are regulated and what this means for your business. You’ll learn compliance fundamentals, get an overview of the most common compliance regulations, and understand your options for managing compliance for your business.

Compliance guidance and best practices

A common way to offer financial products in the US is by partnering with a bank to power your product. Each bank partner is regulated by a primary regulator (alongside a host of other regulatory bodies) that examines the bank periodically for compliance. For example, the bank may be assessed on whether it is compliant with state and federal statutes that regulate unfair and deceptive acts and practices (UDAP), which require transparent, up-front communication to customers (among other things).

Any fintech company that works with a bank is indirectly accountable to these same regulators as a result of their banking partnership. Your startup will seldom directly interact with the primary bank regulator; instead, the bank will oversee your compliance with banking-related laws and regulations. For example, using the same scenario as above, you would also be assessed by the bank on whether you remain compliant with UDAP through periodic testing engagements and reporting requirements.

Compliance fundamentals 2

In addition, federal regulators who oversee banks (and fintechs) but who do not function as a primary banking regulator include (but are not limited to):

  • The Federal Trade Commission (FTC), enforces laws against deceptive and unfair trade practices as well as unjust methods of competition. The FTC also enforces federal consumer protection laws that prevent fraud, deception, and unfair business practices. For example, the FTC may investigate telemarketing scams, sweepstakes scams, or “bogus health products.”
  • The Consumer Financial Protection Bureau (CFPB), is tasked with ensuring consumers are treated fairly by entities offering consumer financial products. It provides consumer protection across all consumer financial products, whether they’re offered by a bank, a fintech, or any other entity.

Overview of compliance regulations in the US

The specific laws and regulations you must follow greatly depend on your business. For example, certain rules only apply to consumer financial services or businesses extending credit. However, in general, there are a few rules that apply to all businesses:

Laws that apply to all financial services businesses

This section is for demonstrative purposes only and should not be considered an exhaustive list of fintech compliance requirements.

Know Your Customer (KYC) and Know Your Business (KYB) obligations

KYC or KYB is the mandatory process of verifying customer or business identities when they sign up for an account and then continually monitoring transaction patterns to gauge risk. Users must provide proof of their identity and address during your onboarding process to ensure that they are who they say they are.

What this means: Complying with KYC or KYB obligations helps ensure that the money moving through your system is safe and is not involved in money laundering, terrorism financing, or other fraudulent schemes.

Anti-money laundering (AML) rules

AML rules are a set of laws and regulations designed to prevent criminals from engaging in financial crimes and illegal activity—namely, disguising illegal funds as legitimate income. AML rules require banks and other financial service providers to record and report money movement to screen for money laundering and terrorist financing.

What this means: Helps to keep the financial system safe and secure by preventing money laundering and terrorist financing.

The Office of Foreign Assets Control (OFAC) sanctions

OFAC enforces a series of economic and trade sanctions against countries, legal entities such as businesses, and groups of individuals such as terrorists and narcotics traffickers.

What this means: Helps accomplish foreign policy and national security goals by preventing terrorism financing, money laundering, or other fraudulent schemes.

Unfair or Deceptive Acts or Practices (UDAP) and Unfair, Deceptive, and Abusive Acts or Practices (UDAAP)

UDAP and UDAAP laws prevent companies from engaging in any unfair or deceptive (and, in the case of UDAAP laws, abusive) acts or practices, such as failing to disclose fees or misrepresenting a product or service. UDAP is invoked to protect all persons and entities engaged in commerce, while UDAAP laws provide extra protection to consumers using financial products.

UDAP and UDAAP provide similar customer protections, but they differ slightly. UDAAP contains an additional, intentionally vague prohibition against “abusive” acts that is used to capture a wider variety of acts that could result in consumer harm.

What this means: Ensures that you are creating a high-quality and safe user experience by making all your communication transparent and easy to understand.

Red Flag Rules

Red Flag Rules require businesses to adopt and implement a written identity fraud program to detect the warning signs—or red flags—of identity fraud. This program helps companies more easily identify suspicious patterns and trends in their business, take appropriate steps to prevent identity theft and mitigate its damage.

What this means: Helps businesses detect fraud attempts before actual crimes are committed.

Laws that only apply to businesses that extend, support, or collect credit

Many regulations apply to businesses extending, supporting, or collecting credit. For example, you may be subject to the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the Equal Credit Opportunity Act (ECOA), and others. This guide doesn’t provide an exhaustive list of all lending laws. Instead, we’ll cover two of the most common: fair lending laws and the Truth in Lending Act.

Fair lending laws

Fair lending laws such as ECOA prohibit lenders from considering race, colour, national origin, religion, sex, familial status, or disability when applying for credit. These laws and regulations apply to any extension of credit, including credit for small businesses, corporations, and partnerships. There are also technical communication requirements within federal fair lending laws that require ​creditors to explain why an adverse action was taken against a borrower or an applicant for credit.

What this means: Prevents discrimination and ensures that people of protected classes are offered fair and equal access to credit; provides transparency to the credit underwriting process.

Truth in Lending Act (TILA)

TILA protects consumers against unfair credit billing and credit card practices. It requires lenders to provide loan cost information upfront so consumers can compare different types of loans. TILA primarily applies to consumer loans, but important fraud and dispute procedures also apply to business credit. For example, in certain situations, an employee cardholder can’t be held liable for more than $50 for the unauthorized use of a stolen credit card.

What this means: Protects borrowers from unethical lending practices and improves customer experience by ensuring that users have a clear understanding of credit costs and terms; protects certain borrowers from unauthorized use of stolen credit cards.

How to handle compliance for your business

Manage compliance yourself

Common regulations 900w R3

You or your in-house compliance team may be able to work directly with a bank to manage compliance, but it is often expensive and time-consuming. For example, this involves building a full-time compliance team from scratch, hiring lawyers, compliance experts, finance managers, and others.

To approve your in-house compliance management program, banks expect you to apply the same level of rigour that they apply to their own programs. To satisfy bank expectations, you will need to leverage your team of in-house and external legal and compliance professionals to implement and operate a resource-intensive set of program components on an ongoing basis. These components include your foundational compliance policies, risk assessment methodologies and matrices, independent testing plans and workflows, compliance training content and assessments, various compliance procedures and controls, ongoing “state of compliance” reporting, and compliance issue program management. They would evaluate you and your team for subject matter expertise, reporting capabilities, program policies, issues and risk management, internal training curriculum, and more. We recommend that you speak with a compliance professional and a lawyer to fully understand what you need to do to make this program viable.

Work with third-party advisors

Image4 ThirdParty

In addition to managing compliance by yourself, you could hire an external compliance consultant to design your policies, review materials, and test your user flows to make sure you are compliant with applicable laws.

However, not only are external consultants very expensive, but they are also compliance experts—not product experts. While they have a deep understanding of regulations, they may not be able to effectively marry that understanding with your specific product.

Offload elements of compliance to a banking-as-a-service (BaaS) solution

The below diagram represents the elements that Stripe, as the BaaS provider, oversees and/or manages, and may not apply to all BaaS providers.

Image5 Baas Oversees

A successful fintech is made up of both product excellence and compliance expertise. While third-party consultants can only advise on half of that equation (the compliance expertise), a BaaS provider can do both. A BaaS solution offers both the full suite of embedded finance needs in addition to the infrastructure for financial partnerships and compliance. This allows you to use one system for building your fintech offering, growing your feature set, and managing a compliance system, reducing the complexity required to go to market and saving internal costs.

The best BaaS offerings assign you a compliance program manager that partners directly with banks on a range of important topics including compliance, risk, reporting, marketing, disputes, and contracts—so you don’t have to.

Sometimes, your BaaS provider may build solutions directly within the product that help you adhere to the bank’s compliance requirements. For example, the best providers offer prebuilt funds flows and user onboarding elements that match the bank’s specific compliance needs and also have an in-house testing program that tests and audits your user flows on behalf of the bank.

In other cases, the compliance program manager works directly with you to outline the requirements you must adhere to, reviews and approves your entire user experience and periodically audits your compliance controls.

Even when working with a BaaS provider, your business will still be responsible for implementing certain compliance responsibilities. For example, your business will always need to ensure that all your customer-facing assets and user interfaces go through the BaaS provider’s approval process and report any user complaints to the BaaS provider (e.g., by enabling your customer service team to tag complaints so that the BaaS provider can investigate whether any are indicative of a broader compliance issue and send reports to your BaaS provider each month).

How to evaluate a BaaS provider for compliance

The best BaaS providers don’t just offer APIs to help you integrate financial services into your product—they also offer compliance as part of their product. To that end, as you’re looking for a BaaS provider, make sure to evaluate them specifically on how they help you manage compliance. For example, ask for copies of their compliance policies and sample requirements that they would ask you to implement, and compare those to other providers.

While there is no one-size-fits-all approach when evaluating a BaaS provider, we recommend asking about the following criteria during the discovery phase:

  • Relationships with multiple banking partners to ensure reliable solutions with redundancy measures.
  • Demonstrated ability to enforce compliance requirements. Ask the BaaS provider for a recent example of how they’ve modified their program to adapt to evolving compliance requirements.
  • Level of detail needed in use case supportability and onboarding. A BaaS provider that asks for more details when onboarding fintechs suggests that they have a robust compliance program.
  • The number of full-time employees working on compliance and the number of years/experience working in compliance.
  • Demonstrated ability to support multiple types of companies across industries and business models.
  • Demonstrated ability to support businesses in getting started and operating at scale (since compliance and support needs vary by company size).