Thanks to technological advancements, sending money overseas is now straightforward. Financial services are among the businesses with the highest levels of regulation, which is not surprising. Any business that manages and transfers money, particularly over international borders, has to be strictly regulated and continuously watched over. In addition, the financial crisis of 2007–2008 and the increase in cybercrime have made the regulatory environment significantly tighter.

Handling a changing environment

Despite the fact that banks and other traditional financial institutions have been in the money transfer business for a long time and have established compliance standards, the remittance environment is now much more diversified and competitive. Money transfer businesses are now providing a wide range of new, quick, and convenient services to more individuals worldwide as a result of the rapid growth of digital technology.

How is the world market for money transfer changing?

Sending money overseas has always been a challenging and costly undertaking, involving countless networks of middlemen, tedious paperwork, and unstated fees. Thank goodness, industry developments over the past few years have allowed consumers and small-to medium-sized enterprises to benefit from value-added, expedited, and less expensive international money transfer services.

Larger firms, banks, and governments have historically benefited from all of these advantages because of their direct access to the institutional foreign exchange market, which handles $4.8 trillion worth of transactions every day.

Why is compliance the highest priority in the remittance industry?

Every year, the amount of remittances increases, and the sophisticated networks established by today’s international money transfer corporations link more corridors. All organizations are subject to local, state, federal, and international regulations. All remitters, whether banks or money transfer businesses are subject to long-standing compliance and due diligence requirements. For example, all remitters need to be licensed; if they don’t, they’ll be viewed as illicit and clandestine.

Remittance flows and transfer infrastructures are undergoing a completely favorable transition thanks to digital technology and mobile money. It shows that a large number of people now have access to inexpensive and flexible remittance services.

Compliance needs to keep up with the rate of change since new practices and technologies present both possibilities and weaknesses. This is demonstrated by the recently passed Second Payment Services Directive (PSD2), which brings online money transfers and the mobile revolution into line with European payments.

Compliance leads to improved customer service and operational effectiveness. Without regulations, no one would be accountable for detecting and preventing fraudulent transactions or for safely and securely moving money from sender to recipient. Laws such as “know your customer,” “anti-money laundering,” and “anti-terrorist financing” (ATF) now need to be expanded to cover the new realm of digital remittances as transactions become more digital.

Whether a transaction is completed by a bank or an online money transfer service such as Transferra UK, the same compliance standards apply. Technology offers incredibly useful solutions, despite the fact that it has made compliance requirements more difficult and demanding. The technical innovations driving the remittance business are also driving significant advancements in security and visibility. 

Examples of compliance technology that the sector is adopting are automated identification, real-time transaction scanning, data analytics, data enrichment, and artificial intelligence. As transfer paths increase in size, scope, and complexity, a deeper understanding of transaction flows and counterparties is provided by these and other digital innovations.

KYC is an important compliance concern because mobile money is used everywhere and online remitters do not have face-to-face client meetings. Biometrics is one solution; it’s becoming more widely accepted as a reliable and easy way to verify financial services. Biometric methods, including fingerprint IDs saved on phones, help with transaction party authentication and fraud reduction. This is but one example of how technology can create policies and the infrastructure needed to facilitate efficient and rapid money transfers.

Compliance is crucial because of a trend that could obstruct the growth of the remittance sector. “de-risking” is the process by which certain financial organizations consider the advantages and disadvantages of certain operations and then decide not to pursue high-risk endeavors in order to reduce their exposure to risk.

Organize your future payment compliance

Even while payment compliance is already very complex, it gets even more complicated when new technology, fragmented marketplaces, and changing rules are taken into consideration. If payment providers are ready for these obstacles, they can position themselves for success.

Payment service providers that comply with current standards while remaining adaptable to future developments can effectively counteract evolving fraud assaults and provide smooth consumer experiences.

In the future, money transfer service providers will make sure that the latest developments maintain remittance networks compliant and regulated while also utilizing new and emerging technology to further expand their offerings.