In 2021, the FinTech market was focused on growth at all costs, but with the recent slowdown in the economy since 2022, one of the biggest priorities for companies in the financial services industry has been earning and building customers' trust.?
One of the main ways of achieving this is through regulatory compliance, to assure security and protection for customers.?
Therefore, we predict hiring an AML Officer (as well as similar positions like MLRO and Compliance Officer) to become a huge priority for firms in the industry. Their role is to manage and execute on a firm's AML compliance program. An example of their duties (at least for the UK), can be found in the FCA handbook: https://www.handbook.fca.org.uk/handbook/ML/7/1.html?date=2005-04-02
But when is the right time to hire one?
Here are some key points you have to take into perspective:
- Regulatory Requirements: Your first port of call should be to check with your jurisdiction when it is necessary to hire an AML Officer. Certain jurisdictions and industries may mandate the appointment of an AML Officer based on company size or transaction volume.
- Operational Complexity: Even if there is no regulatory requirement above, you should consider hiring an AML Officer if you have operations in regions with strict AML norms. If you deal with high-risk clients, you should also consider hiring an AML Officer early on to navigate and mitigate unique risks for the future. Therefore, in a country with strict AML norms like the UK, hiring an AML Officer could be necessary even as early as Seed stage.
- Reputation Management: This is another factor to take into consideration. A company's reputation can quickly be undermined by an AML transgression. Hiring an AML officer early on not only prevents potential regulatory pitfalls but also sends a strong message about the company’s commitment to global financial integrity, increasing long-term customer trust.
- Technological Advancements: Modern AML compliance platforms powered by machine learning automate many tasks involved in AML compliance. These platforms handle vast amounts of data in real-time, allowing for more comprehensive transaction monitoring, risk assessment, and regulatory reporting. Many FinTechs understand the importance of hiring a Data team early, but hiring an AML Officer at the same time is important in shaping the strategy of the Data team. Therefore, we would also recommend hiring an AML Officer at the same time as your Head of Data.
In conclusion, determining the optimal time to hire an AML Officer involves considering regulatory obligations, operational intricacies, preserving reputation, and data/technological advancements. This strategic appointment not only ensures compliance, but is also important commercially when it comes to building trust with customers.
If you're still unsure of when exactly to hire an AML Officer, please get in touch, and we can point you in the right direction!
