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As fintech companies and other businesses that adopt financial services for their operations expand globally, regulatory compliance ceases to be a local requirement and becomes a key vehicle for operating and scaling.
The diversity of global regulations, the high transaction volumes handled by non-financial platforms that demand these services, and constant regulatory oversight are making compliance increasingly complex and, at the same time, decisive for business growth.
The internationalization of businesses and the need to integrate payment systems to support operations in the digital economy have led companies across multiple sectors to prioritize their compliance policies before taking their next steps.
In the context of platforms that integrate payment and remittance systems, compliance encompasses the set of policies, processes, and systems that enable these companies to identify, prevent, and manage regulatory, operational, and financial crime risks, including money laundering and fraud.
Percentage of financial institutions reporting an increase in fraud attempts and losses from these crimes
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In this context, payment and remittance infrastructure enables banks, neobanks, money transfer operators (MTOs), retail platforms, e-commerce players, and the gig economy to manage cross-border transfers, payments, and refunds efficiently and in compliance with regulations.
However, the global expansion of these financial services requires companies across sectors to integrate strict compliance policies in order to operate safely in an environment of increasing risks that may result in financial losses and reputational damage.
A common example is gig economy platforms that must pay workers in multiple countries while complying with KYC (Know Your Customer) and AML (Anti-Money Laundering) requirements, validating beneficiaries, and monitoring unusual payments to avoid sanctions and financial risks.
According to industry-specialized company BioCatch, the cost of managing financial crime goes far beyond fines.
Addressing operational inefficiencies requires specialized teams and complex technological infrastructure, although solutions such as automation are helping companies respond to these challenges at lower cost without compromising effectiveness.
“Indirect costs derived from obsolete processes and legacy systems reduce productivity. Manual work that could be automated and platforms that cannot be upgraded leave companies stuck,” it warns.
Regulatory compliance “also plays a crucial role in maintaining the stability of the financial system,” explains financial institution Citi in a report. “Innovations in financial technology can be disruptive and, without adequate oversight, could generate systemic risks.”
It explains that in the digital lending segment, the absence of clear regulatory frameworks can lead to poor credit practices, such as granting financing without proper risk assessment, generating impacts on the financial system.
Regarding the internationalization of fintech companies, it states that they must adapt to “the complexity of multinational regulatory environments to comply with cross-border activities and transactions.”
In many cases, according to Citi, this involves “implementing different compliance strategies for each market, which could increase costs and operational complexity” if not done efficiently.
Globally, compliance with financial crime regulations is estimated to cost the global financial system more than US$206 billion annually, according to a report by global analytics and data company LexisNexis Risk Solutions.
According to the report, this cost “is comparable to more than 12% of global spending on research and development (R&D) and equals US$3.33 per month for every working-age person on Earth.”
Failure to comply with compliance policies may be more costly for companies compared to implementing the right measures on time.
In fact, costs can be up to 2.7 times higher than maintaining adequate compliance programs, according to an analysis by specialists at Gitnux.
In the 2025 Dark Economy Survey by BioCatch, more than half of the institutions surveyed reported spending more than US$10 million per year on managing money laundering, including both operational costs and sanctions.
Seventy-five percent reported annual fines of at least US$5 million, according to the BioCatch report, which highlights that “companies that invested in financial crime prevention technologies were far less likely to face such massive penalties.”
According to Citi, one of the main challenges for companies providing fintech services is precisely the high cost of regulatory compliance.
High costs can particularly impact startups and smaller companies due to the investment required in controls, specialized teams, and audits.
These costs may increase when companies lack adequate technology partners to simplify the integration of financial services and facilitate the implementation of compliance solutions according to each client’s requirements.
This challenge is compounded by the absence of homogeneous rules at a global level, forcing companies to manage multiple regulatory frameworks and generally increasing the cost of cross-border operations. “The diversity of regulatory standards across jurisdictions requires complex legal management, especially for companies offering cross-border services,” Citi explains.
It also notes that rapid technological evolution demands constant adjustments to align innovation with regulations that do not always progress at the same pace.
“As fintech platforms leverage advanced technologies such as AI and blockchain, promoting compliance with existing regulations may require continuous adaptation and innovation,” says the document signed by Citi analyst Chafic Haddad.
Inswitch, a TransNework company, addresses compliance challenges in the digital ecosystem through an API-based, modular financial technology platform that enables companies to scale financial services and enable or integrate regulatory solutions when required by their business partners or clients.
Its approach combines automation, advanced security, and the ability to integrate third-party tools — such as KYC, KYB, or AML solutions — to facilitate transaction monitoring, fraud prevention, and regulatory compliance in line with guidelines defined by responsible entities.
By adapting to different local and global regulatory frameworks, the platform facilitates expansion into markets such as Latin America and the United States, acting as a technological intermediary that helps reduce regulatory complexity and accelerates the implementation of solutions designed by the actors responsible for compliance.
Through its API-based platform, the company integrates Cross-Border Money Services, connecting Latin America and the United States under an MSB license scheme with coverage in all 50 states, facilitating international transfers without sacrificing regulatory control or brand identity.
Its Wallet with Core Banking offers an end-to-end solution for stored-value accounts, real-time operations, and multi-currency management, incorporating KYC, AML, and continuous fraud monitoring controls from the outset.
With capabilities including flexible funding (cards, ACH, wallets, cash), agile remittance processing, white-label accounts and cards, and rapid implementation, Inswitch reduces regulatory complexity and accelerates time to market while maintaining compliance as a central pillar of regional and cross-border expansion.
The Thomson Reuters Institute notes in a report that “for compliance and risk management professionals, the growing proliferation of technology-based fraud represents a formidable threat.”
For example, the technology gap leaves many compliance teams at a disadvantage compared to criminals who already use artificial intelligence to commit large-scale fraud.
Artificial intelligence will be key to improving KYC, AML, and fraud detection policies, but compliance teams must close the gap with criminals who already use generative AI and advanced automation, incorporating these tools with ethical criteria, human oversight, and data controls.
Analysts estimate that greater adoption of cryptocurrencies in traditional banking and constant shifts in regulatory priorities will require more specialized controls, continuous monitoring, and systems capable of rapidly adapting to new rules and guidelines.
“The trend toward greater involvement of cryptocurrencies in traditional financial institutions means compliance officers will face increasing pressure to accurately assess the risks of working with companies and clients based on them,” the report states.
Likewise, challenges related to data privacy, ESG, supply chains, and ongoing regulatory changes consolidate compliance as a structural business function.
“Organizations that fail to implement strict data management practices will face increasingly punitive measures for non-compliance in the coming years,” says the Thomson Reuters Institute document.
In this context of data proliferation, increased reporting, and greater speed, manual processes become unviable, making investment in technology, automation, and talent essential to sustain growth and avoid sanctions.
With these challenges in focus, analysts believe that updating compliance involves reviewing risks and team capabilities, strengthening governance and accountability, investing in technology and automation, updating policies in light of new risks such as AI and digital assets, training the entire organization, and anticipating scenarios to better respond to the unexpected.
If you would like to learn more about Inswitch’s solutions, you may contact our experts.
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