Compliance and Innovation to Support Growth

Online Lender Exchange

Cleared the path for a lending marketplace to partner with regulated banks and other lenders.

Objective: Update operational systems to ensure compliance with the requirements of a regulated partner.

Background/Opportunity

  • A market-leading online lender exchange in the U.S. was entering into a new partnership with one of the largest banks. The client is highly visible, making them vulnerable to competitive pressure as well as regulatory scrutiny. Their lender network includes hundreds of members, including large lending institutions, regional lenders, and an increasing number of emerging alternative players. Their new bank partnership was expected to increase prospect referrals and earned income substantially, but also required the client to undergo an especially rigorous and comprehensive vendor due diligence process.

Challenge/s

  • The client was expected to upgrade certain aspects of their compliance program to fulfill the stringent requirements of their prospective bank partner.

InnReg's Solution

  • Conducted compliance assessment.
  • Reviewed and rewrote client’s information security policies and procedures to identify and address any gaps.  
  • Updated processes to close all procedural gaps and codified the new system.

Client Results

  • Successfully completed vendor due diligence and contract negotiations with the new partner.
  • Established an enhanced compliance and operations foundation that supports ongoing growth. As a result, the client was able to process more customer requests, increase their network of lending partners, and expand into new lines of business such as student loans, debt consolidation, and credit counseling.

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Regional Bank

Supported a major regional bank’s expansion into wealth management services in line with U.S. regulations.

Objective: Develop the business plan for a new wealth and investment management service.

Background/Opportunity

  • The client is a strong and established regional bank in South Florida, the fifth largest financial institution in its state and one of the top 50 most profitable banks in the U.S. The client wished to serve an increasing segment of international and high net worth prospects moving to the region. To tap into this new target audience, the client planned to launch a wealth management advisory service.

Challenge

  • The client wanted help with assessing the market potential for the wealth management business and then designing the optimal operational structure to launch it.

InnReg's Solution

  • InnReg developed a launch strategy leveraging the strong foundation built on the client’s history and longevity coupled with forward-thinking innovation.

Client Results

  • The client has been acquired by a large global bank based in South America. The new management team is leveraging the InnReg business plan as a foundation for the launch strategy for its new wealth management and investment services program.

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Trading Education Service

Helped an innovative company avoid potential regulatory gray areas with user-generated investment content.

Objective: Help a non-regulated entity prevent inadvertent regulated activity and maintain data security.

Background/Opportunity

  • A provider of tools, education, and community features for investors sought InnReg’s help to build and operate a compliance program supporting the activities on its platforms. Although it does not act as an investment advisor or broker dealer, it needed to ensure that content on the platform did not cross the line into activities that are regulated by the SEC. In addition, it is critical to follow FTC rules and regulations around marketing content publication.

Challenge/s

  • By offering an environment where end-users contribute content and interact with each other, the firm needed to monitor compliance at scale within an active community.
  • The firm needs to tread a careful line avoiding the appearance that content directly offers investment advice or impacts equities markets.
  • The firm also must ensure the security of user data that it manages and maintains.

InnReg's Solution

  • Planned and implemented a fully-outsourced compliance program and manage it on behalf of the client.
  • Provided a one-stop-shop for 1) content and data analytics around user activity, 2) review of content, social media, and advertising in accordance with FTC rules, and 3) data protection and security.

Client Results

  • The client is one of the market-leading companies in its space with a thriving and engaged user community.
  • Risks of inadvertent regulated activity have been mitigated.
  • The client continues to remain on the right side of the line and is able to demonstrate that its activities do not require registering as a regulated entity.
  • The security of user data is managed effectively.

Testimonial

“Operating a business in a highly regulated industry carries risk. InnReg has provided us with an individualized compliance program that they manage and monitor. It's a relief to know that we have expert industry professionals taking care of both our compliance and information security programs. Their services allow us to focus on growing our business and offering a great experience to our users, knowing our compliance program is in good hands.” — Client CEO


InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

ATS

Scaled an alternative trading system to become one of the largest in the U.S.

Objective: Help an alternative trading system (ATS) build a technology-based compliance platform to support its unique and disruptive business model.

Background/Opportunity

  • The client came to InnReg looking to develop a sophisticated set of compliance processes and workflows to support a groundbreaking peer-to-peer ATS for retail investors.

Challenge/s

  • An ATS and its broker dealer operator are typically subject to enhanced regulatory scrutiny by their functional regulators, primarily FINRA and the SEC. The many unique components of the ATS’s business model, such as the near-total reliance on operational processes that were based on proprietary algorithms, compounded the frequency and depth of regulatory interactions.  While the broker dealer and ATS had a compliance program in place, the client wanted to upgrade its workflows and processes to optimize its compliance strategy, execute on it efficiently, and satisfy regulatory expectations.

InnReg's Solution

  • Devised and implemented a comprehensive set of compliance processes to accommodate the complexity of the ATS business model.
  • Leveraged fintech compliance expertise and experience in regulatory relations to satisfy regulators’ requirements and expectations.
  • Successfully demonstrated the efficacy of the new compliance processes to three separate regulatory agencies.
  • Advised on process design to ensure compliance with all regulatory guidelines, as well as scalability to accommodate the high volumes of users and transactions in the ATS.   
  • Ongoing delivery of a fully managed, outsourced regulatory compliance solution, including having a licensed professional serve as the Chief Compliance Officer of the broker dealer and ATS.

Client Results

  • The ATS has been able to facilitate a high-volume of retail transactions in a scalable, compliant manner.
  • The ATS has become one of the largest in the US in volume of transactions.
  • The client has begun expansion in foreign markets.

Testimonial

Our business model is based on algorithms and high-volume trading. Using InnReg as our outsourced compliance program allows us to keep up with the frequency and depth of complex regulatory requirements. I also see it as an important strength for our continued growth in the U.S. and beyond.

-- Client CEO


InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Bank-Owned Broker-Dealer

Allowed a bank to add new investment services and grow its global business with a U.S. presence.

Objective: Guide a bank through the processes of setting up and then operating a broker-dealer subsidiary for international investors wishing to trade in the United States.

Background/Opportunity

  • The client came to InnReg with a strong business idea, but needed guidance for navigating relevant regulatory regimes, building out its operations, and then supporting its compliance function once it launched.

Challenge/s

  • A publicly-traded foreign bank with an established presence in the U.S. wanted to be able to target retail investors from all over the world to invest in U.S equities. The client came to InnReg to seek in-depth, detailed knowledge on how to establish a compliant brokerage operation with a global footprint.

InnReg's Solution

  • Conceptualization of the bank’s broker-dealer compliance model for international investors.
  • Leveraged compliance expertise and experience in regulatory relations to manage regulatory exams and inquiries.
  • Devised and implemented a comprehensive set of compliance processes.
  • Advised on process design to ensure compliance with all regulatory requirements for international investors participating in U.S. markets.

Client Results

  • Successful launch and growth of the broker-dealer’s international business.
  • Positive outcomes of regulatory exams.
  • Efficient compliance processes and workflows to maximize internal resources.

Testimonial

“Operating a business in a highly regulated industry carries risk. InnReg has provided us with an individualized compliance program that they manage and monitor. It's a relief to know that we have expert industry professionals taking care of both our compliance and information security programs. Their services allow us to focus on growing our business and offering a great experience to our users, knowing our compliance program is in good hands.” — Client CEO


InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Crypto Exchange Broker-Dealer

Objective: Enable a crypto trading platform to offer a seamless customer experience between crypto and equities trading by offering registered broker-dealer services.

Background/Opportunity

  • Uphold, a well-regarded traditional and crypto trading app, had already attracted millions of users worldwide with its crypto trading experience and user-friendly approach. But the company had a bigger, more ambitious vision, which “embraces a future where people and businesses around the world have access to safe, transparent, fair and affordable financial services.”

Challenge/s

  • While equities are a core element of investing and trading, purchasing them with cryptocurrencies creates significant regulatory complexities and adaptations to special middle- and back-office requirements.
  • Uphold wanted to make it simple to use the value stored in their crypto wallets to purchase fractional shares of publicly traded companies.

InnReg's Solution

  • Helped guide Uphold through the regulatory requirements around acquiring a broker-dealer to settle fractional buy- and sell- trades that initially originated from an end-user’s crypto wallet.
  • Advised on moving the acquired broker-dealer from a fully-disclosed to an omnibus structure so that it could manage trades within one, proprietary set of digital books and records in the broker's name.
  • Provided essential input on obtaining regulatory approval from FINRA to provide these new services and persisted with the process through several rounds of inquiry.
  • Designed the strategy for Uphold to mitigate risks and quickly build a compliance program to meet all regulatory requirements for its new broker-dealer business model and operations.

Client Results

  • On March 31, 2021, Uphold announced that it received regulatory approval to purchase JNK Securities, a U.S. broker-dealer, making it one of the first cryptocurrency firms to own a broker-dealer approved to offer equities.
  • News of the approval made big waves in industry press covering cryptocurrency, fintech, and regulation, as well as lifting Uphold’s search traffic by roughly 1,000%.
  • The ability to offer equities to U.S. investors will drive new account openings and trading volumes to greater heights of success, giving Uphold customers greater wealth-creation opportunities.

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Mobile App Broker-Dealer

Objective: Interim outsourced CCO role, setup and enhancement of compliance workflows, and onboarding of a full-time, in-house CCO

Background/Opportunity

  • Our client, a fast-growing startup broker-dealer, was expanding its client base and investing into the next growth phase. Unfortunately, they had a critical gap in their senior leadership structure – the Chief Compliance Officer (CCO). The absence of a CCO posed a threat to the firm's regulatory integrity and operational effectiveness, which increased regulatory risks and potentially hindered growth.

Challenge/s

The broker-dealer was confronted with three key challenges. They needed to:

  1. Immediately hire a competent and professional CCO on an interim basis.
  2. Establish robust compliance workflows to streamline operations, promote transparency, and ensure continued adherence to regulatory standards.
  3. Facilitate the onboarding process for the hired, permanent CCO, ensuring a seamless transition and immediate effectiveness in the role.

 

InnReg's Solution

Our team of outsourced compliance experts stepped in to tackle these challenges head-on:

Interim CCO Support: We immediately filled the leadership void as one of our seasoned compliance professionals assumed the role of interim CCO. Leveraging their extensive industry experience, they guided the broker-dealer through complex regulatory landscapes, ensuring full compliance with financial regulations.

Compliance Workflow Setup: We then focused on the creation and implementation of effective compliance workflows. Our team performed a comprehensive analysis of the broker-dealer's operations and crafted tailored workflows to ensure regulatory compliance, efficient processing, and risk management.

New CCO Onboarding Support: Finally, as the broker-dealer hired a permanent CCO, we facilitated the transition. Our team worked closely with the new hire, providing comprehensive training on the established compliance workflows and offering insight into the changing regulatory requirements of broker-dealers.

 

Client Results

Our engagement with the startup broker-dealer resulted in significant tangible outcomes:

  • Continuous Compliance: Our interim CCO ensured the firm remained compliant with all necessary regulations, preventing potential violations and associated penalties.
  • Efficient Operations: The new compliance workflows streamlined operations, reduced errors, and increased transparency, leading to greater operational efficiency and risk reduction.
  • Smooth Transition: The onboarding process for the new CCO was seamless, ensuring the firm's ongoing compliance and operational effectiveness. The new CCO was able to hit the ground running equipped with a deep understanding of the firm's compliance workflows and regulatory requirements.

This engagement was an example of our commitment to providing comprehensive, tailored compliance solutions that empower financial firms to operate efficiently, maintain regulatory compliance, and navigate growth stages with confidence.

 

Client Testimonial

"Partnering with [InnReg] during a pivotal period of our growth was one of the best decisions we made. The vacancy in our Chief Compliance Officer position was a significant concern, but their team seamlessly stepped in, providing an experienced professional who guided us through complex regulatory landscapes with proficiency. They further created and implemented compliance workflows that were tailor-made to our business model, increasing efficiency, transparency, and risk management across our operations. Lastly, the onboarding support they provided for our new CCO was invaluable – it ensured a smooth transition and equipped our new officer with a deep understanding of our firm's specific requirements. Their comprehensive solutions not only ensured our regulatory compliance but also empowered us to focus on our core business and growth. We couldn't be more grateful for their support." 
- Client CEO


InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Global Bank Expansion

InnReg’s client, a prominent Brazilian bank, aspired to extend its operations into the broker-dealer sector within the United States.

The goal was straightforward but involved a complex regulatory journey: to initiate their broker-dealer business while adhering to the Financial Industry Regulatory Authority (FINRA) guidelines.

 

Background/Opportunity

The client, looking to expand their operations beyond Brazil, reached out to InnReg to initiate the process of becoming a US broker-dealer. Founded in 2018, this institution has been steadily expanding its banking services from investments, financial advisory, credit operations, etc., and now aspires to diversify its portfolio even further.

The roadmap towards this internationalization encompasses intricate steps, so the client sought help with the regulatory process and the documentation requirements. Simultaneously, the client was in the midst of managing many internal projects, which posed an additional challenge.

 

Challenges

The main challenges faced by the client were:

  • Gathering the exact documentation needed for the US broker-dealer filing process
  • Understanding the process of transitioning to launching a broker-dealer business
  • Coordinating with third parties for additional support

Despite its robust business model, the unfamiliarity with these processes required a detailed approach from InnReg to ensure everything was done correctly.

 

InnReg's Solution

InnReg was hired to provide a clear roadmap to navigate through these challenges:

  • Regulatory Guidance: InnReg’s experts explained the process, highlighting the steps involved in the FINRA filing.
  • Documentation Support: InnReg helped with collecting the necessary initial documentation and identified potential third-party vendors for extra support where needed.

 

Why InnReg?

InnReg LLC has supported the launch and growth of disruptive fintech companies since 2013, and developed expertise in understanding its clients’ business requirements while mitigating risks and managing the impact of regulations.

Our competitive advantage and unique experience enable us to manage a project on behalf of a client operating in a gray and rapidly evolving area for both regulators and businesses.

In addition, InnReg is a leading provider of outsourced compliance services for fintech startups, including through the appointment of CCOs who are fully responsible for regulatory compliance of your fintech. We help our clients identify and manage key compliance risks and meet all  their regulatory requirements with increased efficiency and cost savings, freeing them to focus on their core business goals.

 

Client Results

The partnership with InnReg has allowed the client to build an effective and scalable compliance program that mitigates regulatory risk.

This prominent Brazilian bank’s journey towards establishing its US broker-dealer business is well underway, with a clear plan and expert guidance from InnReg to ensure compliance with US regulatory standards.

Specifically, the client:

  • Enhanced its BSA/AML/OFAC compliance program to better mitigate key compliance risks associated with its business model.  
  • Established the necessary governance and process to file an application with FINRA.
  • Gathered the necessary documentation required by regulators.
  • Implemented and maintained the system of internal controls (i.e., complaint management, suspicious activity, and transaction monitoring). 

 

Project Duration

In progress and ongoing since March 2023.


InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

FINRA Examination for Broker-Dealer

Our client, an established broker-dealer from Brazil, found themselves at a critical point. Facing an upcoming FINRA examination amid a change in leadership, they needed to address existing compliance issues while ensuring a smooth transition.

 

Background/Opportunity

Originally a Brazilian entity, the client was an established US broker-dealer facing regulatory challenges by US authorities after launch.

InnReg was hired to help them with this situation and learned they planned to offboard their Chief Compliance Officer (CCO) and Chief Executive Officer (CEO). They needed new leadership and a compliance team to help navigate the regulatory challenges  posed by an upcoming FINRA examination.

The aim was to resolve existing compliance issues and establish a solid operational structure.

 

Challenges

Listed below are the main challenges the client faced:

  • Undergoing a FINRA examination with existing compliance issues.
  • Changing leadership without affecting operational stability.
  • Correcting the identified compliance issues.

 

InnReg's Solution

InnReg provided a structured approach:

  • Leadership Transition: InnReg assisted with the transition of the CCO and CEO roles.
  • Compliance Operations: During the client’s reorganization process, InnReg provided a compliance team to address existing issues and align operations with US regulations.
  • Operational Reorganization: In order to prevent future compliance issues, a reorganization of the operational structure was conducted with InnReg’s help

 

Why InnReg?

InnReg LLC has supported the launch and growth of disruptive fintech companies since 2013, and developed expertise in understanding its clients’ business requirements while mitigating risks and managing the impact of regulations.

Our competitive advantage and unique experience enable us to manage a project on behalf of a client operating in a gray and rapidly evolving area for both regulators and businesses.

In addition, InnReg is a leading provider of outsourced compliance services for fintech startups, including through the appointment of CCOs who are fully responsible for regulatory compliance of your fintech. We help our clients identify and manage key compliance risks and meet all  their regulatory requirements with increased efficiency and cost savings, freeing them to focus on their core business goals.

 

Client Results

The collaboration has led to improved operational compliance and growth for the client. InnReg’s ongoing engagement is focused on maintaining the client’s continued compliance with US regulations and reducing risks.

 

Project Duration

From May 2022 until November 2023.


InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

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