Compliance Programs for Startups

Alternative Lender

Objective: Prepare a new alternative lender with a strong compliance foundation and no regulatory issues from Day One.

Background/Opportunity

• A US-based alternative lender came to InnReg prior to launching a mobile-only lending app targeting millennials and college students with thin credit. As they fine-tuned the product design, they asked us to advise on the configuration of their operational stack and compliance platform. This forward-thinking group needed a product design and operational system that would conform to all compliance regulations. This system also needed to scale over time to support long-term growth.
  

Challenge/s

• The alternative lender wanted to deploy effective and efficient account origination processes for a prospect audience with thin credit files while complying with all relevant origination regulations. In addition, their planned funding and payment processing system was 100% mobile. They were concerned about how to meet compliance regulations, without allowing constraints to erode the integrity of the user experience of their unique new product. 

InnReg's Solution

• Advised on the design and deployment of a secure and compliant automated underwriting and processing system that delivers origination decisions within 3 minutes.
• Identified and implemented an optimal compliance stack using the most appropriate technologies for the client.
• Designed efficient and effective processes that meet all lending requirements and all digital information security requirements.

Client Results

• Successfully booked 1,000+ consumer accounts within 3 weeks of launch.
• Seamlessly originated accounts, transmitted funds, processed payments, and securely transmitted sensitive customer data to credit reporting agencies without hiccups during launch and growth phases.
• Named a Start-Up Of The Year by a prominent industry publication.

Testimonial

“Francesco Matteini and his team at InnReg are doing an outstanding job as our compliance gurus. It is like having an in-house regulatory department. They came in, listened, understood our needs, and built our compliance systems from the ground up. They make it easy for me to focus on launching my company and building my customer base because I know the regulatory issues are in safe hands. They are creative in their problem-solving approach. Their work is on-time and on-budget. I trust their input completely, and I highly recommend InnReg to any fintech company that wants outsourced compliance for all or part of their compliance function.”  

-- 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.

Compliance and Cybersecurity Program and Support for Crypto and Blockchain Assets Lender and Custodian

Background/Opportunity

• A global innovator in the use of blockchain and cryptocurrency holdings needed support to ensure two core elements of its business. First, as both a lender and a custodian of assets, it needed to meet the compliance requirements of the many national and local jurisdictions where it operates. Second, it required a cybersecurity approach to meet global financial standards.

Challenge/s

• Operating in the world of cryptocurrencies creates potentially higher degrees of risk in the prevention of money laundering.
• The client’s business model and global scope required a complex regulatory structure across countries and, in the U.S., individual states.
• Operating globally also entails adopting and complying with data protection and data security best practices.
• The client works with a wide range of affiliates and distribution partners as well as customers of its white label solution.

InnReg's Solution

• InnReg completed a full risk assessment of the client’s business.
• InnReg designed an end-to-end outsourced compliance and cybersecurity program, including:
  • Regulatory filings and updates
  • Anti-Money Laundering and Suspicious Activity Reporting
  • Management and protection of client and transaction data
  • Vendor and partner management
  • Marketing and advertising compliance

Client Results

• The client has the ability to manage thousands of end users and millions of dollars in assets in a compliant manner where it does business.
• The client has successfully avoided the risks inherent to their business model.
• The client has saved extensively by using dedicated, outsourced compliance professionals rather than building an in-house team.

Testimonial

“Francesco and his team helped us build and scale a global crypto company, navigate the many complex legal and regulatory challenges, and design a product that helped us satisfy our many constituents – customers, partners, local, national and international regulators. The team also provided critical guidance in the areas of risk management, security, HR, and strategic roadmap considerations.  They have become a full extension of our team and we would not be in the same place today without their endless guidance, support, and great judgement.”

-- 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.

Fractional Shares Trading

Objective: Launch a revolutionary new equity stock trading platform for retail investors.

Background/Opportunity

• The client wanted to create a trading platform that would be fun, easy, and affordable. The platform needed to deliver their mission to help new investors learn about stock trading in a low risk and low-cost environment. Their goal was to make Wall Street accessible to a wider Main Street audience. The product design included online brokerage accounts, plus gifts of stocks delivered via gift cards and e-cards.

Challenge/s

• In pursuit of their mission, the client had to build a platform attracting younger and lower net worth investors to equity trading but at the same time avoid raising regulatory red flags or generating negative press. Given their business model and plans for growth, they had to create a cost-efficient operational system, but with a complex product design including custodial accounts for minors, shares of stock in the form of gift cards and e-cards, fractional trading, and other areas that required a clear regulatory strategy.

InnReg's Solution

• Designed and deployed a compliance platform that supported accurate transactions at high speed and with a high level of information security.
• Advised on the negotiation of profitable vendor contracts, including a multi-year clearing agreement.

Client Results

• Raised $15 million in Series A funding after their successful launch and positive press.
• Stock shares delivered via gift cards contributed an incremental $50 million in revenue from sales at partnering national retail outlets such as Target, Safeway, and Staples.
• Won numerous awards in fintech trade publications including Product of the Year and Most Disruptive Company.

Testimonial

“Francesco has been the driving force in establishing our compliance, legal, and risk management functions. His experience and profound knowledge of the industry have been instrumental in protecting our brand during high-growth periods, as well as through challenging times. A clear communicator, Francesco has established strong relationships with industry regulators. In addition to his experience and knowledge of business, law, and regulations, Francesco has an extremely organized approach to problem-solving. I have been very happy to work with Francesco and look forward to doing so again in the future.”

-- Client President and COO

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.

Equities Gifting Solution

Objective: Launch a new service that makes it easy to give stocks and index funds as gifts.

Background/Opportunity

• The client was a start-up supported by the Y Combinator incubator program. Their mission was to design a new service for people who wanted to give the unique gift of equity stocks, using an easy and fun platform. Their product strategy blended retro and fintech because it hearkened back to the days when parents and grandparents gave bonds to children to seed their college fund.

Challenge/s

• The client needed to manage numerous compliance regulations spanning the brokerage/investment advisory environment to support stored-value gift cards and the trading environment to support online investing, including custodial accounts for minors.

InnReg's Solution

• Established a manageable set of regulatory requirements.
• Advised on the adoption of the most efficient regulatory structure to accommodate the desired business and revenue model.

Client Results

• The company was acquired by a competitor based on their successful product launch with substantial positive press, and their potential to become a viable competitor in their own right.
  
  

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.