Objective: Prepare a new alternative lender with a strong compliance foundation and no regulatory issues from Day One.
Background/Opportunity
Challenge/s
InnReg's Solution
Client Results
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
Background/Opportunity
Challenge/s
InnReg's Solution
Client Results
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
Objective: Launch a revolutionary new equity stock trading platform for retail investors.
Background/Opportunity
Challenge/s
InnReg's Solution
Client Results
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
Positioned an equities solution for a strong exit via acquisition by a competitor
Objective: Launch a new service that makes it easy to give stocks and index funds as gifts.
Background/Opportunity
Challenge/s
InnReg's Solution
Client Results
Robo Advisor
Objective: Launch a micro-investing app designed to increase portfolio growth potential compared to conventional savings and investment accounts.
Background/Opportunity
Challenge/s
InnReg's Solution
Client Results
Testimonial
“InnReg understands fintech, online brokers and robo-advisors like no other compliance consultants we approached. They keyed in immediately on all the potential regulatory issues that could affect our business when targeting international users. Their CEO Francesco Matteini has built a substantial network of third-party providers. He helped us evaluate and select the right vendors to meet our needs within our budget and timeline."
-- Client Founder and President
Objective: To support a non-U.S. blockchain innovator through complex operational planning to apply and obtain state and federal money transmitter licenses.
Background/Opportunity
A leading global digital gaming company with attractive offerings such as downloads, sports memorabilia, and NFTs pursued a business expansion strategy in the U.S. They understood the difficulty of this process and approached InnReg for help in managing the compliance requirements involved with obtaining state licenses and federal registrations for money transmission activities.
The company’s key differentiator is to make it as easy as possible for customers to make payments for digital products through their platform while maintaining privacy.
Engaging in this business model requires operating as a money transmitter, acquiring separate licenses in 50 jurisdictions, and meeting appropriate compliance, operational and staffing requirements according to each jurisdiction’s specifications.
Challenges
As a non-U.S. based company, the client requires guidance in successfully navigating the rules and requirements of both state and federal regulators. FinCEN registration and state licensing requirements differ widely in the number of rules to follow, their type, and complexity.
Licensure-related costs and processing times can differ significantly from state to state, and acquisition of each license may take from several months to two years.
The client requires support to understand and address the many obstacles of this complex process. They needed a multi-pronged, multi-jurisdictional approach requiring diligent program management, governance support, and in-depth experience with the nuances of money transmitter regulations as they apply to blockchain platforms—a need which InnReg was well-positioned to address.
InnReg's Solution
InnReg has provided project management and compliance expertise to fulfill the client’s regulatory and licensing requirements necessary to engage in money transmission payment activities across all relevant U.S. jurisdictions.
This role encompasses business planning, compliance advisory and project management services to support the execution of the tasks associated with the acquisition of money transmitter licenses, while serving as a centralized point of contact with the Client’s leadership team to maintain alignment with Client’s strategic goals. InnReg has also helped the client ramp up their compliance function with best-in-class advisory, processes, and procedures.
The scope of our services over the course of the engagement has included the following key components:
Why InnReg?
InnReg has supported the launch and growth of disruptive fintech companies operating under the MSB/Money Transmitter regulatory framework 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 provide us with the ability to manage a project on behalf of a client operating in a gray and rapidly evolving area for both regulators and businesses.
Finally, our experience with crypto and digital assets since 2014 and with the challenges of successful money transmitter license applications allows us to guide this complex project to success.
Project Duration
In progress
Client Results
The client is making significant progress in an unfamiliar area of regulation and compliance, and in this process, InnReg is providing key know-how to build the internal resources needed for successful licensing application at both federal and state levels.
In addition, InnReg is contributing expertise and know-how around key compliance requirements such as information security, reporting, and vendor management.
Behind the Scenes
With limited exceptions, any business that accepts and transmits funds, including cryptocurrencies, such as bitcoin, will be considered an MSB and require an MTL in each U.S. state where the business operates. Money transmitters are a part of a specific category of MSBs.
Money transmitter regulations can be a complex challenge for fintechs that wish to operate at the national level within the U.S. Each state has its own requirements. While there are many similarities from state to state, there is no “one size fits all” approach.
Even more complicated for leading-edge businesses operating in crypto or Decentralized Finance (DeFi), the application process was designed for traditional finance businesses rather than online fintechs dealing with digital assets.
At the same time, businesses must be able to comply with other related regulations, most importantly those issued by FinCEN, a department of the U.S. Treasury that oversees the prevention of money laundering and other financial crimes.
The application process itself requires gathering significant amounts of documentation. In addition, businesses must be ready for the interactive review of their applications, which typically involves in-depth regulatory scrutiny and several rounds of questions.
Readiness involves having appropriate staff and processes in place so that regulators can confirm key facts about the business.
In the application process, the applicant is required to submit documents including business plans, financial statements, financial records of officers, directors, board members, and owners, and proof of compliance policies, procedures, and controls. To make the process go smoothly, all of these must be in place with a clear understanding of the factors that lead to the approval of an application.
Applicant companies should also consider building a compliance and risk management foundational framework prior to engaging in the license application process, so as to minimize regulatory questions and scrutiny at a later stage.
Given the above, money transmitter licensing projects not only require rigorous program management, but also differ from other projects because the most important tasks go beyond the application process. It takes experienced compliance expertise to understand the process and resources companies need to put in place before a single application can be filed.
Team members who can meld their understanding of the operational requirements with the operational and governance elements needed to secure the licenses needed to operate legally.
In InnReg’s experience, all of these components combined tend to challenge the capacity of the client’s in-house compliance leadership and staff, who are already handling day-to-day business activities. Bringing dedicated resources to the table allows clients to stay focused on business priorities even while they plan and execute their strategic evolution with the support of additional compliance experts.
InnReg Money Transmitter Services
InnReg’s core services for businesses involved in money transmission include:
Interested in learning more? We have developed a detailed guide for crypto fintech founders and leaders.
Cryptocurrency Laws and State Money Transmitter Regulation
for Fintech Leaders
Contact InnReg for more information about managing complex money transmitter license requirements.
Objective: Implemented a Compliance and Licensing Maintenance Program across all US jurisdictions for a Global P2P Crypto Company.
Background/Opportunity
Our client was a prominent early-stage company offering the first global peer-to-peer payments app and a bitcoin-native financial experience, widely reported as one of the most significant crypto developments in 2021.
This crypto transfer company supports fiat transfers, conversions into bitcoin, fiat-to-fiat, and crypto-to-crypto transactions for a large and global user base based on a high-volume transactions model that exposes it to relevant compliance risks, including money laundering and fraud. The company also needed to build its new U.S. compliance program from the ground up.
Challenges
Crypto exchanges are regulated entities subject to multiple regulators, spanning many compliance areas including AML, cybersecurity, fraud, KYC, and business continuity. Because regulatory risk frameworks and requirements differ across each regulator, monitoring and reporting is complex.
Moreover, it is challenging to design and implement large-scope solutions in a nascent industry. There are few established industry best practices or clearly leading tools. Therefore, current and unique knowledge is needed to select tools and apply new forms of compliance expertise.
In addition, for this growing organization, the sheer number of transactions and complexity of compliance created cost and scale challenges.
InnReg's Solution
InnReg was hired to establish the company’s custom compliance program to meet all ongoing requirements by both state and federal regulators – including AML processes, suspicious activity monitoring, vendor management, employee compliance, license maintenance and reporting requirements.
InnReg’s automated tools and outsourced compliance team enabled the client to effectively manage all escalations and provided experienced critical operational personnel to review suspicious transactions.
Specifically, InnReg:
Client Results
As it grew, the client built an internal team for ongoing operations. InnReg transitioned the responsibilities and knowledge so that the company could manage its custom-built technology and processes.
Specifically, InnReg:
Project Duration
9 months
Contact Us
If your crypto business is facing similar challenges, do not hesitate to get in touch.
Objective: Implement a Compliance Program for an early-stage RIA regulated by the SEC.
Background/Opportunity
Our client is a prominent early-stage company offering an online marketplace that leverages advanced technology solutions to allow individual investors to identify sources of investment advice quickly and seamlessly. In particular, their platform allows users to filter financial advisors by customizable criteria based on their degree of user relevance, such as geographic location, services provided, or credentials.
Challenges
The company’s business strategy is to fill a market niche by building a technology-driven solution to fulfill consumer expectations in a highly regulated industry.
Furthermore, it is challenging to design and implement targeted compliance solutions for an innovative offering with limited precedent regulatory guidance or established industry best practices. Therefore, current and specialized knowledge is needed to select tools and apply new forms of compliance expertise.
InnReg's Solution
InnReg assisted Finsie with the SEC registration process and helped regulators understand Finsie's offering because it was new and innovative. Specifically, InnReg helped Finsie design the offering in a way that satisfied the regulatory requirements while, at the same time, enabling Finsie to develop something unique.
In addition, InnReg was hired to establish the company’s custom compliance program to meet all ongoing requirements by both state and federal regulators – including AML processes, information security, vendor management, employee compliance, registration maintenance, and reporting requirements.
Specifically, InnReg:
Client Results
Successful launch of an innovative digital marketplace where financial advisors and investors can work together, while abiding by the letter and spirit of new regulations and guidance pertaining to advisor marketing and digital advice.
The partnership with InnReg allowed Finsie to build an effective and scalable compliance program that mitigates regulatory risk and builds the necessary infrastructure to promote the business’ fast growth and scalability.
Project Duration
Ongoing since December 2020.
Testimonial
"Unlike some generalist compliance organizations with a corporate hierarchy and an army of entry-level analysts, InnReg is a network and a team of deep experts with many different specializations. InnReg consultants mesh organically into the business, and we have a lot of confidence in folding InnReg’s approval into our process.
InnReg provided support in documentation tracking as they have a library of samples most suitable for startups.
In a nutshell, we loved InnReg’s ability to match the right professional with the right business and that their solutions are targeted at startups, are customized to our niche and vision vs. being generic, thereby restricting innovation."
Founder and CEO
Contact Us
InnReg is a team of licensed compliance experts who minimize regulatory risk while helping you launch your creative fintech startups. We solve complex regulatory scenarios and build sustainable operational and compliance platforms to support groundbreaking technologies and business models. If your business is facing similar challenges, do not hesitate to get in touch.
You can read our International Neobank Launch Case Study in Spanish!
Objective: Implement a fully outsourced Compliance Program for an early-stage, cross-border neobank.
Background/Opportunity
Our Client is a prominent, early-stage company offering a cloud and mobile-based financial platform supporting a wide range of products and services across multiple jurisdictions and geographies. Since its founding in 2018, our Client has formed over 20 strategic partnerships with industry-leading banks, lending operators, and payment processors.
Our Client’s core business model consists of international money remittances through a prepaid/debit card-based program made available to both U.S. and international clients through a bank sponsorship with a U.S.-based, community-focused banking institution.
The program’s offering, live since February 2023, leverages reloadable prepaid cards, a cardless wallet associated with a bank account and native mobile applications. Services made available to clients include saving and deposit accounts, withdrawals, transfers, P2P payments, and international remittances based on a multi-channel digital strategy.
As a purpose-driven, Hispanic-owned and operated financial services company, the Client’s key differentiator is to improve the financial health of the Hispanic community in the U.S. and Latin America (including México, Guatemala, El Salvador, Honduras, Nicaragua, Dominican Republic, Haití, Perú, Ecuador, Bolivia, and Chile) through fair and inclusive financial services.
Challenges
Due to the financial nature of the business combined with technology, the Client is exposed to several risks across various compliance areas, including AML, cybersecurity, fraud, KYC, and business continuity.
In particular, the company is exposed to a number of critical AML risks, including the following:
Moreover, the Client operates in a nascent industry with related challenges in designing and implementing large-scope solutions. There are few established industry best practices or leading tools; therefore, current and unique knowledge is needed to select tools and apply new forms of compliance expertise.
InnReg's Solution
InnReg LLC was hired as an outsourced provider to establish the company’s custom compliance program to meet all requirements imposed by its bank partner.
Specifically, the scope of InnReg’s services includes the following compliance and operational expertise, including policy development and regulatory advice across a broad spectrum of compliance areas:
Overall, InnReg’s role encompasses business planning, compliance advisory, and project management services, while serving as a centralized point of contact with the Client’s leadership team to maintain alignment with the Client’s strategic goals.
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.
It has produced the necessary infrastructure to promote the Client’s goal to generate revenues through value-driven fees, interchange, and third-party commissions.
Specifically, the Client:
Client Testimonial
“Having a Compliance Officer backed by a team with the right knowledge and a compliance practice with the appropriate artifacts and methodology is a huge help. InnReg has enabled us to operate with confidence and focus on execution. We initially hired InnReg to provide temporary support, but they have become an intrinsic part of our business.”
Client’s Founder and CEO
Project Duration
In progress and ongoing since February 2022
Contact Us
InnReg Neobank Compliance Services
InnReg Outsourced CCO Services
InnReg’s outsourced CCO services include but are not limited to:
About InnReg
InnReg is a team of licensed compliance experts who minimize regulatory risk while helping you launch your creative fintech startups. We solve complex regulatory scenarios and build sustainable operational and compliance platforms to support groundbreaking technologies and business models. If your business is facing similar challenges, do not hesitate to get in touch.
At InnReg we resolve a myriad of complex fintech compliance issues for cutting edge clients in highly regulated industries. We’re passionate about launching your creative ideas without compromising your original vision, and without undue regulatory risk.
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1101 Brickell Avenue
South Tower, 8th Floor
Miami, Florida 33131
305-908-1160
info@innreg.com