FAQ Page

I already have a Chief Compliance Officer. How can InnReg help my company?

Most of our clients employ an in-house CCO and some compliance staff to manage ongoing compliance activities. We work with a range of digital finance companies, including broker-dealers, digital lenders, alternative trading systems (ATS), crowdfunding platforms, online advisors and robo advisors, cryptocurrency platforms, and other fintechs who may be operating in a regulated environment or considering becoming regulated.

Our job is to partner with a client’s compliance team when they need specialized expertise focused on digital finance or additional bandwidth. This situation tends to arise when they enter a growth phase, launch a new product in a regulated sector, or start to build (or scale up) a more efficient or more effective approach to compliance.

We help clients minimize risk, create efficiencies, and save substantial time and money by recommending industry best practices and implementing a state-of-the-art Compliance Stack. Our solutions are always technology-neutral and always in our clients’ best interests.

We’re flexible as we work to meet your needs. We can implement an ad hoc project or provide a fully managed Outsourced Compliance Management Solution. We’re here to support your compliance function in any way that you need.

How does InnReg support digital broker-dealer compliance?

Broker-dealer compliance has been a part of InnReg’s business from the very beginning when we supported 13 digital broker-dealers with the compliance aspects of their launches. InnReg’s CEO and founder Francesco Matteini helped launch TradeKing and Zecco as their in-house CCO. The two companies merged into one of the largest online brokers of their time, managing over 500,000 traders and nearly $3 billion in assets.

Today, we work with digital broker-dealers to support both their launch and growth. Depending on their maturity, we can work within their current compliance platform or recommend the best technology stack for compliance and back office. 

Our process with digital broker-dealer compliance is as follows:

  1. Determine the best regulatory structure for the client’s business model
  2. Analyze the client’s technology and user acquisition strategy
  3. Support regulatory findings and communicate your business approach to regulators
  4. Develop and manage workflows for compliance that will scale to high rates of user onboarding and transaction processing
  5. When needed, take full ownership of the client’s compliance and back-office operations with a cost-effective outsourced model.

For more information: Online Broker-Dealer Compliance and Operations

How does InnReg help digital lenders?

Digital lenders often face complex compliance issues because they do not meet prospective borrowers face-to-face.They often use non-traditional approaches such as algorithms for credit approval decisions. As a result, they may attract scrutiny around areas such as Customer Due Diligence and fair credit.

InnReg recommends the best technology stack to solve digital lenders’ compliance and technology needs, both effectively and cost-efficiently. We can also take ownership of lenders’ compliance and back-office operations as an expert outsourcer with digital lending experience.

For more information: Online Lender Compliance

How does InnReg help alternative trading platforms with ATS regulations?

ATS regulation is designed specifically for Alternative Trading Systems, such as platforms that offer non-traditional securities or innovative ways to buy or sell, such as fractional shares. InnReg’s experience with broker-dealers in the technology-based trading space makes us an ideal partner for ATS companies. 

We start by partnering with clients to deploy digital trading technology and secure federal and state regulatory approvals. From there, we run operations that cover all aspects of an ATS: client approval and onboarding, manage online funds transfers, buy and sell order matching, and transaction settlement. 

In addition, data privacy and cybersecurity have never been more critical. The SEC has made this area a top enforcement priority.

For more information: ATS Regulation and Compliance

How can InnReg help my company understand and comply with crypto regulations?

Crypto regulation is an area of deep concern among regulators. The potential for fraud or malfeasance with digital assets and anonymous transactions can be much higher, and as a new area, risk management is still evolving. 

As a result, core compliance activities all need to be tailored to blockchain-based business models. InnReg offers blockchain-savvy approaches to crypto regulation areas, including User Onboarding (CIP / KYC / EDD), Suspicious Activity Monitoring, and Advertising Compliance (UDAAP / FTC). 

We also build and run compliance and cybersecurity programs for Decentralized Finance (DeFi) companies, protecting them from risk and liability while safeguarding assets and users.

For more information: Crypto/Blockchain Assets Compliance Services

What services does InnReg offer online / robo-advisors?

InnReg extensive experience with online investment advice and portfolio management makes us an ideal partner for both new and established online RIAs and robo advisors. We have multiple startups in these areas, as well as digital broker-dealers and alternative trading systems. 

We tackle a three-prong approach with online / roboadvisors. First, we carry out in-depth compliance risk assessment based on the client's business model and help determine the best regulatory structure for their technology and user acquisition strategy. Second, we develop and manage clients’ compliance and operational workflows so that they can efficiently onboard high volumes of users and process transactions. Third, we take ownership of compliance and back office operations for online / roboadvisors on a fully outsourced basis so they can focus on developing products and growth strategies.

For more information: Robo-Advisor Compliance and Operations

Does InnReg handle other types of fintech compliance?

Fintech compliance offers important risk management benefits and controls even when a fintech company is not a regulated entity. 

These cautions can help satisfy the concerns of potential investors, establish trust among customers, or meet the requirements of financial and technology partners. They also help create a foundation for compliance in situations that fall into regulatory grey areas, such as what counts as a security or broader requirements for protecting customer privacy and managing cybersecurity.

InnReg supports compliance for fintechs by providing detailed risk assessments and developing implementation plans for compliance programs that help manage such risks. We also help growing fintechs make decisions around whether and when to register, how to partner with regulated entities, and how to make compliance a strategic advantage over the long haul.

For more information: Fintech Compliance

Will InnReg replace my legal counsel?

InnReg is not a substitute for your own legal counsel. We do not provide legal advice.

However, our clients benefit from our expertise in fintech and digital finance. Our founder was a lawyer by trade before specializing in compliance issues impacting fintech startups. 

We also help CCOs more effectively manage the legal review of complex regulatory issues. We start by clearly defining the project scope and objectives, and then we interface with the legal team using their legal language. We ask the right questions of the right lawyers. We save our clients time, money, and headaches—and help them avoid unnecessary delays and costs.

Read more here: https://www.innreg.com/blog/compliance-consulting

What is a compliance stack?

Digital finance innovators often operate in regulated areas but struggle to create an integrated system of compliance and operations processes. We take the guesswork out of this process. We call this integrated system the Compliance Stack. It provides seamless support for a superior user experience for customers, employees, and strategic partners.

We can manage the entire lifecycle from development and implementation to training for you as an outsourced solution. Or, we can advise you on specific issues such as:

  • Choosing the best APIs for your business goals and regulatory requirements
  • Minimizing regulatory impacts on user experience and operational efficiency
  • Training your team to manage compliance and operations workflows before, during, and after your product goes live

 

My company is not regulated. Do I still need a compliance specialist?

If your company is in the fintech arena, you will most likely need to establish one or more partnerships with banks or other regulated entities. These institutions are governed by numerous laws and regulations, which means they apply a high level of scrutiny to every potential new partner.

InnReg will help your company successfully navigate partner reviews by auditing your compliance system and ensuring you meet all their regulatory requirements before the first conversation. We have a stellar record when it comes to preparing our clients for successful partnerships with regulated financial institutions because we leverage more than ten years’ worth of experience in this arena. 

In addition, in today’s regulatory climate, federal and state regulators are paying very close attention to digital finance activities. As fintechs grow in popularity and regulators take notice, taking a proactive approach to compliance can make a big difference. We help clients set up and manage processes to help mitigate future regulatory scrutiny and risks.

Should my company register as a regulated entity?

Whether to become regulated is one of the first questions many of our clients ask. We use 10+ years of experience to determine the most efficient regulatory approach and structure for their program. We then support them from initial filing to inquiries to final registration. It all depends on product design, business model, and marketing strategy.

Our goal? Ensuring that clients get the maximum functionality and revenue growth opportunities while keeping compliant with regulatory requirements.

If you’re wondering whether or not you’re asking the right questions (or missing major opportunities), then reach out for a Complimentary Consultation.

What if I’m a bank or an established financial institution? How can you help me?

We work with a variety of established financial institutions (e.g., commercial banks, brick-and-mortar broker-dealer investment advisors, and lenders).

There are three ways that we typically support these groups. First, if they are establishing a new partner relationship with a fintech startup, we help them assess and enhance their new partner’s compliance capabilities. Second, if they are planning to develop a new fintech product or service, we help them optimize product design and maximize revenue potential while adhering to regulatory guidelines. Third, if they have an international footprint and want to launch a new fintech line of business in the United States, we help them understand how to maneuver the local regulatory environment without setting off any warning lights.

Review highlights of our Fintech Compliance Expertise.

There are thousands of compliance consultants out there. What makes InnReg different and better?

Experience: We launched our business in 2013 with a focus on companies in the fintech arena. Since our founding, we have helped launch and grow technology-focused broker-dealers, digital lenders, alternative trading systems (ATS), crowdfunding platforms, online advisors and robo advisors, cryptocurrency platforms, and other fintechs.

Digital focus: Most compliance consultants are experts in traditional financial services business models. They’ve been part of a 100+ member compliance team at a Wall Street bank, or they’ve worked for a few years after college at a regulatory agency. They do not always understand the nuances of regulation and compliance for digital products and startups.

Depth of service: While many other compliance consultants are good at identifying problems, they fall short when it comes to formulating effective, cost-efficient solutions. InnReg shows clients where obstacles and pitfalls are lurking, and how to manage those obstacles while making sure regulators are comfortable. We also run compliance programs from end-to-end–planning, implementing, and then acting as an outsourced provider of compliance leadership, management, and operations.   

Solution focus: We never point out a problem without offering a solution. We’ll advise on how to innovate and remain competitive while working within compliance boundaries, helping build an efficient, effective, and scalable compliance platform that accommodates program needs during beta testing, product launch, and market expansion.

Results: Before launching InnReg, our founder was the Chief Compliance Officer at TradeKing and Zecco. These startup launched and merged into the sixth largest online broker-dealer in the US with 500,000 customers and $2.6 billion invested assets. Ally Bank acquired the combined company in June 2016.  

Key successes include:

  • The first broker-owned social networking platform, where 300,000 users publish validated details about their trading activity to other members
  • A browser extension that recognizes stock symbols on third-party websites (e.g., Yahoo Finance) and opens a pop-up window for one-click order entry
  • Gift certificates for stocks
  • Brokerage APIs for deployment on affiliates' sites
  • Currency-based trading in fractional shares using a mobile device

Cost-effectiveness: InnReg gives you the benefits of an in-house expert department with significant savings. You only pay for the staff time you need, without additional overhead. Our compensation structure is also designed to accommodate the financial constraints of early-stage clients—we are willing to align our incentives with those of founders and investors.

I know you’re the experts. But aren’t there cheaper alternatives out there?

When it comes to compliance in a regulated industry, the “cheap option” is often a false economy with disastrous results. Fines, penalties, and reputational impact are enormously costly. Doing the right things, the right way, the first time is usually the most economical route.

The majority of our new clients become long-term partners because our programs and services deliver measurable ROI to their bottom line.

How much do your services cost?

Outsourced Compliance Team Cost/Benefit Analysis

InnReg was launched to support early-stage startups with completely outsourced and end-to-end compliance solutions. In addition, we provide specific compliance services as a way to augment clients’ existing compliance teams with the specialized expertise that they do not have in-house. 

We understand the discipline of cost/benefit analysis, and we approach every engagement with cost savings and cost avoidance in mind.

Cost Savings

By offering a fully outsourced solution, you get experts who focus specifically on the challenges of digital innovators in financial services. Similar savings are also generated by using our solution in Outsourced Supervision.

How much does an in-house team cost? Averages vary based on the metro area but take a look at representative 2020 staff cost data from Robert Half.

New York

Chief Compliance Officer Salary + Benefits – $411,594

Compliance Manager Salary + Benefits – $232,597

Compliance Analyst Salary + Benefits (x2) –  $340,290

Total – $984,481

SF

Chief Compliance Officer Salary + Benefits – $413,059

Compliance Manager Salary + Benefits – $233,425

Compliance Analyst Salary + Benefits (x2) – $341,502

Total – $987,986

LA

Chief Compliance Officer Salary + Benefits – $386,694

Compliance Manager Salary + Benefits – $218,526

Compliance Analyst Salary + Benefits (x2) – $319,704

Total – $924,924

Chicago

Chief Compliance Officer – $363,258

Compliance Manager – $205,282

Compliance Analyst (x2) – $300,328

Total – $868,868

Miami

Chief Compliance Officer – $310,527

Compliance Manager – $175,483

Compliance Analyst (x2) – $256,732

Total – $742,742

Philadelphia/National Median

Chief Compliance Officer – $336,892

Compliance Manager – $190,383

Compliance Analyst (x2) – $278,530

Total – $805,805

With InnReg, you tap into resources with these skill sets without the salaries and overhead of an internal team receiving benefits and bonuses. Not only that, but you only use the services you need from niche experts such as KYC and AML specialists, fraud analysts, and more – tailored to the needs of your business.

What are the costs and risks of compliance failures?

If you are a startup:

By developing a regulatory strategy and compliance program from the beginning, integrated within your overall business strategy, you mitigate the risk of enormous costs. Imagine yourself 18 months after launch, now facing the costs of not getting it right the first time. You now have to contend with regulatory inquiries, possible regulatory fines, legal costs, potential personal liability, and then remediation.

If you are already established and growing:

Do not let your commercial growth outpace your compliance capabilities. It can be a difficult and costly mistake if issues arise that you are not equipped to mitigate or handle. Our solutions provide turnkey expertise and processing capacity.

Fines or penalties alone can be extremely challenging for smaller companies to absorb.

  • The Securities and Exchange Commission assessed $4.7 billion in disgorgement and penalties across 715 enforcement actions in fiscal 2020 - an average of over $6.5 million per action. (Source: SEC Division of Enforcement, 2020 Annual Report). 
  • The Federal Trade Commission obtained 66 court orders for over $507 million in consumer refunds – an average of almost $7.7 million per case. (Source: FTC Stats and Data 2020).
  • Industry sources report that the average Consumer Financial Protection Bureau Fine is $60.3 million. (Source: ValuePenguin).

The pro advice: Don’t put yourself in that position in the first place.

For a more detailed cost/benefit analysis tailored to your firm, contact us today.

You already manage multiple clients. Do you have enough bandwidth to meet my needs?

We are structured to fulfill 100% of each client's compliance needs, from ad hoc projects to providing a fully managed outsourced compliance department. We dedicate highly qualified administrators to manage your daily compliance processes. We also provide proven C-suite experts to lead your compliance function as a member of your executive team when needed, up to and including being registered as Chief Compliance Officer (CCO) with your industry regulator. We always accommodate your business needs and your budget.

We also offer more than simply manpower. We enhance the capability of your executive team with subject matter expertise from over ten years of experience supporting the ideation, development, and launch of innovative broker-dealers, digital lenders, alternative trading systems (ATS), crowdfunding platforms, online advisors and robo advisors, cryptocurrency platforms, and other fintechs.

Moreover, our multi-client practice positions us to deliver the latest solutions and best practices across multiple business categories. All of our clients benefit from this omni-category view because we apply what we learn from one category to another category. So everyone wins.

Why is InnReg headquartered in Miami, FL? Instead of a technology zone like Silicon Valley?

We established a home base in South Florida when our founder was helping to launch TradeKing, and it soon became clear this was the ideal location to house a fintech back-office operation.

Miami is a global hub for technology and financial services, especially international banking and disruptive startups. The business-friendly environment (no state income taxes in Florida) coupled with the low cost of living helps Miami attract more innovative companies and more talent. It’s the perfect place to establish an operations and service center to complement your Silicon Valley technology hub. 

Our operations are also 100% digital and cloud-based, so your team enjoys anytime/anywhere access regardless of physical proximity. Our team is distributed nationally and internationally to mirror your national or global footprint. Your team and your clients are everywhere, and so are we.
I am not sure I need your help. How can I find out more?

Reach out to schedule a Complimentary Consultation via telephone, video conference, or in-person meeting.

We’ll ask a lot of questions and listen carefully until we understand your business needs. If we believe InnReg can improve your compliance or back-office systems in a cost-efficient way, then we’ll be happy to prepare a statement of work with project scope, costs, and timeline.

This Discovery Meeting is free, so there’s nothing to lose and everything to gain.
What if I’m a fintech angel investor, VC or accelerator? How can you help me?

InnReg also supports angel investors, VCs, and accelerators who have fintech companies in their portfolio that need to develop a compliance and/or back-office operations platform to support its product or service. Investors benefit by approaching InnReg as a trusted compliance resource to help assess the regulatory aspects and risks of a potential fintech investment.

We provide additional services to help investors and accelerators support fintech startups. We’re one of the only regulatory compliance consultants with deep expertise in the fintech arena, from early-stage to later-round scenarios.

What questions should I ask a potential compliance service provider?

Compliance Questions

  • Do you believe our company should register as a regulated entity if we are not already?
  • How should we approach non-financial regulation such as the Federal Trade Commission?
  • Specifically which KYC and AML requirements apply to our business

Experience Questions

  • Does your partner team have a long history of experience in digital finance and fintech, from strategy to hands-on, day-to-day operations?
  • What is your track record of client success?
  • Do you focus on identifying problems or proposing solutions?
  • Are members of your team licensed compliance professionals?
  • Have you worked with broker-dealers, digital lenders, alternative trading systems (ATS), crowdfunding platforms, online advisors and robo advisors, cryptocurrency platforms, or other fintechs like us?
  • What level of experience do you have with middle- and back-office operations?

Process Questions

  • How specifically do you communicate recommendations, rationales, and alternatives to clients?
  • Are you able to work and negotiate with potential other partners and vendors?
  • How does your process ensure that you get traction and results quickly and efficiently?
  • Do you take ownership by taking compliance and supervision processes off our hands?
  • How will you support our business alongside your other accounts?
  • How do you innovate and improve your approach to compliance?

Would you like to learn more about how InnReg can help your business?

Reach out today for a Complimentary Consultation.

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