10 Compliances You Must Know

In 2023, regulatory fines against fintechs exceeded $5.8 billion globally, with violations ranging from weak AML controls to failure in securing payment data. These weren’t edge cases. They involved well-funded startups and established platforms alike. Fintechs operate at the intersection of financial regulation and data privacy, making compliance a critical operational risk, not just a back-office task.

Whether you’re issuing loans, processing payments, facilitating crypto transactions, or handling sensitive consumer data, your business is subject to specific and often overlapping legal obligations. 

This fintech compliance checklist outlines the most relevant compliance areas fintechs must address. It covers what each regulation requires, where it applies, and how it affects your operations.

Fintech Compliance Checklist

1. Payment Card Industry Data Security Standard (PCI DSS)

PCI DSS applies to any fintech that stores, processes, or transmits cardholder data. It sets the baseline for secure payment infrastructure and is enforced globally by card schemes like Visa and Mastercard. For fintech companies, PCI compliance is a prerequisite for working with payment processors, issuing cards, or building consumer trust.

Key PCI DSS compliance requirements include:

• Encryption of cardholder data, both at rest and in transit, using industry-standard protocols such as TLS 1.2+ and AES-256.
• Access controls that restrict data access to authorised personnel, with unique user IDs and multi-factor authentication for administrators.
• Network segmentation to isolate payment environments from broader systems.
• Real-time monitoring and alerting for unauthorised access or anomalous activity.
• Regular security testing, including vulnerability scans and penetration testing.

PCI compliance also requires operational discipline. Fintechs must maintain detailed audit logs, and policies must be reviewed regularly, particularly after changes in infrastructure or architecture.

2. Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT)

Fintechs involved in payments, digital banking, or crypto must comply with AML and CFT regulations to prevent illicit funds and terrorist financing. Compliance requires assessing risks by product, geography, and customer profile to tailor controls effectively.

Key obligations include:

• Verifying identity and beneficial ownership before onboarding.
• Detecting suspicious activities like structuring or unusual volumes.
• Filing suspicious activity reports (SARs) with authorities promptly.
• Maintaining customer and transaction data as required.
• Enabling employees to identify and escalate risks.

Cross-border fintechs face varied local requirements but must align with international standards, often through centralised compliance functions. Failing AML/CFT compliance risks heavy fines, licence loss, and reputational harm.

3. Gramm-Leach-Bliley Act (GLBA)

The GLBA protects the privacy of consumers’ personal financial information and applies to fintechs operating in the US or processing US consumer data. The GLBA Safeguards Rule mandates fintechs to develop, implement, and maintain a robust information security programme. 

Key components include:

• Risk assessments to identify vulnerabilities in systems and processes.
• Technical controls such as encryption, firewalls, and multi-factor authentication.
• Administrative policies including strict access management and ongoing employee training.
• Measures to prevent pretexting, such as strong customer authentication and social engineering awareness.

Fintechs often face challenges complying with GLBA due to evolving technologies and complex third-party relationships. Non-compliance risks regulatory investigations, fines, and reputational damage from agencies like the FTC and CFPB.

4. Health Insurance Portability and Accountability Act (HIPAA)

HIPAA applies to fintech companies that handle protected health information (PHI), particularly those offering payment, insurance, or finance tools connected to healthcare. Although HIPAA is a US regulation, it also applies to non-US companies processing PHI of US citizens. 

Key requirements include:

• Access controls to restrict PHI to authorised personnel only.
• Data encryption for PHI in transit and at rest.
• Audit logging to track who accessed PHI and when.
• Physical safeguards, such as secured data centres and device policies.

Many fintechs fail HIPAA audits due to misconfigured cloud environments, inadequate access controls, or lack of breach preparedness.

5. Sarbanes-Oxley Act (SOX)

SOX applies to publicly listed fintech companies in the US and any foreign fintechs listed on US stock exchanges or serving public companies. The regulation was introduced to improve corporate transparency and prevent accounting fraud following major financial scandals like Enron and WorldCom.

Key SOX requirements include:

• Documented internal controls over financial reporting (ICFR), with routine testing and independent audits.
• Certifications from the CEO and CFO that financial statements are truthful and complete.
• Retention of financial records and audit documents for at least five years.
• Real-time disclosures of material changes that could impact shareholders.

Non-compliance can result in criminal charges, personal liability for executives, and suspension from stock exchanges.

6. U.S. Securities and Exchange Commission (SEC) Regulation

Fintechs involved in issuing, trading, or advising on securities must comply with SEC regulations if they interact with US markets or investors. This applies regardless of where the company is based. It includes platforms dealing in tokenised assets, algorithmic trading, robo-advisory services, and equity crowdfunding.

To meet SEC requirements, fintechs must:

• Register as a broker-dealer, investment adviser, or alternative trading system (ATS), depending on their business model.
• Disclose material information, including investment risks, pricing structures, and any conflicts of interest.
• Maintain operational transparency, particularly in fundraising activities such as token offerings or securities issuance.

Non-compliance can result in enforcement actions, including fines, trading bans, or loss of licences. For fintechs operating in investment, trading, or digital asset markets, SEC compliance is a core legal requirement and a safeguard for investor trust.

7. Truth in Lending Act (TILA)

TILA applies to fintech companies that offer credit products, such as personal loans, credit cards, instalment plans, or buy now, pay later (BNPL) services, in the United States. Its primary aim is to promote transparency in lending, so consumers can make informed decisions about borrowing.

Key disclosure and compliance requirements include:

• Clearly stating the Annual Percentage Rate (APR) and total finance charges
• Informing consumers of their right to cancel certain types of loans within three business days.
• Providing accurate billing statements, with clear breakdowns of charges and interest.
• Ensuring advertising and promotional materials reflect actual credit terms.

TILA also places restrictions on how credit terms are communicated in marketing. If any trigger terms are used (e.g. “0% interest”), the full set of required disclosures must follow. Violations can result in consumer lawsuits, class actions, and enforcement by the Consumer Financial Protection Bureau (CFPB). 

8. Fair Credit Reporting Act (FCRA)

FCRA governs how fintech companies handle consumer credit information in the United States. It applies to any fintech that provides credit, accesses credit reports, or furnishes data to credit reporting agencies. The goal is to ensure fairness, accuracy, and privacy in the use of consumer credit data.

Key compliance responsibilities include:

• Providing accurate and up-to-date information to credit bureaus.
• Explaining credit denials, including the reasons and the consumer’s right to a free credit report.
• Obtaining consumer consent before accessing credit reports.
• Investigating disputes and correcting any reporting errors promptly.

FCRA violations can lead to regulatory penalties, lawsuits, and reputational damage. For fintechs offering credit services or integrating with third-party credit platforms, building FCRA compliance into product and engineering workflows is essential.

9. New York Department of Financial Services (NYDFS) Regulation

Fintech companies operating in New York or serving its residents must comply with strict NYDFS regulations. This includes obtaining licences such as the BitLicense or MSB for crypto and money transmission, along with meeting ongoing compliance standards that often exceed federal requirements.

Core NYDFS requirements include:

• Cybersecurity compliance, including a written security policy, risk assessments, regular penetration testing, and incident response plans.
• AML/KYC enforcement, with customer verification, transaction monitoring, and suspicious activity reporting.
• Regulatory reporting, including annual certifications, audits, and breach disclosures.
• Licensing obligations, depending on the nature of the financial product or service.

The NYDFS can impose steep fines or suspend a company’s ability to operate in New York for non-compliance. 

10. California Consumer Privacy Act (CCPA)

The CCPA governs how businesses, including fintechs, collect, use, and share personal data of California residents. It applies to companies operating in California or handling data of its residents, regardless of where the business is based.

The regulation is designed to enhance consumer privacy rights by giving individuals control over their personal information. 

Key CCPA requirements include:

• Provide clear privacy notices about data collection and usage.
• Let users access or delete their personal data.
• Allow users to opt out of data sales to third parties.
• Use security measures to protect against data breaches.

Non-compliance can result in significant fines and damage to reputation. Given the rise of data-driven financial services, adhering to CCPA is essential for fintechs to maintain consumer trust and avoid regulatory penalties.

Conclusion 

Compliance in fintech is not just a legal formality; it is a core product requirement. Every feature you release, from payments to crypto, triggers regulatory obligations based on geography and service type. Even early-stage startups must consider laws like PCI DSS, GLBA, or NYDFS when handling sensitive data. Ignoring compliance early can lead to regulatory penalties and expensive rework. 

Our fintech compliance checklist helps align development with legal expectations, covering licensing, data practices, audits, and reporting. In a regulated space, smart compliance planning is not optional. It is a strategic edge that supports growth and long-term success.

FAQs

1. What happens if a fintech startup ignores compliance requirements?

Non-compliance can result in regulatory fines, licence revocations, lawsuits, data breach liabilities, and even criminal charges depending on the violation.

2. How can early-stage fintechs manage compliance without a legal team?

Start with a focused risk assessment, prioritise high-impact regulations (like AML, PCI DSS), and consider working with specialised compliance consultants.

3. How often should fintechs review their compliance policies?

At a minimum, policies should be reviewed annually or when expanding to new markets, launching new products, or after any regulatory changes.

4. What should be included in a fintech compliance checklist?

A strong fintech compliance checklist should include applicable licences (MSB, lending, crypto), data privacy standards (GLBA, GDPR, CCPA), security frameworks (PCI DSS, SOC 2), AML/KYC controls, and regular audit procedures. Startups should build this checklist early to avoid legal and operational risks later.

5. Does EngineerBabu offer compliance-ready fintech development services?

Yes. EngineerBabu specialises in building fintech platforms that are secure, scalable, and designed with compliance in mind. From AML/KYC integrations to PCI DSS-ready architectures, our team ensures your product aligns with regulatory standards