Britain’s fintech success story is entering a new phase, one defined not by innovation, but by accountability. As regulators tighten sanctions and financial crime oversight, the very firms that once symbolized disruption are now being tested on their compliance maturity.
The message from regulators: scale is no excuse for weak controls. When digital bank Monzo was fined £21 million this year for shortcomings in anti-money-laundering (AML) systems, after customer addresses like “10 Downing Street” slipped through, it became a warning shot to the entire sector. In the era of real-time finance, fintechs must meet big-bank standards or face big-bank consequences.
Across the UK and EU, regulators are leveling the playing field. The European Banking Authority’s guidelines require fintechs to demonstrate the same real-time transparency over ownership, sanction screening, and auditability as any traditional institution. Those that fall short risk fines, growth restrictions, and reputational damage that can quickly undo years of customer trust.
For fintechs chasing double-digit growth, compliance can no longer be an afterthought. It must be designed into operations from day one.
From Startup Mentality to Compliance Maturity
For much of the past decade, regulators treated digital challengers as experiments: innovators first, institutions second. That grace period is over. Supervisors in London, Frankfurt, Paris, and beyond now expect fintechs to prove the same governance, auditability, and sanction readiness as any high street bank.
Excuses such as “we’re not a bank” or “our vendor handles it,” no longer hold water. With embedded payments, banking-as-a-service (BaaS), and cross-border offerings, fintechs are now central nodes in the financial system, and therefore on the front line of risk.
The vulnerabilities have been apparent for years: fragmented controls, inconsistent data, and limited visibility over third-party providers. Criminal networks have learned to exploit these weak links. From crypto exchanges to card-issuing platforms, the results are showing. Complaints linked to digital payment scams have increased 99% since 2023, going as far as CVC kiosks being used for illicit activity, and reported victim losses have risen by more than 30% according to UK regulators.
The High Stakes of Non-Compliance
The European Banking Authority’s 2024 guidelines have made the new regulatory expectations explicit: real-time screening, ownership transparency, and explainable automation. Compliance decisions powered by AI must now be auditable and defensible.
The price of non-compliance is steep. Beyond fines, firms risk losing their banking partners, suffering reputational damage, and even losing their license to operate. Research shows the cost of non-compliance is nearly 2.7 times higher than the investment required to build a robust compliance program.
Yet for many rapidly scaling fintechs, the financial burden is not the only challenge.
Outdated processes create a new kind of exposure: the compliance bottleneck. When screening systems slow onboarding and delay transactions, they undercut the very speed and trust that define the fintech model.
Legacy Sanctions Screening Isn’t Enough
Traditional rules-based systems may tick the boxes of a compliance checklist, but do not address today’s reality. Criminal networks easily evade simple name-matching through shell companies, aliases, or layered ownership structures. Worse, these outdated tools flood compliance teams with false positives, clogging operations and frustrating customers.
The next generation of compliance will depend not only on automation, but on explainability, ensuring regulators can see how AI-driven systems reach their decisions. Transparency will define credibility. In an industry where reputation moves as quickly as money, that could be the ultimate differentiator.
Agile xAI Compliance Solutions
Fintechs have built their reputations on speed: launching products in weeks, scaling across borders in months, faster than traditional banks ever could. But maintaining that agility under stricter oversight requires compliance systems that evolve just as fast.
Explainable AI (xAI) is emerging as the bridge between innovation and regulation. It enables automated screening that not only detects suspicious activity, but shows precisely why a transaction was flagged, creating trust between firms and regulators alike.
By reducing false positives and streamlining review processes xAI allows small compliance teams to do more with less. The technology is not a silver bullet, but it turns compliance from a reactive necessity into a proactive, data-led advantage.
Fintechs that invest early in transparent, auditable systems will gain more than regulatory approval. They’ll gain operational resilience and market trust. In a sector where credibility moves as fast as money, that may be the most valuable currency of all.
A quote from the author:
“AI is a mindset before it is a technology. Real impact happens when it is embedded into everyday operations.”
Moshe Siman-Tov, COO at ThetaRay
Moshe Siman-Tov is the COO of ThetaRay, where he leads the company’s core operational and technological domains — from R&D and algorithmic development to customer delivery, support, and post-sales operations. Moshe focusses on AI as a strategic driver that should reshape how a company operates, and focuses on both applying AI both in external product offerings and internal processes. Prior to ThetaRay, Moshe worked at organizations such as Orange, Kaltura and served as CTO and GM at Venn City.
Moshe Siman-Tov
Moshe Siman-Tov is the COO of ThetaRay, where he leads the company’s core operational and technological domains — from R&D and algorithmic development to customer delivery, support, and post-sales operations. Moshe focusses on AI as a strategic driver that should reshape how a company operates, and focuses on both applying AI both in external product offerings and internal processes. Prior to ThetaRay, Moshe worked at organizations such as Orange, Kaltura and served as CTO and GM at Venn City.
