How International Payment Providers Can Navigate Global Compliance

In today's world of globalised financial services, international payment providers face enormous pressure from regulators on a daily basis. FATF statistics show an alarming trend: in recent years, the total amount of fines for violating AML/KYC rules has risen sharply. In 2024 alone, businesses paid more than $3.5 billion. These figures clearly demonstrate how seriously governments take regulatory compliance.

Non-compliance with established rules has serious consequences for businesses:

• Financial losses. Fines can reach 2-4% of a company's total turnover (e.g., under GDPR regulations).
• Operational risks. Licences may be suspended, and payment networks may be temporarily or permanently disconnected.
• Reputational costs. Loss of trust from customers and business partners.
• Legal sanctions. Criminal liability of managers in a number of jurisdictions.

The problem is particularly acute in areas where different legal fields overlap. Without a comprehensive approach to managing payment rules and regulations, even the most profitable transaction can turn into a serious legal conflict.

Payment transaction licensing: basics

Cross-border compliance is one of the keys to successful business operations in different countries and reducing the financial burden, as it minimises the risks of non-compliance with standards.

Licensing features by country

Obtaining legitimate status as an international payment gateway provider is the first and most important step in building a sustainable business. Each major economy has its own requirements for market participants.

European Union (PSD2, EMI licences). The PSD2 directive sets strict requirements for electronic money institutions (EMIs) and payment institutions (PIs). Companies are required to have a minimum authorised capital of €50,000 to $125,000, have their headquarters within the European Union, and comply with European Banking Authority (EBA) standards. In return, they gain access to the SEPA system and the right to issue electronic money.

(MSB, state licences). The American practice is more complicated: in addition to the federal MSB (Money Services Business) status issued by FinCEN, a separate licence is required in each state where the company plans to operate. New York State, for example, is known for its strict regulation through the NYDFS department. Every year, you will have to undergo an AML programme audit, submit reports on large transactions and keep documentation for five years.

Asia-Pacific region. The situation here is diverse. Singapore has a Major Payment Institution (MPI) regime that requires a statutory fund of $250,000 and mandatory PCI DSS certification. Hong Kong regulates the market through a Money Service Operator (MPO) licence, which requires quarterly reporting to the HKMA. Japan, in turn, requires registration as a money transfer operator with mandatory audits twice a year.

Licensing procedure

The procedure for obtaining a licence for international payment providers consists of several consecutive stages.

First, a package of documents is prepared, including founding documents, a detailed business plan, an approved AML/CFT policy, and information about the ultimate beneficiaries. Then, the minimum capital is confirmed by placing funds in a special escrow account at one of the authorised banks.

Next, a technical audit of the IT infrastructure is conducted to ensure compliance with security standards (PCI DSS, ISO 27001). After submitting the application, the review period varies from three months (in Singapore) to one year (in the United States). The first year and a half to two years are accompanied by enhanced checks by the regulator. The cost of licensing depends heavily on the jurisdiction chosen.

Supervisory authorities

• European Union: European Banking Authority (EBA)
• United States of America: Financial Crimes Enforcement Network (FinCEN)
• Singapore: Monetary Authority of Singapore (MAS)
• Hong Kong: Hong Kong Monetary Authority (HKMA)
• Japan: Financial Services Agency (FSA)

AML/KYC: anti-money laundering

International payment regulations impose strict rules for verifying the identity of customers. This is related to the tracking of money movements, as well as age restrictions on financial transactions.

Basic customer verification standards

The basic principle of combating financial crime is thorough identification of counterparties. The Customer Due Diligence (CDD) programme involves mandatory identification of the customer, verification of their source of income and understanding of the objectives of the upcoming financial relationship.

Current practices suggest that initial identification should take no more than five minutes for low-risk customers and no more than a couple of hours for high-profile customers. Most transactions over €1,000 are subject to mandatory verification.

Enhanced due diligence (EDD)

In cases of increased risk, Enhanced Due Diligence (EDD) procedures are used. Such measures are necessary when working with customers from high-risk areas (countries included in the FATF blacklist), detecting signs of fragmentation of amounts, or conducting transactions through anonymous wallets (e.g., cryptocurrencies).

EDD methods include in-depth analysis of beneficial ownership chains, continuous monitoring of IP addresses used, and comparison with databases of politically exposed persons (PEPs).

Modern automation tools

Modern technologies greatly facilitate the implementation of AML/KYC procedures. The following solutions are most in demand:

• Trulioo – international identity verification in more than 200 countries.
• Onfido – biometric user authentication.
• ComplyAdvantage – round-the-clock monitoring of sanctions lists.
• Featurespace – a tool for detecting anomalies in customer behaviour.

According to experts, automation reduces the number of false alarms by 60% and speeds up the verification process by 80%.

Tired of manual checks and false positives in AML? With the 0xProcessing payment gateway, you can automate real-time transaction monitoring, uploading transaction reports. Access the platform and test it for AML today.

Data protection and confidentiality

European PSD2 payment regulations and other regulators prescribe rules not only for the disclosure of certain customer data, but also for methods of protecting this information.

GDPR Regulation

The general provisions of the GDPR have become the benchmark for personal data protection. The legislation provides for:

• The right to be forgotten (Article 17 of the GDPR).
• Limitation of data storage period (no more than five years).
• Obligation to notify the regulator of a data breach within 72 hours.

The maximum penalty for a violation is €20 million or 4% of the company's turnover.

PCI DSS standard for payment systems

Special attention is paid to the storage and processing of payment data. The PCI DSS standard requires:

• encryption of card data using the AES-256 method;
• physical isolation of network infrastructure (DMZ);
• annual external audit by qualified specialists (Qualified Security Assessor, QSA).

Small businesses can undergo a simplified self-assessment (Self-Assessment Questionnaire, SAQ), while large operators are required to submit a full Report on Compliance (ROC).

National data protection laws

• California Consumer Privacy Act (CCPA) – the right of California residents to request access to their data and demand its deletion.
• Lei Geral de Proteção de Dados (LGPD, Brazil) – the obligation to store the data of Brazilian citizens exclusively within the country.
• Personal Data Protection Act (PDPA, Singapore) – obtaining consent for cross-border transfer of personal data.

Cross-border payments: regulatory features

Let's take a closer look at the main payment processing regulations/

Currency control

• Limits on transfer amounts (e.g., India has set a threshold of $50,000 per month).
• Requirements for disclosure of sources of funding (China, Russia).
• A complete ban on settlements in certain currencies (e.g., the Venezuelan bolivar).

All large transactions (over $100,000) are subject to mandatory reporting via SWIFT MT202/MT103 forms, indicating bank identification codes (BIC).

International agreements

• FATF Recommendations – 40 standards for combating money laundering.
• Common Reporting Standard (CRS) – automatic exchange of tax information between more than 1,100 countries.
• Foreign Account Tax Compliance Act (FATCA, USA) – reporting on foreign accounts of US residents.

Taxation

Value added tax (VAT/GST) rates range from 0% (UAE) to 27% (Hungary). Reporting forms also vary:

• Form 1099-INT (USA) – for interest payments to non-residents.
• South African Value Added Tax Return (SA-VAT) – South African VAT return.

Taxes on cryptocurrency transactions deserve special attention. In India, for example, they amount to an impressive 30%.

Technological solutions for regulatory compliance

Failure to comply with regulatory rules can result in serious fines. For this reason, businesses need to be careful when processing financial transactions.

Payment orchestrators with compliance modules

Orchestrator platforms automate the complex process of routing payments in accordance with local laws. Their functionality includes:

• automatic selection of the optimal jurisdiction for conducting a transaction;
• real-time monitoring of the licences of the providers involved;
• generation of reports for regulators (EBA, FinCEN).

Popular solutions include Adyen and Stripe.

Transaction monitoring systems

Modern monitoring systems are based on artificial intelligence and machine learning. They can recognise suspicious patterns of fund movement (e.g., layering – moving money in multiple layers to cover tracks). Graph analytics allows you to track long chains of transfers, and Natural Language Processing (NLP) allows you to analyse accompanying comments on payments.

Cloud platforms for KYC

Cloud solutions make the customer verification process fast and efficient. The advantages are obvious:

• scalability – simultaneous verification of millions of profiles;
• speed – verification in less than a minute;
• convenience – integration with any existing CRM and ERP systems.

Common mistakes in ensuring regulatory compliance

Even experienced international providers sometimes make unfortunate mistakes that lead to serious consequences.

Ignoring the specifics of local regulations

A common mistake is underestimating the importance of local laws in developing regions of Africa, South America, and Southeast Asia. For example:

• In Nigeria, registration with the National Financial Intelligence Unit (NFIU) is required.
• In Brazil, the LGPD law requires the mandatory storage of personal data on servers within the country.
• Indian authorities strictly control cross-border transfer limits, taking into account the type of currency and the purpose of the payment.

The consequences of neglecting such nuances can include multi-million dollar fines, loss of access to local payment systems, and even criminal prosecution.

Rare updates to AML/KYC policies

Another common mistake is the use of outdated checklists and customer verification methods. It is particularly dangerous to delay policy adaptation after the release of new FATF recommendations or the introduction of new risk categories (e.g., the emergence of cryptocurrency exchanges and P2P platforms).

This can result in suspicious transactions being overlooked, inclusion in FATF blacklists, public scandals, and additional checks by regulators.

Lack of real-time monitoring of sanctions lists

Some companies continue to rely on manual updates of OFAC, UN, and EU blacklists. This practice is fraught with dangerous consequences. A striking example is the case of a European provider fined €8.2 million for cooperating with an organisation that had recently been added to the EU sanctions list. The reason was the lack of automatic synchronisation with an up-to-date database (e.g. Refinitiv World-Check).

Insufficient level of personal data protection

Finally, insufficient personal data protection remains a serious problem. Many companies store excessive amounts of information without proper encryption, transmit sensitive information through insecure channels (FTP, email) and neglect to develop data breach response plans.

The consequences of negligence can be extremely severe: huge fines under the GDPR, lawsuits from affected customers, and suspension of licences (e.g., in Singapore).

Conclusion

For any international payment provider, regulatory compliance is not a bureaucratic formality, but a strategic resource. Success is only possible with a comprehensive approach:

• Obtaining licences in all relevant jurisdictions.
• Continuous monitoring of changes in legislation.
• Active implementation of innovative technologies (AI, cloud-based KYC).
• Transparency and willingness to cooperate with regulators.
• Flexibility in building cross-border payment routes.

Investing in the right compliance processes pays off – the risk of fines and losses is significantly reduced, customer and partner trust grows, and opportunities to expand into new markets emerge.

Ready to take your international payment business to a new level of compliance? Book a consultation with an international payment expert at 0xProcessing.

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