Fintech Compliance, The Ultimate Guide for Scaling Fintechs in 2026

Your Series B closed six months ago. You've hired 40 people across three new markets. And yesterday, your banking partner sent a due diligence questionnaire that made your Head of Compliance go quiet for an hour.

Fintech compliance is a governance and control discipline that ensures a technology-led financial services business meets its legal, regulatory, and security obligations across licensing, anti-financial-crime controls, consumer protection, and operational resilience. That's the textbook definition. The reality for a company scaling from 200 to 2,000 employees is messier: regulators will treat you like a financial institution long before you feel like one.

Here's what most compliance guides miss. They focus on regulations and checklists without addressing the organisational design questions that actually trip up mid-market fintechs. Who employs the person running your AML programme in Germany? What happens when your contractor in Texas starts handling customer complaints? These workforce and entity decisions are compliance decisions, and they're the ones that create the most expensive surprises.

Key Takeaways

• Fintech compliance safeguards customers, builds trust, and accelerates market access as you scale
• It spans AML, consumer protection, data privacy, payments rules, licensing, and operational resilience
• Mid-market growth multiplies scrutiny from regulators, banks, and investors
• Workforce model choices (contractors, EOR, entities) directly affect regulatory accountability
• Treat compliance as a growth function to unlock partnerships and expansion

What Is Fintech Compliance And Why It Matters For Scaling Companies

For mid-market fintechs operating across multiple countries, a practical compliance operating model typically requires 3 distinct layers of accountability: first line ownership in operations and product teams, second line compliance oversight, and third line independent assurance where resourced, according to Teamed's governance guidance for scaling regulated companies.

Compliance in fintech goes beyond AML and KYC. It includes consumer protection rules that govern how you disclose fees and resolve disputes. Data protection frameworks that dictate where you store customer information and how you transfer it across borders. Payments regulations that require safeguarding client funds. Licensing conditions that determine which products you can offer in which markets. And operational resilience requirements that expect you to keep critical services running when things go wrong.

Why does this matter for a company at 300 employees? Because the scrutiny intensifies at exactly the wrong moment. You're adding products, entering markets, and hiring fast. Your banking partners are asking harder questions. Your investors want to see audit-ready documentation. And regulators are paying attention to your customer volumes, not your headcount.

Consider a European payments firm that built its compliance programme for PSD2 and GDPR. It works well in the EU. Then they launch in the US and discover that EU-only approaches are insufficient across a multi-regulator environment. State money transmitter licenses. Federal consumer protection rules. Different AML expectations. The compliance function that felt adequate at 150 employees suddenly has gaps everywhere.

Teamed advises HR, Finance, and Legal leaders on how employment and entity decisions align with fintech regulatory compliance. The question isn't just "are we compliant?" It's "is our organisational structure built to stay compliant as we scale?"

Key Fintech Regulations And Regulators In The US And Europe

A regulated activity perimeter is a legal boundary that determines whether a fintech's product features, customer journey, and revenue flows trigger licensing, registration, or conduct rules in a specific jurisdiction. Understanding where you sit within that perimeter is the first step.

In the EU

The EU operates on a single rulebook model. PSD2 (Payment Services Directive 2) governs payments and strong customer authentication. GDPR (General Data Protection Regulation) sets strict data protection requirements. MiCA (Markets in Crypto-Assets Regulation) started applying in phases, with rules for asset-referenced tokens and e-money tokens applying from 30 June 2024 and broader provisions applying from 30 December 2024. The Digital Operational Resilience Act (DORA) applies from 17 January 2025 and requires many EU financial entities to implement ICT risk management, incident reporting, resilience testing, and third-party oversight.

National competent authorities implement and supervise EU rules, which means compliance evidence and supervisory expectations can vary by member state even when the underlying regulation is harmonised.

In the UK

The FCA (Financial Conduct Authority) handles conduct supervision for e-money, payment institutions, and consumer credit. The PRA (Prudential Regulation Authority) covers prudential matters for larger firms. Post-Brexit, the UK has its own regulatory trajectory, though many frameworks remain aligned with EU standards.

In the US

Here's where it gets complicated. There's no single fintech regulator. The CFPB (Consumer Financial Protection Bureau) protects consumers regarding financial products. The SEC (Securities and Exchange Commission) regulates securities and investments. FinCEN (Financial Crimes Enforcement Network) oversees AML and counter-terrorism financing. The FTC enforces consumer protection and data security. State regulators require money transmitter licenses, often in each state where you operate.

An EU payment institution can passport services across EEA member states under PSD2. A US expansion typically involves coordinating with several federal agencies while obtaining licenses state by state. For a first compliance or legal team, that contrast shapes everything from hiring plans to entity structure.

Fintech Regulatory Compliance For Payments, Lending And Crypto

A mid-market fintech should treat a launch into each additional regulated jurisdiction as at least a 4-workstream change programme covering licensing or passporting, AML and sanctions controls, data protection and transfers, and third-party governance, according to Teamed's cross-border expansion playbooks.

Payments

If you're moving money, you need licensing as a payment institution or e-money institution (or US equivalents). You must safeguard client funds, keeping them separate from operational accounts. PSD2-style strong customer authentication applies in Europe. Consumer disclosures and error resolution procedures are mandatory. And your payment services rules stack on top of horizontal requirements like AML and data protection.

Lending

Consumer credit rules require transparency on rates and fees. Fair lending and anti-discrimination laws apply in most jurisdictions. BNPL and small business lending face increasing supervisory attention. Servicing and collections standards govern how you treat borrowers who fall behind. The regulatory perimeter can shift quickly: a feature that looks like a payment delay might actually be credit.

Crypto and Digital Assets

MiCA provides an EU-wide framework for certain tokens, custody, and exchange services. In the US, treatment varies: some stablecoin issuers face bank-like expectations, while other crypto activities fall under SEC or state supervision. Consumer protection and financial stability concerns drive regulatory focus. Custody and exchange obligations are becoming clearer but remain fragmented across jurisdictions.

The reality for most scaling fintechs is multi-category. You might combine stored value, payments, and credit in one product. Each layer has its own obligations, and they stack. A small feature change can shift your regulatory category entirely.

Fintech Compliance Risks For Mid Market Companies

For regulated fintech roles, Teamed advises that "who employs the worker" is a compliance-relevant control point because regulators and bank partners typically expect clear lines of supervision and accountability, not informal contractor management.

Licensing and Perimeter Risk

You launch in a new country or add a product feature. Did you update your licenses, registrations, and notifications? This is the most common scaling pitfall. What passed as acceptable in one jurisdiction can be a red flag in another.

Policy-to-Practice Gaps

Your AML policy looks solid on paper. But is your team actually following it at scale? Regulators flag discrepancies between documented procedures and operational reality. The gap widens as you grow faster than your compliance function.

Workforce Risk

Regulated activities handled by contractors or via third parties create accountability questions. If your AML analyst in Frankfurt is a contractor, who supervises them? Who's responsible if they miss something? Misclassification issues compound the problem, especially under UK IR35 rules where HMRC can assess underpaid tax with look-back periods of up to 4 years for "careless" behaviour and up to 6 years for "deliberate" behaviour.

Technology and Data Risk

Weak access controls, inadequate incident response, and poor vendor oversight draw increasing regulatory attention. Your cloud provider's security posture becomes your compliance posture.

Operational Resilience

DORA in Europe sets explicit expectations for ICT risk and third-party oversight. US guidance raises similar bars. Can you keep critical services running when your payment processor goes down?

Which of these risks resonate with your current situation? Most mid-market fintechs face several simultaneously, with multiple regulators, markets, and products outpacing a nascent compliance function.

Fintech AML Compliance Essentials For Scaling Fintechs

If you are moving money, AML is not optional, it is foundational.

A Money Laundering Reporting Officer (MLRO) is a designated senior individual responsible for oversight of an organisation's anti-money laundering and counter-terrorist financing programme and for making required external reports to authorities where applicable. Most mid-market fintechs need this role once they operate regulated products across multiple countries.

Programme Elements

Your AML programme needs customer due diligence (verifying who your customers are), enhanced due diligence for higher-risk profiles, ongoing transaction monitoring, sanctions screening, and suspicious activity reporting. These aren't optional components you can phase in later.

Risk-Based Approach

Tailor controls to your product, customer base, and geographic footprint. Generic checklists don't satisfy regulators. A payments app serving retail customers in low-risk markets needs different controls than a crypto exchange with institutional clients moving funds across high-risk corridors.

Scaling Tipping Point

Manual checks and basic tools work at 50 employees. By 200, you need structured tooling and clearer ownership across Compliance, Operations, and Technology. The transition is painful if you wait too long., with fintech firms increasing AML investment by 35% year-over-year to meet these scaling demands. The transition is painful if you wait too long.

Evolving Expectations

The EU is moving toward centralised AML supervisionThe EU is moving toward centralised AML supervision, with 70% of fintech companies now identifying money laundering and terrorist financing risks as high or rising according to the European Banking Authority. US FinCEN guidance emphasises risk-based modernisation. AI can support decision-making in monitoring and scoring, but accountable human oversight remains essential. You can't automate away responsibility. with detection accuracy improvements of 43%, but accountable human oversight remains essential. You can't automate away responsibility.

EU-based fintechs expanding into higher-risk markets or seeking US correspondent banking relationships often need to uplift controls beyond what worked domestically.

Fintech Risk Management Framework For Regulatory Compliance

Teamed advises that an internal policy set is not audit-ready unless each critical control has an assigned owner, a testing cadence, and retained evidence, and that the minimum viable cadence for high-risk controls is at least quarterly review.

A risk management framework is a structured way to identify, assess, and respond to risks that could hinder regulatory and business objectives. It sounds abstract until your banking partner asks for your risk register and you realise you don't have one.

Core Components

Start with a risk register that catalogues what could go wrong. Assign clear ownership: AML risk to Compliance, access controls to Engineering, data privacy to Legal or a dedicated DPO, conduct risk to Operations. Define your risk appetite, meaning how much risk you're willing to accept. Establish standard control types. Test those controls and report to leadership and the board.

Ownership Mapping

In a 200 to 2,000 person fintech, typical ownership looks like this: Compliance owns AML and regulatory reporting. Engineering owns access controls and system security. Legal owns data protection and contract review. Operations owns customer-facing conduct and complaints handling. The boundaries matter because unclear ownership creates gaps.

Separation of Functions

Keep risk management, compliance, and internal audit (where you have it) distinct. The person designing controls shouldn't be the only person testing them.

Teamed can advise on evolving frameworks as companies move from a few markets to global footprints where workforce and entity structures add complexity. Aligning your framework to EU DORA-style operational resilience and comparable US expectations on continuity and third-party risk is increasingly non-negotiable.

Fintech Compliance Checklist For Companies With 200 To 2,000 Employees

In a 200 to 2,000 employee fintech, Teamed typically sees compliance evidence requests from partner banks and enterprise customers concentrate into 5 documentation sets: licensing status, AML policies and monitoring evidence, incident response and security controls, third-party oversight, and governance reporting packs.

This checklist is directional. Specific requirements vary by regulator and partner. But it signals what "good" looks like for a scaling fintech.

Licensing

• Confirm licenses match your current products and countries
• Track renewal dates and notification requirements
• Plan US state licensing if applicable (prioritise based on customer concentration and partner expectations)

AML and KYC

• Document policies with clear ownership
• Implement customer risk ratings and screening
• Establish monitoring processes and SAR procedures
• Validate models where AI or automation is used

Data Protection

• Map GDPR processing activities and lawful bases
• Define data retention periods
• Establish cross-border transfer safeguards
• Conduct DPIAs for high-risk processing
• Document incident response procedures

Technology

• Implement access controls and encryption
• Establish change management processes
• Conduct vendor security assessments
• Test resilience and maintain disaster recovery plans

Governance and Reporting

• Define roles and responsibilities clearly
• Establish board reporting rhythms
• Track issues and remediation
• Set training cadence for all staff

People and Entities

• Ensure regulated activities are performed by appropriately employed and supervised staff per jurisdiction
• Avoid misclassification of contractors performing regulated work
• Align entity structure with licensing requirements

Review this checklist at least annually and after major product or geography changes. Include compliance status in board reviews.

Comparing Fintech Compliance In Europe And The US

EU fintech supervision differs from US supervision because an EU-authorised payment institution can often passport services across EEA member states under PSD2, while a US expansion typically involves a multi-agency and multi-state licensing and oversight landscape.

Regulatory Structure

In Europe, you often learn one system. The EU single rulebook model means directives and regulations apply across member states, with national authorities handling supervision. In the US, you need to learn many. Federal agencies cover different aspects, and state regulators add another layer entirely.

Data Protection

GDPR requires strict privacy controls, lawful bases for processing, and safeguards for international transfers. The US has sector-specific and state-specific privacy laws (CCPA in California, GLBA for financial institutions), with varying transfer expectations. Cross-border data flows between the EU and US remain a friction point.

Licensing and Supervision

PSD2 licensing in Europe enables passporting. US money transmitter licenses require state-by-state applications. Some states are straightforward; others take months and significant legal fees.

Enforcement Culture

Europe is moving toward more centralised AML supervision with coordinated oversight. The US has multiple agencies with overlapping jurisdiction, plus active state attorneys general who pursue enforcement independently.

Workforce and Entity Strategy

EU firms often centralise regulated roles in their home jurisdiction. US expansion may require local responsible officers and specific entity setups to satisfy licensing conditions. The employment model for your US compliance team isn't just an HR decision, it's a regulatory one.

Employment Models And Fintech Compliance For Mid Market Firms

Direct employment differs from contractor engagement in that direct employment creates clearer managerial control and statutory employment protections, while contractor engagement increases misclassification risk when the worker is embedded into daily operations.

In a regulated fintech, who does the work and who employs them is part of your compliance story.

Direct Employment via Local Entities

Strongest control and accountability. The licensed entity employs the worker directly. Regulators and banking partners prefer this for controlled functions. The trade-off is higher setup costs and ongoing overhead.

Employer of Record (EOR)

An Employer of Record (EOR) is a third-party organisation that becomes the legal employer for workers in a specific country, handling payroll, tax withholding, and statutory employment compliance while the client directs day-to-day work. EOR offers speed and flexibility for non-regulated roles or initial market entry. But limitations apply for certain regulated functions where the license holder needs direct employment relationships.

Independent Contractors

Agility and cost benefits, but heightened misclassification and oversight risk. Choose contractors only when the work is clearly project-based, deliverable-led, and not embedded into core operations.

Why do regulators care? Because accountability matters. If your AML analyst is a contractor managed through a third party, the chain of supervision becomes unclear. Some regulators require in-country responsible officers directly employed by the licensed entity.

Consider a European fintech using contractors or EOR for initial US roles. As regulated activity grows or licenses are sought, they often need to shift to direct employment and local entities. The transition is smoother when you've planned for it.

How To Choose Fintech Compliance Solutions That Scale

Third-party risk management in fintech is a control framework that evaluates and monitors vendors, outsourcing partners, and service providers to ensure regulatory accountability, data protection, and service continuity obligations are met.

Technology should make good compliance easier, not encourage you to outsource judgment.

Role of Tools

KYC platforms, transaction monitoring systems, policy management software, and regulatory change trackers support compliance. They don't replace accountable people and governance. The best tools reduce manual effort and improve consistency. They don't make decisions for you.

Typical Triggers for Investment

Manual reviews becoming unsustainable. Inconsistent application of policies across teams. Fragmented data making it hard to evidence compliance. Difficulty responding to audit requests.

Evaluation Criteria

Criterion	What to Look For
Regional coverage	Does it support EU, UK, and US requirements?
Scalability	Can it handle 10x your current volume?
Audit trails	Does it retain evidence in a format regulators accept?
Integrations	Does it connect to your existing systems?
Workflow flexibility	Can you configure it to your processes?
Pricing transparency	Are costs predictable as you grow?
AI usage	Is it clear how AI is used and controlled?

Pitfalls to Avoid

Rigid platforms that force you to change your processes. Opaque pricing that surprises you at renewal. Vendor lock-in that makes switching painful.

Start from your risk management framework. Use your checklist to identify where tools add the most value. Sometimes the gap isn't tooling, it's strategy, organisational design, or workforce structure. Teamed can help leaders determine which it is., particularly as cloud-based AML solutions reached 69% adoption in 2025, highlighting that technology alone doesn't solve compliance challenges. Teamed can help leaders determine which it is.

Third Party And Technology Regulatory Compliance In Fintech

Operational resilience is a regulatory and risk management capability that ensures critical business services can continue within defined tolerances during technology failures, cyber incidents, supplier outages, or operational disruption.

You can outsource activities, not accountability.

Fintechs rely heavily on third parties: cloud providers, payment processors, KYC vendors, data analytics platforms. Regulators expect robust oversight of these relationships. Your vendor's failure becomes your compliance failure.

Core Steps

Pre-onboarding due diligence assesses the vendor's security posture, financial stability, and regulatory standing. Clear contracts define responsibilities, SLAs, and liability. Ongoing monitoring tracks performance and security. Exit plans ensure you can migrate away if needed.

EU and US Frameworks

DORA sets explicit ICT risk and third-party expectations for EU financial entities. US guidance from banking regulators raises similar bars, particularly for fintechs partnering with banks. The scrutiny intensifies when you serve regulated institutions as customers.

Consider a European fintech ensuring its non-EU cloud and KYC providers meet GDPR and DORA requirements while also satisfying US partner bank third-party standards. The documentation burden is real, but so is the risk of getting it wrong.

Align vendor strategy, including EOR and employment vendors, with regulatory accountability. The third party managing your payroll in Singapore is part of your compliance ecosystem.

Aligning Fintech Compliance With Board And Investor Expectations

Your board does not need every policy. They need confidence in how you control risk.

Board Expectations

Formal oversight of risk and compliance. Regular reporting with clear metrics. Defined accountability for who owns what. Evidence of independent challenge, meaning someone asking hard questions.

Investor Lens

Compliance weaknesses delay funding rounds. They trigger regulatory issues that spook acquirers. They block partnerships with banks and enterprise customers. Investors conducting due diligence want to see a compliance programme that matches your growth ambitions.

Strategic Narrative

Strong compliance accelerates market entry. It withstands regulatory scrutiny. It streamlines due diligence. Position your compliance programme as a growth enabler, not a cost centre.

Practical Governance

Establish a risk and compliance committee (even if informal at smaller sizes). Set reporting rhythms: quarterly to the board, monthly to leadership. Ensure cross-functional alignment across People, Finance, Legal, and Product. Track issues and remediation in a format you can share with auditors.

Teamed advises on presenting employment and entity strategy as part of the compliance story. When your board asks about your US expansion, they want to know you've thought through the regulatory implications of your hiring decisions.

Future Trends In Fintech Regulation For Scaling Companies

Compliance strategies that assume today's rules will stand still are the ones that age fastest.

Operational Resilience and Tech Regulation

DORA implementation is underway in Europe. Similar expectations are spreading to other regions. The focus on ICT risk, incident reporting, and third-party oversight will intensify.

Crypto and Stablecoins

MiCA is maturing in the EU. US frameworks are treating some stablecoin issuers more like banks or payment institutions. The regulatory perimeter is expanding.

AI Scrutiny

Use of AI in credit decisions, fraud detection, and AML monitoring faces increasing transparency, fairness, and governance expectations. Regulators want to understand how your models work.

Cross-Border Data

Continued tension and alignment on EU-US transfers affects data location and processing decisions. The rules keep shifting.

Individual Accountability

Increased focus on named senior managers affects hiring and organisational design. Regulators want to know who's responsible, by name.

Build flexible frameworks. Invest in advisors who track local enforcement trends. Teamed monitors regulatory changes across 180+ countries to inform employment and entity strategy.

Building A Fintech Compliance Strategy You Will Not Outgrow

Teamed defines "mid-market" for global employment and compliance operations as 200 to 2,000 employees, a range where multi-country headcount and regulated scrutiny scale faster than in-house specialist capacity.

Compliance is an operating model, not a project. The programme you build at 100 employees should evolve intentionally as you reach 500, then 1,000.

Strategy Pillars

Regulatory mapping across your current and planned markets. A right-sized risk framework that grows with you. Strong AML and data protection foundations. Thoughtful workforce and entity design that aligns employment models with regulatory accountability. Targeted use of compliance solutions where they add value.

Sequencing

Don't overbuild too early. But don't wait until regulators or banking partners force a scramble. Mature your frameworks and governance as you approach mid-market scale. The transition from "compliance as a project" to "compliance as an operating model" typically happens around 200 employees.

Strategic Partner Value

A single advisor knowledgeable in global employment and fintech regulation helps align contractors, EOR, and entities with compliance quality. Teamed can advise on when and how to establish entities, shift from contractors to EOR or direct employment in regulated markets, and execute transitions once strategy is set.

If you're scaling from 200 to 2,000 employees and want to build a fintech compliance strategy you won't outgrow, talk to the experts. One conversation can clarify whether your current approach will hold up under regulatory scrutiny, or whether it's time to rethink your workforce and entity structure.

FAQs About Fintech Compliance

How much should a mid-market fintech budget for compliance each year?

Budgets vary by business model, geography, and risk appetite. A payments-focused fintech in three EU markets has different needs than a lending platform entering the US. Aim to invest enough to meet regulatory expectations, support growth, and satisfy banking partners rather than following a generic benchmark. Teamed can advise Finance leaders on how employment, entity, and vendor choices shape compliance spend.

When should a scaling fintech hire its first dedicated head of compliance or MLRO?

Typically essential once regulated products span multiple countries or when entering the mid-market range. Higher-risk models like lending or crypto may need this role earlier. Founders or General Counsel can't realistically own compliance at scale, and regulators expect dedicated expertise.

How does fintech compliance apply to SaaS companies offering embedded finance?

Offering payments, lending, or wallets inside your product can trigger financial regulation, even if you partner with a licensed provider. Know your contractual and regulatory responsibilities. Don't assume the partner covers everything. The regulatory perimeter extends to you.

How should a European fintech decide which US states to seek licences in first?

Prioritise based on target customers, partner expectations, and each state's complexity. Many start where customers or banking partners are concentrated. Seek specialist legal and advisory input. Teamed can align entity and workforce strategy with your licensing path.

How long does it take for a mid-market fintech to build a robust compliance framework?

It's an ongoing programme, not a one-time project. Timelines depend on current maturity, product mix, and markets. Clear ownership, pragmatic sequencing, and the right advisors shorten the journey. Expect continuous evolution rather than a finish line.

What is mid-market?

For this guide, 200 to 2,000 headcount or £10m to £1bn revenue. This is the range where employment and compliance decisions carry higher stakes without enterprise-scale resources. Large enough to need sophisticated guidance, small enough to need responsive advisors.or