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Alleviate the Time, Cost and Stress of Payments Compliance

Published: August 19, 2022

Rusty Pickering is the President and Chief Operating Officer of Ingo Money.  Prior to Ingo Rusty was a senior partner and chair of the venture capital practice at Nelson Mullins, an Amlaw 100 law firm in Atlanta.

The explosion in new consumer financial accounts that accelerated during the pandemic has led to a corresponding demand for money mobility solutions. Every neobank, retail brand or financial entity that began offering a branded prepaid card, deposit account or online wallet must now deliver on consumer expectations for safe, reliable and real-time money movement capabilities.

But few companies are prepared to effectively navigate the deep and complex world of regulations and compliance that these solutions require.

Payments Compliance 101

Most people in the payments’ world are familiar with the basic requirements for accepting money from consumers. A smaller circle is adept at what’s needed when companies disburse funds to consumers or allow them to initiate an inbound transfer to fund their accounts. But very few understand the intricacies of how to manage the regulatory and compliance burden for those transactions. Money transmission laws, anyone?

Today’s regulatory and compliance structure is intended to ensure that all money movement in the United States is between legitimate parties for legitimate purposes. The goal is to eliminate the use of our financial systems for terrorism, money laundering or other nefarious purposes.

To do that, there are complex layers of legal requirements that payment processors and banks must navigate. For example, every merchant that sends money through the system must be verified, along with the use case for the payments they make and who they pay them to.

And because only a bank can allow a merchant or a processor to submit a transaction to a network like Visa or Mastercard, every merchant and its processor must first be approved and sponsored by an acquiring bank sponsor. This scrutiny is heightened even further for transactions involving high risk merchant activities such as loans, gambling or crypto.

The aforementioned money transmission laws can trip up even the most careful companies and their legal teams. Any organization that takes money from one entity and promises to send it to another must comply with these regulations. This ensures the money is not diverted or used for an unintended or undesirable purpose while it’s in their possession.

The many permutations of these money transmission requirements can become dizzying when you consider technology platforms that enable one-to-many transactions, such as a company enabling payments from many merchants to their vendors or one that processes tips to wait staff for hundreds of restaurants.

Ingo Money’s Regulatory and Compliance Expertise

Here at Ingo Money, clients and partners come to us for our technology and risk mitigation capabilities. What they rarely expect but always love is the third leg of our payments stool: regulatory and compliance support.

We know that regulatory and compliance requirements can be daunting for even the most seasoned of teams. That’s why Ingo Money has proven so valuable to its partners. As a money mobility vendor, we not only deliver the technical expertise and fraud protection, but also compliance know-how and solutions.

This is partly because Ingo was founded as a bank, meaning we’ve been navigating financial institution regulations and requirements since day one. Key members of our leadership team have served as regulators, bankers, credentialed compliance experts and bank lawyers prior to joining Ingo. Ultimately, our team of experts acts both as consultants and providers, able to leverage our custom-built suite of solutions for managing regulatory and compliance requirements applicable to our bank partners, the networks and our clients.

For example, we assist in collecting all the due diligence required of our clients and their merchants by the banks and networks that will sponsor and process their payment transactions.  We also provide technical solutions for OFAC compliance and KYC verification and help enable compliance with privacy data requirements – even in states that have their own, more rigorous privacy laws.

And in the case of money transmission laws, Ingo works to ensure that clients never unintentionally run afoul of these requirements by making sure that funds held on behalf of third parties are always done so by a licensed money transmitter or financial institution that has taken full control of and responsibility for custody and movement of the funds. This is much easier (and more cost effective) than a merchant or processor becoming licensed as a money transmitter – a multi-state, multi-year and multi-million-dollar endeavor.

Our customers often breathe a sigh of relief when they come to us for help. Many have been frustrated by the constant roadblocks they encounter with other processors in attempting to ramp up a payments or money movement solution.

Typically, if a fintech has not solved all its potential regulatory, compliance and funds-flow issues, it’s turned away by inflexible processing partners. In contrast, Ingo and it partners will typically help the fintech to identify and implement compliant solutions. Instead of just identifying problems, we help engineer solutions.

We stand apart because we can take the burden from them and resolve it quickly, easily and effectively. We like to say our team of compliance and information experts are very good at “speaking bank”. This is a critical part of regulatory and compliance management in the payments’ world – every payment use case and processed transaction requires the permission or participation of a bank in some respect.  That’s why we’ve designed our technology, processes and teams from the ground-up with compliance in mind.