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 Happy Wednesday, Fintech Listeners! I hope your week has been going well. I’ve been a bit distracted by the NBA offseason, which has led me to a realization: I have tremendous respect for professional athletes’ ability to (mostly) block out the noise surrounding them and to focus on their craft. I can’t really imagine how bad this newsletter would be and how distracted I would sound on my podcast if people on the internet were constantly speculating on rumors that Workweek was considering trading me to This Week in Fintech for a couple of future first round picks. — Alex P.S. — Western Union has been moving money across borders for 175 years. It sees something promising in stablecoins, which tells me that there is significant potential for stablecoins as payments infrastructure. I’m going to try to figure out exactly what that potential is by chatting with Malcolm Clarke and Charles Yoo-Naut on June 30th. The event is free to join, so register now (and don’t forget your questions!) — Alex Was this email forwarded to you? Sponsored by Knot Top-of-wallet isn't won on rewards. It's won on friction. 3 BIG IDEAS FROM THE PODCAST  This week on Fintech Takes, I sat down with Andrew DiMattina, Product Architect at Persona (and expert in all things fraud and compliance, especially BSA/AML compliance), for an illuminating conversation about the current state of fraud, money laundering, and compliance in the U.S. and beyond. Much of our conversation hinged on an observation that I’ve had over the first 18 months of the Trump 2.0 administration and the nature of deregulation. My observation is that deregulation (at least the way that it’s being done on a federal level right now) isn't less risk, it's a transfer of risk. The risk moves down onto the operator (who now has to exercise and defend judgment instead of following a checklist) and sideways onto a multiplying cast of other enforcers (like state attorney generals and plaintiffs, among others) who don't agree with each other. Andrew has been deep in this space for 15 years, where he’s watched the pendulum swing in one direction (more enforcement, bigger fines, tighter programs). That's the only version of this industry that many compliance professionals have ever known. And it’s partly what makes the current moment so disorienting. Tune in for the full conversation here And read below for my three big ideas... #1: Has Deregulation Led to Less Compliance Work?The working assumption for anyone in financial services going into the current administration was that deregulation would mean less compliance burden and a cleaner operating environment. In some ways, that’s what we have gotten. Federal agencies are pulling back. The CFPB has been defanged. Staffing at prudential regulators is contracting. The rhetorical posture from people like Scott Bessent at Treasury has been pointed: the traditional zero-tolerance focus on process and documentation, the kind where missing a step gets you whacked with a ruler regardless of whether it had any relationship to outcomes, is something this administration wants to move away from. Prior administrations would acknowledge that AML could be improved, but they stopped short of courting radical redesign. This administration sounds more open to the industry bringing it a different model. But here's what Andrew had to say, and it maps to what I'm hearing from others: most institutions aren't making significant operational changes when it comes to compliance. At least not yet. They're watching. They're listening. They know the look-back period on enforcement is five years, and they know the underlying statutes haven't moved (Congress would have to act, and Congress hasn't). They also know a future administration could revisit all of this. The institutions that whipsawed their compliance programs the last time the pendulum swung paid for it. Most aren't making that mistake twice. #2: A New Form of Consent OrderThe recent CFSB consent order (which I also podcasted about here) is the perfect artifact from this regulatory moment because it is both deregulatory and not deregulatory at all. On one hand, it proves enforcement hasn’t gone away. Community Federal Savings Bank, a small sponsor bank in Queens working with a number of fintech programs, including several high-risk remittance programs, was still hit for AML deficiencies. We may be in a deregulatory environment, but regulators are still entering into consent orders. On the other hand, the order looked different from the consent orders we got used to under the last administration. Back then, consent orders almost always came with some version of: You have identified deficiencies, you need to remediate them, and until you do, you need our non-objection before bringing on new programs. That requirement always made intuitive sense to me. If your plumbing can’t handle the current house, maybe don’t add another bathroom. When your controls can't keep up with your current book of business, adding new programs only compounds that problem. But strangely, that requirement is missing from the CFSB order. If the consent order doesn't restrict your business, the urgency to close it out competes with every other priority the organization has. If there’s no growth restriction, the consent order loses a lot of its teeth. "I'll get to it" becomes a viable answer. This may be intentional. The current administration has been consistent about not wanting to slow down innovation, even when flagging material weaknesses. We see that attitude permeate across stablecoins, AI, and now, apparently, in AML enforcement. Whether that produces better outcomes or just faster moving problems will be an open question. #3: Fast Charters, Slow LawsThe new bank charter waterfall isn't news to regular readers of this newsletter. What Andrew added was a useful lens on the risk-profile mismatch, one worth revisiting as the applications keep rolling in. His advice to every new entrant is that the Bank Secrecy Act hasn’t changed, Congress hasn’t passed any new anti-money laundering laws, and getting a bank charter quickly doesn’t come with a compliance discount. A century-old bank and a brand-new stablecoin issuer may be two very different animals, but they’re still walking into the same foundational AML obligations. The mismatch is where it gets interesting. Supervision has historically used size as a rough proxy for risk. The larger the institution, the larger the scrutiny. More assets, more controls. That model is getting less reliable by the day. For example, a crypto-native institution or stablecoin-focused bank pursuing international remittances from day one doesn’t fit neatly into that sliding scale. Their ambitions are enormous. As Andrew and I discussed, that kind of charter holder could carry the AML exposure of a TD Bank on the balance sheet of a de novo community bank. That’s the problem with using size as shorthand for risk. It misses complexity. It also misses product design, customer geography, and the fact that a small institution with a novel charter and product (and no operating history) can still walk directly into a very grown-up money-laundering problem. Andrew’s prescription? Have a strong risk assessment. Show that you understand your business, your customers, where the risks are, and then have controls in place to meet those risks. Sponsored by T-Mobile for Business Financial services is not a one-size-fits-all industry. Legacy infrastructure, regulatory complexity, and different levels of digital maturity mean flexibility is paramount. Most people never think about the network. That's kind of the point. WHAT I'M LISTENING TO #1: From stablecoins to AI agents - how Stripe is changing the internet economy (Fintech Insider) 🎧A Stripe-centric episode that hits all the big fintech 2026 buzzwords, but in a typically thoughtful style. #2: Why the $250 bill would be good … For criminals! (The Indicator) 🎧A good explainer on a weird news story that I had not taken the time to try to understand. I basically just wrote the tagline for NPR. Thanks for the read! Let me know what you thought by replying back to this email. — Alex | |||||||||||
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