The UK’s money transfer service (MTS) industry has thrived on a mix of established financial institutions and innovative startups. Demand for their services has been high, so the marketplace has been relatively comfortable. That may be about to change. A growing number of new or expanding competitors is challenging the status quo.
International services are rapidly becoming global
This intensified competition is appearing from several directions. Take, for example, Econet Wireless, a Zimbabwean operator. They recently announced free remittance corridors from the UK to Zimbabwe and South Africa. This move directly targets significant and growing diasporas in the UK and could significantly alter remittance flows to those countries. Similarly, VM Money Transfer Services (VMTS) have partnered with TerraPay, a cross-border payments network, to streamline transfers between 31 destinations, most recently including payments between the UK and Jamaica.
Finally, the Nigerian fintech company LemFi exemplifies a global trend. With a secure remittance base of African migrants, the company is broadening the scope of its operations to include more under- and unbanked communities. New services will include from Canada and the UK to India. The addition of the sub-continent signifies aggressive expansion into prime money transfer markets.
Effective compliance strategies for smooth operations
These examples highlight the need for UK Money Transfer Businesses (MTBs) to enhance operational efficiency across the board. Back office functions need to be smooth and fast. And there needs to be a conscious awareness of the extent to which MTBs are vulnerable to financial crime.
A crucial element in achieving high levels of efficiency is ensuring robust and effective Anti-Money Laundering (AML) compliance. While thorough Know Your Customer (KYC) checks underpin AML protection, ongoing transaction monitoring is equally important. Identifying and flagging suspicious activity requires sophisticated systems and deep expertise in financial regulations. This is a challenging task for many in-house compliance teams and beyond the capacity of most small and medium sized businesses.
The most effective solution lies in partnering with a specialist fintech provider. Such relationships offer the provision of a comprehensive suite of compliance tools that can significantly enhance efficiency and mitigate risk. Here’s a closer look at some of the required functionalities:
- Streamlined KYC/AML Checks: KYC/AML checks should go beyond basic identification. They need advanced verification to help identify fake or stolen documentation. They need checks across multiple databases to build true global profiles of individuals. The double benefit? Regulatory compliance and protection for the MTB and its customers.
- Advanced Transaction Monitoring: Initial KYC checks alone are not enough. It’s essential to identify anomalous behaviours and suspicious activity in real-time. This allows for swift investigation and intervention, if needed, minimizing the risk of fraudulent transactions.
- Customizable Rules Engine: This feature allows MTBs to tailor the compliance process to their specific risk profiles. They can define custom rules to flag suspicious transactions based on numerous variables, like as transaction size, origin/destination countries, and customer behaviours.
- Scalability: Only a service which provides near instant scalability will be sufficiently flexible to respond to changing transaction volumes.
Invest for the long term with a service that delivers
There are numerous providers who offer something close to the above. But very few deliver the whole package in a comprehensive and cost-effective service. Compli, from Essiell Compli is one of the few that does. It’s user-friendly platform makes it the ideal partner for UK MTBs of all sizes.
Taking the next step can be daunting. It’s easier with the right partner.
By Declan Morton, staff writer at Essiell Compli.
For reference: Econet starts free remittance corridors with the UK, South Africa, telecompaper, Zimbabwe, 2nd May 2024; TerraPay and VM Money Transfer Services partner to expand remittance market for Jamaicans, MSN, 30th April 2024; LemFi plans strategic expansion to emerging markets, Baseline, 6th May 2024 and LemFi goes live in India to offer instant, low-cost payment transfer services, IBS Intelligence, 6th May 2024.
