Compliance allows you to maintain the security and transparency of financial transactions. Users trust you more, knowing that their sensitive data is completely safe. In addition, you avoid fines and reputational risks.
In this article, we will discuss all the critical standards and advise on how to comply with them.
The regulatory environment for payment processing is complex. Let’s examine the main acts and standards a payment processing company must adhere to.
The Payment Card Data Security Standard (PCI DSS) is a global standard ensuring all companies that collect, store, or share credit card information follow the same protocols. This way, you prevent fraud and unauthorized access.
The General Data Protection Regulation (GDPR) not only protects the personal information of EU citizens but also expands users’ rights. In particular, they can have full access to the data, its editing, transfer, or restriction. On the other hand, companies demonstrate their accountability and transparency.
The Second Payment Services Directive (PSD2) regulates payments in the EU and the European Economic Area (EEA). In addition to multifactor authentication, it provides better consumer protection and open banking. This leads to better competition and innovation in the payment industry.
Know Your Customer (KYC) is a procedure for confirming the client’s identity and monitoring their financial activities. Know Your Business (KYB) lets you establish a business client’s identity and assess the partnership risks. As a result, you prevent fraud and terrorist financing.
Anti-Money Laundering (AML) helps organizations avoid financial crimes and the illegal activities of fraudsters. It encompasses a collection of laws, law enforcement, regulations, and processes established by local and global regulators.
Key Steps You Should Take to Ensure Compliance
Now you know the main regulatory acts and regulations. It’s time to guarantee compliance of your banking software and processes with them.
- The regulatory landscape is constantly evolving. Stay abreast of law changes to ensure compliance and address emerging risks.
- Always understand your vulnerabilities. Conduct a comprehensive risk assessment to prioritize risks based on likelihood and potential impact.
- The foundation of a robust compliance system is clearly defined policies and procedures. They must meet all requirements and consider industry practices. All employees should understand their roles in compliance.
- Implement regular internal audits to assess the effectiveness of compliance controls and related processes. Check your employees to take timely action and avoid regulatory fines.
- Create a reliable reporting system. Detailed ongoing compliance reports allow you to monitor your situation and stay abreast of changes to stay compliant.
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