Starting a business is a major challenge, and it is even more problematic in the financial industry. This comes from the fact that the rules have to be strict. These harsh rules are necessary since fintech companies are trusted to handle a large amount of money. Complying with them ensures that a startup can do its job. Here are some compliance issues you have to handle if you want your company to operate with no issues.
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Handling Your Taxes
An important part of any business can pay your taxes. If your startup succeeds and the government notices that you have not been paying the various taxes you need to pay or are underpaying them, you will have issues. Fortunately, tax compliance is pretty easy to handle. Just hire a good accounting team, and they usually can be on top of things. You do need to ensure that they are doing their job and request updates on tax payments. The government doesn’t like late taxes and you shouldn’t, too.
Dealing With Securities Right
Fintech startups have to ensure that they follow securities regulations tightly. A lot of them handle securities and deal with large amounts of money. There are several laws in place to ensure that everything is done correctly. One of the more important ones is the know-your-customer laws. These are in place to stop people dealing with large amounts of money under certain pretenses. The funds might be going somewhere legal or funding terrorists. Know-your-customer laws ensure that you are dealing with a person and not someone fictitious. Other security regulations like anti-money laundering laws are also in place to prevent criminal wrongdoing.
Data Laws To Remember
When dealing with today’s financial dealings, there is a lot of private data floating around. Usually, customers will give you their data so that you can do transactions easier. But this puts the responsibility of protecting that data in your court. As part of data compliance, you should be doing your best to protect them from data thieves. In addition to external intrusion, you also need to take steps to preserve any data. This is mostly for legal reasons. Gathering data is not easy, and you’ll need to have the right software and trained people for it. For example, if you ever face litigation, you need to have a legal hold on your Slack conversations and other electronic communications. This would be a lot easier if you already have the ability in place.
Several data standards should be followed. One of the biggest is the GDPR. Recently, introduced by the EU, the General Data Protection Regulation lays out the rules about what data you can ask, how they have to be protected. There are also rules on asking permission before collecting any data for use. If you plan to operate in Europe, following these rules is essential.
Ensuring Your IP Is Yours
Many fintech startups revolve around a product or service that is unique to the business. At least, that is the idea. Intellectual property compliance ensures that your company is not using intellectual property that is not yours or in the public domain. If you do end up using someone’s private property, then you need to confirm that you have their permission or have a license to use the IP. The more important aspect of IP compliance is protecting your property from other people stealing the idea. For example, you showed off a prototype of your fintech app but then found out that someone stole it. If you did not follow proper compliance rules like patenting and trademarking your property, you will have no way to pursue compensation.
Learning Specific Regional Laws
Your compliance requirements can also mean needing to consult with local authorities. Some states or regions have specific laws that need you to follow when planning to operate in the area. Usually, a lot of businesses stay in areas with fewer regulations. They then learn more about their expansion locations so that regulatory compliance is always followed.
Ensuring that your fintech startup is meeting all the regulatory requirements is an essential step towards success. Even if you have solid backers and a good product, not checking if you follow the law can result in trouble. Keeping your operations legal stops the government from fining you or closing you down, which is a good thing. But compliance is a constant thing so you should try your best to maintain it.