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  • Frank Tian

📖 BaaS Operators - Here is A Playbook

As regulators pay more attention to the fast-growing Banking-as-a-Service (BaaS) business, a group of sponsor banks published a playbook on 10/19.


The Alloy Labs is a consortium of 70+ community and mid-sized banks in the US - many actively participate in BaaS business.


The 10-page playbook does Not represent rules from regulators, but it offers guidance to those who want to explore this business.


A few highlights.


🟧 For fintechs/non-bank operators aka the “Programs”, there is more work beyond setting up a distribution channel.


- Own AML, BSA, KYC, and Fraud Monitoring implementation

- Leadership needs to emphasize legal/compliance

- Need proper, well-knowledgeable staff

- Buy adequate insurance


🟦 For sponsor banks, active control is needed to ensure safety and soundness.


- Specify accepted vs. prohibited businesses/end clients

- Monitor program activities and file SARs

- Review/approve all procedures

- Own all the customer data


At the intersection of regulation and innovations, the bank operators understand it is necessary to heighten the standard, for the long-term viability of the ecosystem.


🟩 My take on BaaS Risk Management



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