An Observation from Jack Challis, Compliance Director at One Click Group.
Managing multiple compliance functions—like the Australian Signal Directorates’ IRAP, Attorney-General audits, the DSP Operational Security Framework, and the evolving Anti-Money Laundering Counter Finance Terrorism AML/CTF Act overseen by AUSTRAC – has given me a front-row seat to how fintech startups often underestimate regulatory complexity. While innovation is the engine of the sector, compliance isn’t just a box to tick – it’s the foundation of a business that can actually scale and last.
There’s a common startup mindset: “Move fast, break things, and ask for forgiveness later.” But in fintech, that approach cannot only backfire – but it can turn into a serious liability. Knowing which risks you’re taking (and which rules you’re breaking) isn’t optional; it’s essential. Yet, too often, startups charge full steam without fully grasping the regulatory hurdles they face.
Where Fintech Startups Get Caught Off Guard
1. AUSTRAC & AML/CTF Compliance – A Non-Negotiable for Financial Services
Fintechs handling payments, transactions, or fund transfers falling in the designated service category, must comply with AML/CTF obligations, including Know Your Customer (KYC), Politically Exposed Peoples (PEPS) and Sanctions checks, and transaction monitoring.
🚨 Common Pitfall: Assuming AML laws only apply to banks or big businesses—many fintechs fall under AUSTRAC’s scope but fail to implement the necessary compliance measures.
2. ASIC Licensing – You Might Be a Financial Service Without Realising It
If your app facilitates financial advice, lending or investments, ASIC may require an Australian Financial Services Licence (AFSL) or Australian Credit Licence (ACL).
🚨 Common Pitfall: Labeling your platform as “technology” rather than a financial service – ASIC regulates function, not branding.
3. Open Banking & CDR Compliance – Consent is Not Just a Checkbox
With Open Banking, fintechs must follow Consumer Data Right (CDR) rules to access and use banking data securely.
🚨 Common Pitfall: Believing that using a third-party aggregator (e.g., Basiq, Yodlee) completely removes your compliance responsibilities.
4. Privacy & Data Security – More Than Just a Policy Page
Fintechs handling personal and financial data must comply with OAIC privacy regulations and the Privacy Act 1988, ensuring data minimization, security, and transparency.
🚨 Common Pitfall: Storing unnecessary financial data, failing to implement proper encryption and retention policies, or assuming anonymized data eliminates all risk.
5. Payments & Stored Value Regulations – Hidden APRA & RBA Obligations
If your fintech facilitates digital wallets, stored value, or payment processing, you may be subject to APRA and RBA regulations.
🚨 Common Pitfall: Assuming outsourcing payments to Stripe or PayPal eliminates regulatory obligations – many fintechs still have compliance responsibilities.
6. Cross-Border Compliance – Global Expansion Brings New Regulatory Burdens
Operating outside Australia? GDPR (EU), CPRA (US), and other jurisdictional privacy laws may apply.
🚨 Common Pitfall: Not considering data residency and international compliance obligations when scaling.
Final Observation: Compliance is a Growth Enabler, Not a Barrier
In fintech, compliance isn’t just about ticking regulatory boxes – it’s about building trust, managing risk and creating a business that lasts. The most successful fintechs aren’t the ones that ignore regulation; they’re the ones that understand it, navigate it strategically, and turn it into a competitive edge.
I’ve seen the consequences of having compliance is an afterthought—regulatory fines, shutdowns, and forced pivots. The smartest startups take a proactive approach, making sure they know the rules before they break them.
Move fast, innovate bolding – but don’t overlook the fact that regulation is part of the game. Play it smart, and it won’t just protect your business—it will help you scale. 🚀