Regulatory Stack

The term “regulatory stack” typically refers to the set of regulatory requirements, obligations, and compliance measures that a company or organization needs to adhere to in order to operate within the legal framework of the industry.

The regulatory stack encompasses various laws, regulations, guidelines, and standards set forth by governmental and regulatory authorities at the national and international levels. It includes requirements related to financial transactions, anti-money laundering (AML), know your customer (KYC) regulations, data protection, consumer protection, cybersecurity, and more.

When someone mentions the “regulatory stack,” it implies that they are referring to the complex and evolving regulatory landscape that businesses in these industries must navigate and comply with. It encompasses the legal obligations and responsibilities that companies need to fulfill in order to ensure compliance, mitigate risk, and maintain the integrity and security of their operations.

Building a robust regulatory stack involves establishing policies, procedures, and internal controls to meet regulatory requirements. It also involves conducting ongoing monitoring, audits, and reporting to demonstrate compliance with regulatory authorities. Non-compliance with the regulatory stack can lead to penalties, fines, reputational damage, and potential loss of licenses or permits.

Given the dynamic nature of regulations in these industries, companies often need to stay updated with changes in laws and regulations, adapt their processes and systems accordingly, and allocate resources to maintain compliance with the evolving regulatory stack.

Overall, the term “regulatory stack” highlights the importance of adhering to regulatory requirements in the banking, payments, money transfer, money services business, and cryptocurrency sectors to ensure legal and compliant operations.

Here are some of the key laws and regulations that govern the financial services industry:

  • The Bank Secrecy Act (BSA): The BSA requires financial institutions to report suspicious activity to the government.
  • The USA PATRIOT Act: The USA PATRIOT Act expanded the BSA and gave the government new powers to investigate and prosecute financial crimes.
  • The Dodd-Frank Wall Street Reform and Consumer Protection Act: The Dodd-Frank Act was passed in response to the financial crisis of 2008. It created a number of new regulations for the financial services industry, including the Consumer Financial Protection Bureau.
  • The European Union’s General Data Protection Regulation (GDPR): The GDPR is a comprehensive law that regulates the collection and use of personal data by businesses. It applies to all businesses that operate in the European Union, regardless of where they are headquartered.

The regulatory stack is constantly evolving, and businesses need to stay up-to-date on the latest developments. There are a number of resources available to help businesses comply with regulations, including:

  • The websites of government agencies, such as the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA)
  • Industry associations, such as the American Bankers Association (ABA) and the National Association of Securities Dealers (NASD)
  • Consulting firms that specialize in regulatory compliance

Businesses that fail to comply with regulations can face a number of consequences, including fines, penalties, and even criminal prosecution. It is important for businesses to take compliance seriously and to develop a comprehensive compliance program.

This page was last updated on May 25, 2023.

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