Learn how Withum’s BSA (Bank Secrecy Act)/AML (Anti-Money Laundering) experts helped build a unique compliance program for an industrial technology company, allowing them to continue business operations while satisfying all AML requirements of their commercial bank, saving both time and money while addressing compliance needs for the company and their bank.
A New York-based technology company providing a revolutionary digital turnkey solution to connect consumers with their environment was notified by their bank that a compliance program was needed for their unique consumer payment structure to continue business operations and to process payments through the bank. The company, with no policy in place, approached Withum for help. Withum’s BSA/AML team’s experience in both risk mitigation and bank regulation made them the perfect fit for the job. The team’s multifaceted perspective allowed them to understand the client profile and risk, and to create a process to monitor and mediate communication between the company and bank. The bank re-evaluated their original request to fit this company’s unique need and Withum right sized the approach creating a successful compliance program from scratch.
The company’s distinctive structure operates from both a financial and industrial technology position. Headquartered in New York with approximately 50 employees, it serves 22 locations nationally with an emphasis on major metropolitan cities such as Washington DC, Denver, Chicago, Austin, and Dallas.
Using their deep expertise in the specific business of automotive parking, the company implemented a novel way to provide services while simplifying what is otherwise a manual and capital-intensive operation. This in turn benefits the retail customers seeking a smoother service delivery experience for their parking needs, in an industry whose estimated revenue exceeds $8B annually. “Why would a parking services company need an AML program?” one might ask. Based on the payment flows and business characteristics of the company, significant AML risks are posed to its commercial bank.
Any organization with an AML risk and working with a bank requires a compliance program to be put in place. When the client began operations, their bank did not understand their payment model and found it complicated with a misinterpretation of potential of high-risk activities. This misunderstanding threatened the bank’s potential to end business with the client thus hindering their relationship and the client’s business. In order to remain in compliance and mitigate risk, they brought in Withum to salvage their company’s standing as well as the relationship.
The Approach and Solution
As a current and established partner with the client, Withum has provided continued support through the Technology and Emerging Growth Services Team for years. When the bank contacted the technology company regarding their AML risk and need for compliance, Withum’s BSA/AML team’s years of expertise in the risk mitigation and bank regulation spaces allowed them to satisfy all requirements. The team acted as an intermediary between the company and the bank, explaining the unique approach of this project for both sides. The process began in a phased approach to assist management by conducting activities for AML risk mitigation. This included responding to the bank’s preliminary expansive questionnaire, developing and implementing the appropriate compliance program and the ongoing effort of producing and operating the proper reports to track progress. Based on this strategy, Withum was able to articulate the nature of AML risk that the business posed and develop a risk-based program to satisfy the requirements of the bank, address the risks posed by the payments received and business activities while right-sizing the approach appropriate for the startup fintech company.
The Results, ROI
The implementation of the compliance plan and successful communication with the bank not only salvaged the client’s operations and corporate relationship between the client and bank, but also saved both parties time, money and resources. Withum’s involvement and knowledge of both the client’s risk and bank’s requirements saved approximately $800,000 in terms of tools, outsourcing of staff and materials and implementation. The technology company can now continue operations in full compliance of the bank’s requirements with its AML program appropriated for its risk profile.
For more information on this topic, reach out to Withum’s Bank Secrecy Act/Money Laundering Services Team.