One of the priorities and strategic objectives of the Financial and Capital Market Commission (FCMC) is the growth of the FinTech industry. In order to support the development of this field, experts of the FCMC’s Innovation Hub provide professional advice to financial technology companies and new entrepreneurs. In the first quarter of this year, the FCMC’s expert team for the most part advised on the possibilities of financial institution licensing, applicable regulation, supervisory requirements, and on compliance requirements in the development process of technological solutions.
There is currently particular interest in two areas: regulatory technology or RegTech and crowdfunding platforms.
The RegTech market is rapidly developing worldwide, and also in Latvia a number of companies are working on compliance and risk management solutions. Such solutions contribute to automating the “Know Your Customer” processes and anti-money laundering (AML) monitoring tools, thus saving time and resources for both financial sector participants and their customers. For example, the development of a particular solution or process may facilitate and modernise the initial period of customer and credit institutions’ relationship, as well as strengthen compliance management in a financial institution.
The new solutions are based on technological approach and ensure a higher digitalisation degree in the compliance process management, such as the AML screening and outsourcing for high-quality assessment of private and legal persons.
At the beginning of 2021, interest in the crowdfunding platform regulation and licencing has significantly increased. The European Crowdfunding Service Regulation1 entered into force in November 2020, but will be applicable from 10 November 2021. Currently, the FCMC experts, together with colleagues from other European financial regulators, are working on the drafting of technical standards for the regulations to offer appropriate licences to local service providers in November 2021.
At the FCMC’s Innovation Hub, customers have already received advice on supervisory requirements and regulation in relation to both business models: the operation of lending based crowdfunding platforms and equity based crowdfunding platforms. During consultations, experts from the Innovation Hub specifically draw market participants’ attention to investor protection issues.
The FCMC’s Innovation Hub is a platform where representatives of FinTech field may receive free advice from the team of FCMC’s innovation experts specialising in the management and interpretation of laws and regulations in different financial fields relating to innovative financial service solutions. Many local and foreign entrepreneurs operating or planning to start activities in the field of financial technology in Latvia have already made use of this option – in the Q1 this year, we saw a strong interest in consultations as it was also in 2020.
We call on the FinTech industry to actively take advantage of the possibility of consulting the FCMC’s professionals, as we are prepared to answer questions about the financial sector regulation to implement the planned business idea, the application of supervisory requirements for innovation, and we can focus on the issues that should be resolved in the process of developing an innovative solution for individual business ideas.
For advice, please submit your questions in a free form to email@example.com. Experts will contact you to arrange an online appointment at a convenient time, or reply in writing.
1 Regulation (EU) 2020/1503 of the European Parliament and of the council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937