Flagright reports that this amounts to a 150% growth rate; however, in the second half of 2019, growth slowed somewhat from 170% to 150%, and average deposit balances decreased from £350 to £260 per client. The neobanking industry is predicted to have 386.3 million users by 2028 and a $10.44 trillion worldwide transaction value.

These numbers demonstrate the growing significance of neobanks in the financial industry and the pressing need for efficient Anti-Money Laundering (AML) compliance procedures in order to reduce inherent risks and comply with more stringent rules.

Neobanks, which only conduct business online, use digital channels to save expenses and improve accessibility. Nevertheless, this digital-first strategy brings serious AML difficulties, namely the inability to perform reliable eKYC procedures and anonymous transactions.

Neobanks' quick transaction speeds and worldwide reach make compliance even more difficult, requiring strict monitoring and reporting systems—especially in light of the additional complexity of cryptocurrency transactions.

The stringent compliance requirements imposed by international regulatory agencies for neobanks include extensive client due diligence and advanced transaction monitoring systems that use artificial intelligence (AI) and machine learning (ML) to identify questionable activity. Maintaining compliance and the integrity of financial transactions also requires ongoing risk assessment and regular AML training for personnel.

With extensive experience in AML governance at organizations like Nubank and PwC, Leonardo Correa, Group Head of Compliance & AML at Taptap Send, highlights the significance of developing a robust compliance culture inside neobanks. His suggested course of action included creating customized AML procedures, using cutting-edge technology to monitor transactions, and doing frequent risk assessments to adjust to the changing regulatory environment.

Neobanks who violate AML standards risk serious consequences, including as harm to their brand, high penalties, and even legal action that might revoke their licenses to operate. On the other hand, strong compliance processes increase consumer confidence and operational effectiveness while shielding neobanks from financial crimes.

Neobanks may establish themselves as reliable financial institutions by tackling the particular difficulties presented by the digital banking environment and putting thorough AML procedures in place. In addition to satisfying legal requirements, this dedication to strict compliance promotes long-term development and market expansion.