How Payment Processors Simplify AML and KYC
In today’s fast-moving financial landscape, compliance is the foundation of trust. The industry has shifted from traditional banking to a world of instant digital transactions, and regulatory expectations have grown more demanding as a result. At the same time, technology has emerged as a powerful ally, turning compliance from a burdensome requirement into a streamlined, intelligent process. Understanding what compliance means, and how payment processors can simplify it, is essential for operating safely and successfully in modern finance.
Why compliance matters
We asked our Head of Compliance (Marine Lopez) for some insight on the importance of regulatory compliance, and here’s what she shared:
Regulatory compliance serves three main objectives: 1. consumer protection, 2. market confidence, and 3. market integrity, both locally and internationally.
Together, these pillars form the foundation of a fair, transparent, and trustworthy financial system. By protecting consumers, regulations help ensure individuals and businesses can engage in financial activities without fear of exploitation or fraud. Strengthening market confidence attracts investment and participation, fueling economic growth. Meanwhile, safeguarding market integrity (through anti–financial crime measures and the enforcement of fair competition) preserves the reputation of markets worldwide and prevents illicit activity from undermining stability.
Marine emphasises that these objectives not only protect stakeholders, including consumers and investors, but also encourage innovation by creating a level playing field where legitimate businesses can thrive and new ideas can emerge. In this way, regulatory compliance is a foundation for driving sustainable global progress.
The consequences of noncompliance
Regulatory compliance exists to protect financial systems, consumers, and institutions. The consequences of noncompliance are severe:
- Fines, penalties, and legal exposure: Regulators continue to enforce stricter standards. In 2024 alone, global AML-related fines totalled over GBP 3.6 billion*, with banks responsible for nearly 80% of the total (Fenergo, 2024).
- License revocation or restriction: Businesses can lose their license or be prohibited from operating in certain jurisdictions.
- Criminal liability: Executives may face criminal charges in extreme cases.
- Reputational damage and loss of trust: Beyond financial costs, reputational harm can erode customer confidence and partnerships.
- Operational blockage: Transactions may be frozen, accounts closed, or customers blocked if compliance systems flag suspicious activity.
Yet compliance isn’t just a cost. Doing things properly builds trust with clients, regulators, and investors (who are essential to the economy). PwC’s 2025 Global Compliance Survey found that 77% of companies say compliance complexity negatively impacts growth, while 85% report that requirements have become more complex in recent years. A proactive compliance culture is now a competitive advantage.
What is AML?
Anti-Money Laundering (AML) frameworks, laws, and technologies stop criminals and terrorist organisations from disguising illicit or illegal funds as legitimate income. AML programs identify suspicious activity, monitor transactions, and prevent money tied to fraud, corruption, or terrorism financing from entering the financial system.
For example, a fraudster might move stolen funds through multiple accounts or shell companies to obscure their origin, a process known as layering. AML programs use customer verification, risk scoring, and ongoing monitoring to detect these patterns. When suspicious activity is found, institutions report it to regulators.
A robust AML program includes customer due diligence, continual monitoring, and regular screening against global sanctions lists. It is a continuous process that evolves as criminals adopt new laundering techniques. Investment in AML continues to grow. Global AML systems spending is forecast to reach GBP 58.7 billion* by 2030, with banks expected to account for 64% of that total (Juniper Research via The Fintech Times, 2024)
The advantages of effective AML
AML isn’t just about avoiding penalties; it protects companies and their customers. Strong AML frameworks reduce exposure to fraud, improve operational efficiency, and build trust with partners and regulators. Businesses with sound compliance systems are seen as stable and reliable, which opens doors to partnerships and smoother approvals from banks or payment networks.
Customers benefit too. When companies actively fight financial crime, transactions are more secure, data is protected, and funds aren’t used for illicit activity. AML enhances the integrity of every transaction, fostering a safer and more transparent financial ecosystem.
Where KYC fits in
Know Your Customer (KYC) is the first step in building an effective AML program. It focuses on verifying who customers are and ensuring they act legitimately. KYC typically follows three stages:
- Identity verification — confirming a customer’s identity with passports, ID cards, or biometric data.
- Risk assessment — evaluating whether a customer or business presents a higher risk based on geography, industry, or transaction behaviour.
- Ongoing monitoring — rechecking identity and transaction patterns over time to detect changes or suspicious activity.
Robust KYC practices prevent fraud, maintain accurate data, and strengthen trust with customers. When people see a business prioritising verification and security, confidence and long-term loyalty grow.
Think of KYC as checking someone’s ID at the door, and AML as watching what happens once they’re inside.
How payment processors simplify AML and KYC
Building robust compliance systems in-house can be costly and complex. Modern payment processors embed compliance into every transaction, making it easier to meet regulatory standards without slowing business growth.
Here’s how they help:
- Faster onboarding and verification: Automated KYC tools verify identities quickly, reducing friction.
- Advanced transaction monitoring: AI-driven analytics flag unusual patterns in real time.
- Built-in identity and sanctions screening: Transactions are automatically checked against global regulatory databases.
- Automation and machine learning: Intelligent systems learn from patterns, reduce false positives, and improve detection.
- Audit trails and compliance as a service: Full visibility into compliance activity, detailed logs, and automated updates simplify regulatory maintenance.
Why compliance matters for your business
Compliance is the foundation of trust and long-term success. AML and KYC measures protect customers, reduce fraud, and promote transparency. While managing compliance internally can be slow and complex, modern payment processors streamline and simplify the process.
By combining strong compliance, reliability, and seamless payment acceptance, businesses strengthen customer confidence and build lasting credibility. Compliance helps meet global standards and consumer protection laws, reducing risk and demonstrating accountability. Meanwhile, reliable service reassures customers that their payments and data are handled securely and efficiently.
Additionally, frictionless payment acceptance across currencies, platforms, and regions helps businesses reach new audiences, support diverse needs, and expand into new markets. Together, these elements create an ecosystem where security, transparency, and convenience drive loyalty, attract partners, and fuel sustainable international growth.
Ultimately, compliance isn’t a burden, it’s a strategic enabler that supports innovation, powers business expansion, and opens doors to global opportunities.
Where The Payments Factory fits in
As a UK regulated Electronic Money Institution (EMI) with an expanding European presence, The Payments Factory provides a secure and compliant platform built for growth. Transparent pricing, fast settlement cycles, and flexible APIs enable digital businesses to move money efficiently while maintaining complete oversight.
Looking to simplify and accelerate your payments strategy? Speak with our team today to discover how The Payments Factory can help your business scale securely.
*Currency conversions are based on rates as of November 2025.