Financial services companies are often advised to create a “culture of regulatory compliance” without anyone really discussing what that means or how to do it.

The Federal Bureau of Investigation has developed its own culture of compliance within its ranks. In the book, The FBI Way, Frank Figliuzzi, the former chief inspector for internal inquiries at the Bureau describes how it does that.

​Getting everyone involved, particularly FBI leadership, is critical to success, he writes.

“I am convinced the FBI’s practice of mandatory leadership participation in both the [Office of Professional Responsibility] and inspection processes forges more knowledgeable and accountable leaders. Many companies unconsciously send the message to their employees that compliance and ethics is someone else’s job. Corporations often make audit staff assignments optional for executive trainees or fail to properly incentivize or reward such roles. When it comes to addressing allegations of misconduct, most companies allocate that responsibility solely to human resources or legal departments. Yet, how can you trust your leaders to comply with standards if you don't trust them to enforce those standards?”

Companies that want to make sure their own regulatory work goes beyond just checking box can apply the FBI model to their own organization. Executives and founders should ask themselves where regulatory compliance fits into their organization and how is it viewed by the rest of the company.

Is the compliance group viewed as the “no department” to be avoided as much as possible? Are regulatory questions viewed as “the lawyers’ problem” by leadership? Is the legal department viewed as a separate but equal part of the company?
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If the answers to these questions are ‘yes,’ then it might be time to reevaluate how the company approaches compliance questions. One way to fix the culture may be to have more employees spend some training time with the compliance department. Another is to get leadership more actively involved in compliance decisions. It does not mean that the CEO needs to approve every transaction exception, but letting leadership see the process from time to time will help everyone be ready for those times when things go awry. 

What is Clair? 

Clair is a New York-based mission driven digital banking platform that provides America’s workforce with fee-free access to their earnings when they want them via the Clair Debit Mastercard and FDIC-insured spending & savings accounts. Our on-demand pay product is embedded within the digital or physical punch clocks of our HR technology partners, where employees clock in and out of work everyday. By giving people access to their earnings when they need them, Clair is rewiring the way America’s workforce gets paid – in a manner that is instant, on-demand, and via direct deposit. 

What is your company’s role in the payments industry (program manager, issuer, processor, service provider, etc.)?

Clair, is an embedded fintech. We partner with Galileo, the API payment processor for world-leading fintech brands. Galileo’s best-in-class payment technologies enable Clair to keep doing what we do best — bringing frictionless, high-quality financial services to America’s workforce.

What kinds of payments & special features do you offer?

Our flagship product is fee-free Clair On-Demand Pay. We have an API connection with prominent human capital management companies that provide us with real-time pay/time data for our end-users. After clocking out of each shift, users are immediately able to access a portion of that shift's earnings, without paying a fee. In addition, Clair offers a suite of other banking tools, such as Clair Savings and Spending Accounts, a physical & virtual Clair Debit Mastercard, free ACH transfers and fee-free cash withdrawals at 40,000 in-network ATMs, and more. 

What kinds of companies are you looking to partner with?

Clair has formed partnerships with numerous HR technology and Time-and-Attendance providers across the country - making us instantly accessible to thousands of businesses and millions of hourly workers. We partner with workforce management firms, PEOs, as well as human capital management companies & payroll providers. Through these partnerships, businesses and employees instantly gain access to Clair as a free benefit. It’s a win-win-win. 
 
What do you think the future of payments holds in the next five years?

Instant, on-demand P2P payments are already table-stakes for consumers and soon these rising expectations will translate to the speed and flexibility of how employees want to receive their paychecks too. The two-week pay cycle hasn’t innovated in 100 years, and Clair has the potential to fundamentally rewire how American workers think about getting paid.  

The current wage cycle causes real pain. Senselessly, millions are pushed into financial instability over nothing so much as timing. With inflation, this is only getting worse. Money rightfully earned is trapped in limbo, acting as an interest-free loan for the employer at the expense of the employee. I’m excited for a future where instant payment access for all employees (both hourly & salaried) will become the rule rather than the exception. 

​On the morning of June 20th I received an email from “Brian T, President & CEO, Innovative Payments Association.” While this alone was not odd, in the email “Brian T” asked for my “cell phone number for an urgent task.” I thought this was a little strange considering Brian had my cell phone number. Also, what urgent task could Brian have for me at 8:30am on Juneteenth, a federal holiday? Perhaps naively, I responded to “Brian T” with my cell phone number. 

​Minutes later I received a text message from an unknown number pretending to be Brian Tate telling me he’s “rushing to a conference” (on a federal holiday?) and that he needed me to purchase $500 in Apple Store gift cards to provide to a client. I immediately recognized the request as fraudulent and cut off communications with the scammer. After examining the initial email further and calling the real Brian Tate to confirm the scam, I realized that “Brian T” was emailing me from a Gmail account, texted me from an out-of-state number that had no connection to Brian, and even misspelled Brian’s name, all red flags for potential scams. 

While the scam was obvious to me, the communication was convincing enough that I initially took the bait. The scammer had done his research, knew who Brian Tate was, and that I worked with him. The email appeared to come from him, and it was only after further inspection did I discover it had not. 
 
While I was fortunate enough to recognize the scam before it was too late, many are not. Email scams such as the one I was exposed to are on the rise, and everyone must use some basic tips to ensure they don’t become victims. According the FBI, below are some tips to protecting yourself online:
 

• Remember that companies generally don’t contact you to ask for your username or password.
• Don’t click on anything in an unsolicited email or text message. Look up the company’s phone number on your own (don’t use the one a potential scammer is providing), and call the company to ask if the request is legitimate.
• Carefully examine the email address, URL, and spelling used in any correspondence. Scammers use slight differences to trick your eye and gain your trust.
• Be careful what you download. Never open an email attachment from someone you don’t know and be wary of email attachments forwarded to you.
• Set up two-factor (or multi-factor) authentication on any account that allows it, and never disable it.
• Be careful with what information you share online or on social media. By openly sharing things like pet names, schools you attended, family members, and your birthday, you can give a scammer all the information they need to guess your password or answer your security questions.

 
With the proliferation of email scams over the last couple of years, everyone should follow the above tips to avoid being targeted by scammers, and if you are targeted as I was, be able to quickly recognize and mitigate any potential damage. 
 

​A recent survey by AARP found that 34 percent of Americans say they or someone they know has been targeted by criminals who try to trick them into paying a bogus debt with a gift card.

The survey of just over 2,000 American adults also found that 24 percent of the people surveyed bought gift cards in response to the request.

As we look to protect customers (and friends and family), it’s importance to recognize that these victims are falling prey to scams and not hacks. In other words, the most secure packaging and computer systems in the world cannot prevent someone from buying a gift card and then giving the numbers over the phone to criminals.

The survey also asked “[h]ow strongly do you agree or disagree that lawmakers need to do more to protect consumers from fraud and scams?” Not surprisingly 89 percent said they agreed with this statement. But laws already exist to prosecute criminals, and there are no laws Congress and state legislators can pass and implement that will totally prevent people from being tricked or misled.

Ultimately, we all need to be part of the solution to preventing these crimes. Laws and regulations are already in place to prosecute criminals, and law enforcement has developed tools like the FBI’s Internet Crime Complaint Center to improve reporting and investigations.

On the industry side, gift card issuers and distributors have built in fraud detection tools and created educational materials for shoppers. For instance, systems can spot unusual amounts of gift card loads or high numbers of activations. At that point they can prompt clerks to ask why the cards are being purchased, put a hold on the funds, or take other corrective action.

Of the people who reported that they bought gift cards as part of a scam, 25 percent said they were warned about the possibility of scams at the time of purchase. Clerks can only do this when the purchase seems unusual. Some criminals have gotten wise to this defense and warn their victims to purchase small amounts from multiple stores so that nothing tips off a clerk or store manager.

This brings us to the last lines of defense: education and social awareness. We need to educate git card buyers about the risks of scams. AARP did this in an article describing the most common types of scams, and industry groups like the IPA and Retail Gift Card Association have also provided information for consumers to avoid scams. The IPA also created an investigation for local law enforcement to make it easier for them to aid victims of card fraud of all types.  

Stores will often post warnings at their gift card malls that gift cards cannot be used for things like utility bill payments. Clerks have been trained to look for unusual purchases by customers.

Ultimately, we need to talk with our friends and family members about the proper uses of gift cards. Let them know they should call us first if someone ever tells them we are in jail or that they need to pay a bill and should buy a gift card. We need to make people comfortable about asking questions and not shame those who get tricked.

Gift cards have topped the holiday wish lists of consumers for the past 15 years, according to the National Retail Federation. They are popular because they bring recipients a lot of happiness and choice. By working together to protect the average American, law enforcement, industry, and friends and family can make sure gift cards remain a source of joy. 

What comes to mind as you think about innovation?

We often think of innovation as being driven by new technologies. They may take the form of new devices such as the next iteration of a smart phone, or new types of software such as artificial intelligence or blockchains.

While new technology is important, one theme that emerged from the IPA’s Innovative Payments Conference in Washington DC is that people drive innovation in payments. This is why companies need to keep the big picture in mind as they try to build the next set of products and features.

In session after session, our speakers talked about the importance of understanding people when it comes to driving innovation forward.

There is one thing that businesses need to exist – customers. Financial services touch people’s lives in a very comprehensive and personal way. So many things we do each day involve a payment. Understanding the needs, desires, and capabilities of potential customers is key. We heard from the Bureau of Fiscal service about how the government has looked for ways to meet the needs of benefits recipients from the days when checks were a new technology. Meeting people where they are is crucial, and so is bringing them along to the next level of innovation.

This coincides with the fact that the audiences that financial services providers are trying o reach are diverse ones. We had panels that discussed how to reach out to new groups of people, both inside and outside of an organization. Building a diverse team can provide more inhouse knowledge that will lead to building better products.

Of course, building products and entering new markets comes with risk. So, one big piece of advice was getting members of a team comfortable with the idea of failure. The people who need to be able to handle failure are not only the product development team, but also management and even investors. Not every idea is going to work, but it is better to test some of them than just avoid every path to innovation out of a fear of failure.
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Watch this space for more insights from our conference and an announcement on how you can get access to recordings of the sessions!

What is your company’s role in the payments industry (program manager, issuer, processor, service provider, etc.)?

B4B Payments is a regulated Electronic Money Institution in the UK and Lithuania authorised by the FCA and Bank of Lithuania to issue e-money across the UK and EEA region. In the US, we are a prepaid card program manager and corporate payments service provider.  We are a Principal Member of Mastercard Europe and a partner of VISA Inc in the USA.  We specialise in end-to-end payment innovation. 
 
With over 15 years of expertise in payments and now as part of the Banking Circle group of companies, B4B Payments is a globally recognised and trusted provider of card issuing and payment services.  We launched our US business in 2019 and can service companies in both the European and American markets from a single platform.
 
Since 2006 we’ve supported thousands of businesses delivering seamless, flexible payment services, from virtual and physical card issuing, direct payments, global payment and FX solutions.
 
What kinds of payments do you support?

Our turnkey card issuing services provide everything needed to create and manage a secure and flexible corporate funded prepaid debit scheme. Typically we handle corporate expenses, disbursements, incentives and payroll spend.

We can also offer a scalable payment solution for managing high volumes of local and international payments, with low-cost foreign exchange rates and no hidden fees, corporates can pay and get paid globally, helping them benefit from new emerging markets, increased convenience, and reduced rates.

As a BIN Sponsor and an E-money issuer in Europe, we enable Program Managers to issue cards and products through the Mastercard® network and manage all associated regulatory compliance. We are also an Apple eligible issuer with experience of both Mastercard’s MDES tokenization platform, as well as VTES with Visa.
 
What kinds of special features do your products and services offer? 

Our turn-key card services and payment solutions are powered by an intuitive, easy to use platform and mobile app. The simple all in one management portal makes it easy to issue, activate and manage cards, load funds, and access a host of in-depth reporting features in real time.  We use tokenization to manage cards and transactions minimizing dependence on transmitting personal information.

Whilst the iOS and Android app allows cardholders to instantly view their card balance and transactions, and upload photographs of expense receipts, using the latest biometric login features to ensure the highest levels of cardholder security. 

Our robust and standard API allows corporates to integrate with a huge range of other software platforms, or build their own custom process. 

Our commercial model is streamlined, and uncomplicated, technical requirements are minimal and significant control is places in our client’s hands, we believe these are fundamentally important to our clients and partners

On top of our core solution, we can offer significant lateral capability with multiple features on the same platform.  As part of Banking Circle, we can leverage the core assets of the bank to take our value proposition to the next level so that clients of ours don’t need to go through a separate bank. This is hugely valuable to those who, on top of corporate expense, want to make volume payments outside of existing banking relationships, to send money overseas minimizing FX costs and make third party payments via secure accounts.

As a regulated EMI in Europe and with scheme principal membership, we offer full bin sponsorship capabilities combined with the added benefit of being able to provide a full back-end banking solution including safeguarding accounts, virtual ibans for collection and disbursement of banking funds across 25 currencies.

Our sister companies in the Banking Circle group can also offer BNPL and corporate financing solutions.
 
What kinds of companies are you looking to partner with?

Our innovative payment processing solutions enable any size organisation to manage expenses, pay-outs, reimbursements and incentives. Fintechs, insuretechs and other industry disruptors are also extremely interesting to us especially where they are looking for digital only payment solutions. Our solution is perfect as an embedded finance component, corporate businesses and aggregators can incorporate financial services into their own product and service to compliment what they already do.

We also want to talk to successful US programs that are keen to support their global clients into Europe. We understand your business and can offer fast to market solutions with end-to-end support via our turnkey product or full bin sponsorship is also an option.
 
What do you think the future of payments holds in the next five years?
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It’s a very exciting time for payments in the US as interest in digital payments continues to grow, having benefited from some shifts in digital adoption which appear to be accelerated by COVID-19.

Innovators in all industries have embraced digital transformations and acceptance of digital first by consumers as such they are looking for embedded finance solutions within their own software and solutions versus going to a traditional bank for transactional services.   Consumers expect payments to be as seamless as delivery of any other services and want payments to be connected directly to the devices in their lives.  Industry innovators will partner with payment innovators rather than with traditional banks as those same consumers are now the corporates looking for the same level of service in the business world that they demand as individuals.

Digital wallets will become normal, checks will go away, payments across the globe will approach real time and the unbanked and underbanked will have options to receive and transmit payments without holding cash.