Top Compliance Challenges Every FinTech Startup Faces in 2025

Well into 2025, FinTech founders face not just a problem of making a market-fitting product, but also a whole minefield of regulations. With the rapid regulatory shifts and the overall development of frameworks worldwide, setting up a company for FinTech operations has become harder than ever before. Many still disregard this step, even though it creates the foundation for the success of any business.

Company formation is your first line of defence against fines, delays, and grave reputational damage. To enter this stage with expertise and precision, consider the most common compliance challenges below.

Challenge 1: Navigating Licensing & Regulatory Perimeters

Different jurisdictions, onshore and offshore, define FinTech activities differently. Take MiCA in the EU as a prominent example: among other things, it has established a sharp distinction between asset-referenced tokens (ARTs) and e-money tokens (EMTs). While bringing clarity, this split also caused new licensing nuances for token issuers registered in the Member States.

Offshore hubs have their own frameworks and processes. For instance, business registration in the BVI offers ease and speed of incorporation unrivalled by most traditional jurisdictions.

What Can Be Done

There are several ways in which you can bridge the gaps in compliance:

• Choose a jurisdiction that aligns with your core services and growth roadmap;
• Use phased licensing: for example, start with an EMI license in the EU, then expand to CASP under MiCA;
• Draft a regulatory business plan during incorporation to avoid future pivots.

By having an exact plan of action, you safeguard your company from regulatory risks.

Challenge 2: AML/KYC Compliance from Day One

Meeting Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) requirements is one of the most immediate and complex hurdles for FinTech startups. Regulators expect companies to verify customer identities (KYC), screen against global sanctions lists, and monitor transactions for suspicious activity. The Travel Rule adds another layer, requiring firms to share sender and recipient information for cross-border transfers above certain thresholds.

What Can Be Done

Adhering to the AML-CFT, as well as KYC requirements, is an obligatory step in company registration and licensing. However, it might be difficult to navigate without the help of a professional. As a preemptive measure, you can try:

• Register in a jurisdiction with a transparent and reputable AML framework to establish market credibility;
• Embed AML/KYC obligations directly into the company bylaws and shareholder agreements to ensure alignment at the governance level;
• Establish a compliance function from the start by appointing a Money Laundering Reporting Officer (MLRO).

While not obligatory everywhere, a Money Laundering Reporting Officer is often an incorporation/licensing requirement in jurisdictions across the EU and in heavily regulated onshore locations.

Challenge 3: Drafting Clear Governance & Ownership Structures

Regulators and investors expect companies to have transparent ownership and well-defined governance mechanisms. When structures are too complex, such as multi-layered offshore holdings, nominee arrangements, or unclear shareholder rights, they create uncertainty and can delay licensing approvals or investment decisions.

What Can Be Done

To ensure transparent ownership and a clear image in the eyes of authorities and investors, consider the following steps:

• Keep shareholder structures simple and transparent;
• Include compliance oversight responsibilities in board charters from the start;
• Prepare shareholder agreements that allow for governance flexibility as you scale. 

It would be wise to research the stance of your chosen location on beneficiary and shareholder privacy in advance or refer to a certified corporate lawyer for a consultation.

Challenge 4: Meeting Share Capital Requirements

The financial aspect, especially the share capital requirement, is a frequent pain point for entrepreneurs. Many jurisdictions require FinTech projects to hold a minimum level of share capital to prove financial stability and proper funding of the business activities. Insufficient capital at incorporation can cause licensing delays.

What Can Be Done

Meeting share capital requirements isn’t just a regulatory checkbox, it’s a strategic decision that can influence funding, investor confidence, and licensing timelines. Proper planning from day one keeps your growth trajectory on track.

• Plan capital injection in line with the chosen license type;
• Structure shareholder agreements to allow for quick fundraising rounds without losing control;
• Consider phased capital increases aligned with growth milestones.

By approaching share capital strategically, you not only meet regulatory requirements but also create a foundation for sustainable growth and investor confidence.

Challenge 5: Handling Ongoing Reporting & Recordkeeping

If you already have some experience in building and registering a FinTech company, then you probably know that compliance doesn’t stop after formation or after licensing. FinTech faces ongoing obligations, such as financial reporting, transaction monitoring, and audits. Notably, these obligations are more stringent in onshore jurisdictions and under heavy frameworks, like MiCA in the EU.

What Can Be Done

Ongoing compliance is not optional; it’s a continuous operational responsibility that can make or break a FinTech business. Planning for reporting and audit processes from the start reduces risks, saves time, and ensures that your company can scale without regulatory disruptions.

• Set up reporting calendars at incorporation;
• Use RegTech tools or outsourced compliance support to meet filing deadlines;
• Build an internal audit trail system from day one.

By embedding these processes into your company from the beginning, you minimize the risk of non-compliance, demonstrate strong governance to investors, and ensure your FinTech can operate smoothly under even the strictest regulatory frameworks.

A Universal Solution: Consulting a FinTech Compliance Expert

Facing FinTech registration challenges alone is daunting, especially for startups: a single mistake can put the compliance at risk and lead to reputational damage. LegalBison has extensive experience guiding FinTech companies through incorporation and licensing. For over five years, the firm has supported startups and established players alike in navigating complex compliance requirements with confidence.

Entrusting your company registration to a legal professional is a cost-effective and proven way to overcome obstacles with ease. A professional agent who knows the intricacies of FinTech incorporation and licensing worldwide can find an individual approach to your project and provide a clear, fast, and effective solution for building your business.