AML Transaction Monitoring Fines: The Silent Fintech Killer

In just April 2025 alone, major fintech firms all across the world faced substantial penalties for failing to comply with their Anti-Money Laundering obligations. Block was hit with a colossal $40 million fine in the US while Revolut faced a €3.5 million penalty in Lithuania. From North America to the EU and APAC to Latin America, regulators are cracking down hard. 

This wave of disciplinary measures highlights a growing trend: fintechs are under intense scrutiny for lapses in AML compliance. This isn’t really a question of why regulators are tightening regulations; the answer to that is pretty self-explanatory. Instead, we should be asking why so many fintechs are still falling short of their AML obligations when they know this is such a hyper-punitive era.

Welcome to the age of AML crackdowns

AML enforcement is nothing new, but the volume and velocity of actions against fintech firms have accelerated in recent years. Since 2020, regulators worldwide—particularly in the US, UK, and EU—have increased scrutiny on digital-first financial institutions.

Fines that once targeted big banks are now hitting fintechs, neobanks, and crypto platforms. In 2024 alone, over $3 billion in penalties were levied globally for AML failures, with fintech companies accounting for a growing share of those fines.

Delayed suspicious activity reports, poor customer due diligence, or inadequate transaction monitoring systems are often to blame for these penalties. What’s more, this is a signal that fintechs are now very much part of the mainstream, and regulators expect them to meet the same standards as their more traditional counterparts.

Suggested read: AML Transaction Monitoring in 2025: The Complete Guide

Why fintechs are getting burned

Unlike legacy banks with decades of compliance infrastructure, fintechs are often used to moving fast and breaking things—unfortunately, even the rules sometimes.

Many startups scale quickly, onboard global users with minimal friction, and rely on automated or outsourced compliance processes. While these tactics help growth, they can also introduce blind spots, especially in complex areas like monitoring cross-border transactions or properly identifying crypto activity.

The challenge isn’t a lack of will or even awareness. Most fintech founders understand the stakes at risk here. But staying ahead of evolving compliance demands while building a competitive product can stretch resources thin. And regulators no longer have as much patience.

Broader impacts: Cost, caution, and constraint

The consequences of AML penalties go far beyond a firm’s balance sheet. Financially, fines can devastate early-stage fintechs and scare off investors. Operationally, companies respond to these shocks by overhauling their compliance stacks, often at the expense of product development.

Read some of the stories around Revolut’s recent fine and you’ll notice many describing it as a “record”, which is exactly what it is, in more ways than one. And it’s not the kind of record a company would be particularly happy to break. While it’s too early to see what kind of financial impacts, if any, this record fine could have on Revolut, it’s no stretch of the imagination for it to impact the entire business and their ability to continue to grow. 

Penalties also go on a company’s public record—reputational damage undermines user trust, which is critical for any platform handling funds. As supervisory expectations grow, firms are getting sucked into more audits, reporting requirements, and regulatory touchpoints, slowing innovation across the sector.

We’re seeing a chilling effect: startups delaying launches, decreases in risk appetite, and overcorrections with overly conservative policies.

Arguably the most worrying impact of all is the increase in the number of fintechs turning away high-risk customers. These customers come from every aspect of life and represent a growing portion of the population, and, in some cases, are even incorrectly identified as high-risk. With more and more firms turning customers like these away, more and more consumers end up being excluded from financial services. 

​​Where third parties can help

In this high-stakes hyper-punitive environment, many fintechs are turning to specialized third-party partners to meet regulatory expectations without building their own massive in-house compliance teams.

RegTech platforms, for example, can simplify compliance with real-time transaction monitoring, machine learning models, and automated suspicious activity report generation. KYC/AML identity verification providers can also help fintechs by streamlining onboarding processes and meeting different compliance standards around the world.

Fintechs are seeking advice from consulting firms as well, using their expertise to help build risk-based frameworks and conduct mock audits. We’re also seeing companies turn to managed compliance services offering fractional compliance officers and scalable back-office support.

The key is choosing partners who don’t just tick boxes, but understand both the regulatory landscape and the technology that makes compliance easier. When used wisely, third parties can help fintechs turn their compliance processes from a lengthy bottleneck into a major competitive advantage.

But just because a fintech uses a third party, it doesn’t mean it abdicates its responsibilities. Regulators still hold the firms accountable for any failures in compliance, so robust oversight of vendors and clear service-level agreements are essential.

Proportional AML: Smarter rules and stronger systems

It’s clear that AML vigilance is non-negotiable. But this current wave of enforcement runs the risk of becoming a sledgehammer when a scalpel would lead to better results.

Instead, regulators and innovators alike need to build a smarter framework. That means proportional regulation that accounts for the size, risk, and maturity of fintechs as well as clear guidelines on AML tech stacks, including the use of AI and machine learning.

Regulatory sandboxes could be used, allowing startups to test compliance solutions without the fear of punitive consequences. It’s also essential to maintain an ongoing dialogue between firms, regulators and third-parties used by regulated firms, instead of learning from post-mortems after hyper-punitive enforcement.

The good news is that there has been some movement in the right direction. Industry groups are forming to shape best practices. RegTech vendors are building smarter monitoring tools. And regulators in places all around the world, from Singapore and Australia to the UK and Brazil, are experimenting with tech-forward approaches.

Suggested read: AML Compliance Program: The Essential Guide for 2025

Balancing trust and transformation

Ultimately, AML is a matter of trust. And trust is the currency of the digital finance world.

But trust won’t flourish in an environment of fear. If we want fintech to continue expanding financial access, lowering costs, and enabling innovation, we need a regulatory model that’s tough but considerate.

AML compliance should be a foundation for growth—not a punishment for ambition.