Savvy Capital

• (01:01) Differences in compliance: Traditional banking vs. Fintech.

• (02:44) Unique compliance challenges faced by fintechs.

• (04:18) Transition from traditional banking to fintech culture.

• (05:56) How AI enhances customer insight and risk management.

• (07:22) Lessons fintech can learn from traditional banking.

• (09:35) Future outlook: Fintech as infrastructure platforms.

• (13:20) Eliminating distinctions between domestic and cross-border payments.

• (14:45) Shifting from geographic to behavioral risk assessments.

• (20:09) Improving sanctions compliance through AI and behavioral data.

• (23:41) Blending static rules with machine learning to fight sanctions evasion.

• (26:39) Proliferation financing and sex trafficking typologies.

• (28:34) Tackling financial crime on live-streaming platforms.

• (31:09) AI-driven compliance efficiency and concern over deepfake risks.

• (00:10) - Hedi Navazan intro: CCO at One Inch, Vice Chair of Global Coalition to Fight Financial Crime.
• (00:49) - No single 'aha' moment for Hedi's crypto entry; chose crypto strategically when her compliance experience became relevant.
• (02:51) - Shifted from law to compliance for more creative freedom and impact; law and traditional banking felt restrictive.
• (06:56) - Learning curve from TradFi (traditional finance) to crypto was substantial; banking provided essential compliance best practices.
• (10:17) - Recent Silk Road founder pardon and meme coins reflect a conflicted approach from the new U.S. administration towards crypto.
• (13:01) - Silk Road pardon raises questions about legitimizing darknet activities; sentences for crypto founders often harsher than in TradFi.
• (21:56) - Tornado Cash ruling (targeting developers, not just entities) was politically charged; exposed regulatory gaps for decentralized protocols.
• (28:20) - Lazarus Group explanation: North Korean cybercrime unit involved in crypto-related attacks and money laundering.
• (30:10) - Zero-Knowledge Proofs (ZKPs) seen as promising for balancing privacy and compliance; regulator acceptance and education remain challenges.
• (32:52) - Crypto regulation needs a technological solution rather than imposing traditional methods; ZKPs could offer compliant, privacy-focused KYC/KYB.

• 01:16 – Jeremy explains early regulatory shifts with the new US administration and leadership changes.
• 02:45 – Discussion on bipartisan support for open banking and CFPB’s finalized rule.
• 03:57 – Jeremy highlights open banking’s broad benefits for fintech, traditional banks, and crypto.
• 05:31 – Conversation on whether the new administration will deregulate or maintain current rules.
• 06:58 – Jeremy notes expanding open banking use cases across various industries.
• 08:31 – Cost advantages of ACH payments over credit cards are discussed.
• 10:15 – Talk on the evolving payment landscape, contrasting credit cards with bank-based payments.
• 11:57 – Open banking is seen as an alternative to, not a competitor of, crypto stablecoins.
• 12:47 – Shift from screen scraping to API-driven connectivity improves security and reliability.
• 14:10 – Comparison of open banking challenges in the US (many banks) versus Europe (standardized APIs).
• 15:19 – Explanation of CFPB delegating standards to organizations like FDX to ensure performance.
• 16:50 – New regulations are expected to help long-tail banks join the open banking ecosystem.
• 18:10 – Focus shifts to fraud prevention using network data and ACH protections.
• 21:11 – Jeremy describes monitoring social media for emerging fraud tactics.
• 23:19 – Balancing fraud prevention with ensuring consumer access is a key challenge.
• 25:37 – Jeremy shares his go-to resources: industry blogs, law firm newsletters, and expert opinions.
• 27:43 – Discussion on the impact of hefty enforcement fines and the risk of “compliance theater.”
• 29:01 – Emphasis on balancing scalable fraud prevention with effective compliance measures.

00:50 - 02:30: Alex explains broker-dealer compliance, private securities transactions, and her transition to startups.
02:30 - 03:40: Alex discusses her role at a startup working on an ESG investment product and her move to NetCapital.
03:40 - 04:30: Lessons from compliance at Fidelity and applying them to fintech and crowdfunding.
04:30 - 05:30: Alex’s motivation—initial plans for law school, moving into business, and regulatory strategy.
05:30 - 07:00: Crowdfunding as a mechanism to democratize investing and expand access to private markets.
07:00 - 08:45: Crowdfunding vs. VC—debunking misconceptions and explaining its advantages.
08:45 - 10:50: Challenges in crowdfunding—marketing efforts, investor awareness, and execution difficulties.
10:50 - 12:30: Need for public access to private markets, regulatory challenges, and protecting investors.
12:30 - 14:00: Accredited investor requirements and efforts to broaden access.
14:00 - 16:00: Crowdfunding as an alternative investment approach—focusing on fundamentals over funding mechanism.
16:00 - 18:30: Differences between equity crowdfunding, rewards-based, and donation-based crowdfunding.
18:30 - 21:00: Secondary markets, IPO trends, and why companies are staying private longer.
21:00 - 23:30: Challenges in creating secondary market liquidity and alternative trading systems (ATS).
23:30 - 25:00: Merging of crowdfunding and broker-dealer models, institutional vs. retail secondary trading.
25:00 - 27:00: The role of technology in reducing secondary market transaction costs.
27:00 - 28:30: Carta's entry into the secondary market and compliance concerns.
28:30 - 30:00: Secondary market risks—valuation discrepancies, ESOP liquidity, and price discovery challenges.
30:00 - 31:30: Fundraising strategies and tactics founders use to succeed in crowdfunding.
31:30 - 32:30: Post-COVID shift back to in-person fundraising events and networking.
32:30 - 34:00: Comparing US and EU regulatory environments—pros, cons, and enforcement-based regulation.
34:00 - 35:30: NetCapital’s recent broker-dealer approval and expanded fundraising capabilities.
35:30 - 37:30: The future of crowdfunding—syndicated deals, collaboration between broker-dealers, and growth.
37:30 - 38:50: Potential for Reg A as an alternative path to IPOs.

00:46–04:44 - SEC Leadership Transition: Discussion on the regulatory shift from Gensler to Paul Atkins, highlighting challenges with enforcement-based regulation and hopes for clearer guidelines under Atkins.

05:16–07:55 - Crypto Market Dynamics: Bitcoin’s role as a store of value versus a currency, the rise of stablecoins for payments, and parallels to the unregulated derivatives market pre-2008 crisis.

12:31–16:56 - Regulatory Landscape: Key cases like Ripple and Coinbase, the division of oversight between SEC and CFTC, and the push for stablecoin regulation globally, influenced by frameworks like MiCA.

20:54–24:04 - Staking and Meme Coins: Regulatory challenges around staking tokens as securities and scrutiny of meme coins for their lack of utility, with an emphasis on investor protection.

26:22–30:42 - Bitcoin ETFs and Smart Contracts: The pros and cons of Bitcoin ETFs for institutions and the evolving legal debates around smart contract liability, such as the Tornado Cash sanctions.

35:04–35:18 - Closing Thoughts: The need for updated legislation tailored to digital assets and reflections on crypto’s potential and regulatory future.

Louie shares his deep expertise on combating financial crime, uncovering how nations like Russia and Iran manipulate trade routes to launder money. From the latest Shadow Fleet cable attacks to innovative compliance strategies, this conversation is packed with insider insights every compliance officer needs to hear.

Highlights:

The crypto world is in a full-on identity crisis. Is it a rogue maverick fighting the system, or a suit-wearing sellout eager to fit into TradFi’s meticulously regulated ecosystem?

After chatting with Joseph Shannon, Head of Legal Compliance at FXCH Group, it’s clear: the answer is a messy hybrid of both.

𝗗𝗲𝗰𝗲𝗻𝘁𝗿𝗮𝗹𝗶𝘇𝗲𝗱 𝗘𝘅𝗰𝗵𝗮𝗻𝗴𝗲𝘀: 𝗜𝗻𝗻𝗼𝘃𝗮𝘁𝗼𝗿𝘀 𝗼𝗿 𝗥𝘂𝗹𝗲 𝗕𝗿𝗲𝗮𝗸𝗲𝗿𝘀?

DEXs the crypto purists dream: anonymous, permissionless, and unregulated. The issue? Regulators don’t.

No KYC, no sanctions checks, no clue who your counterparty is. A hacker? A sanctioned entity? Your mom? Who knows.

Joseph’s Fix: A “hybrid model” with compliance tokens or NFTs for KYC. Anonymity-lite, if you will. But isn’t that just CeFi in a funky new outfit?

"DEXs are amazing until regulators knock on the door and ask where all the IDs are."

𝗕𝗮𝗻𝗸𝘀 𝘃𝘀. 𝗖𝗿𝘆𝗽𝘁𝗼: 𝗔 𝗟𝗼𝘃𝗲-𝗛𝗮𝘁𝗲 𝗦𝗮𝗴𝗮

When Silvergate and Signature banks collapsed, crypto firms lost their fiat safety net. Enter stablecoins as the duct tape solution but even they’re under fire in Europe under MiCA’s strict rules.

Joseph highlighted how regulators scared banks off with “pausing letters,” essentially saying, “Don’t touch crypto.” The result? Firms scrambling to find banking solutions or relying on niche providers.

These actions likely supercharged stablecoin demand.

𝗠𝗼𝘀𝘁 𝗢𝗳 𝗧𝗵𝗲 𝗠𝗲𝗱𝗶𝗮 𝗗𝗼𝗻'𝘁 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 𝗖𝗿𝘆𝗽𝘁𝗼

Let’s talk reputation. The media, including yours truly, often paints crypto as the playground of criminals.

Joseph’s Take: “They lump stablecoins, Bitcoin, and memecoins into one messy pile. It’s lazy reporting.”

In fairness, there is an awful lot of rubbish out there, but that's the same for a lot of industries.

𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘀 𝗔𝗿𝗲 𝗔𝗹𝘀𝗼 𝗦𝘁𝗶𝗹𝗹 𝗙𝗶𝗴𝘂𝗿𝗶𝗻𝗴 𝗖𝗿𝘆𝗽𝘁𝗼 𝗢𝘂𝘁

Joseph pointed out a fundamental problem: regulators and courts can’t decide what crypto even is.

Is it property? A currency? A commodity? Each decision changes how it’s regulated, leaving firms in a legal limbo.

"How can regulators create rules when they can’t define the thing they’re regulating?"

Link to our full conversation in the comments

Compliance sucks for startups ... most of the time, but Rachel Sapers, who’s built compliance programs at places like Carta and E*TRADE from Morgan Stanley, has a solution to save all of those "move fast and break things" entrepreneurs!

Here’s Rachel's guide on how to make compliance work for fintech startups:

[1] Compliance, But Make It Fractional

Why hire a full-time compliance officer when you only need part of one? Get the expertise without the overhead. Startups save money while still impressing investors and banking partners by, you know, being able to show ... there's an adult in the room! Unlike a recent SV startup that thought zero due diligence lending was a great idea ... RIP

[2] Your Onboarding Data Isn’t Just Compliance Fodder

Your customer’s name, address, and birthday? They’re gold.

- Identity verification helps with compliance and marketing insights.

- Fraud protection? Covered. Targeted growth strategies? Done.

A fintech used this exact approach and doubled trust scores while slashing AML review times by 30%.If you’re only using this data to tick boxes, you’re leaving money (and insights) on the table.

[3] AI: Compliance’s Workhorse (Not Its Replacement)

AI is taking grunt work off compliance teams’ plates.

- Reviewing marketing materials? AI can flag problems before they hit compliance.

- Transaction monitoring? AI filters the noisy false positives so humans focus on the real risks.

E.g. One fintech saved days on marketing review cycles by letting AI catch red flags before the compliance team even saw the draft.

[4] Banking Relationships Are a Two-Way Street

Want a banking partner to take you seriously? Start speaking their language.

Tailor your compliance framework to fit both your business and their expectations.

Pro tip: Don’t copy-paste a bank’s compliance policy template for your startup. Unless you want to explain your “cash handling procedures” when you don’t even accept cash.

It was a blast having Rachel Sapers on the pod, great conversation that I'm sure other compliance leaders will enjoy!