The EU and UK regulations for fintech companies are changing rapidly. This year, new rules are coming into play that could seriously impact how your payment services, neobank, or embedded finance platform runs.
Understanding these decrees and adhering to regulatory standards isn’t just about avoiding penalties. It’s about weaving compliance into your daily operations to grow sustainably and build customer trust.
Fintech companies are now leaving the old “compliance as a separate department” approach and integrating regulatory requirements into their product development and business processes.
This proactive stance can help you attract investment, secure partnerships, build stronger customer relationships, and get a competitive advantage in the EU financial services market.
Below, you’ll find a practical tracker of the most important EU and UK fintech regulatory compliance requirements that could affect your business.
We’ll break down deadlines and key operational impacts and share actionable steps so your business can meet the rules and use them to build customer confidence and business resilience.
Understanding EU and UK Fintech Regulatory Bodies
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Several regulatory authorities oversee compliance in the EU and the UK. These organizations set the rules your business must follow to operate legally.
The European Securities and Markets Authority (ESMA) acts as the EU’s main securities regulator. ESMA pushes for uniform rules across member states and aims to protect investors while keeping financial stability intact in European markets.
Over in the UK, the Financial Conduct Authority (FCA) serves as the primary regulator for financial services. The FCA oversees conduct for more than 51,000 financial institutions and sets standards to ensure customers get fair treatment.
Both ESMA and the FCA focus on:
- Anti-money laundering compliance
- Consumer protection
- Market integrity
- Operational resilience
The Financial Action Task Force (FATF) brings its own influence, shaping regulations across borders with its anti-money laundering recommendations. If you’re running a fintech company, you’ll need to stick to these standards to stay in regulators’ good graces.
For payment services, you’ll need to work with the European Banking Authority (EBA) in the EU and the Payment Systems Regulator (PSR) in the UK.
Traditional banks deal with similar oversight, but fintechs usually get extra scrutiny thanks to their newer business models and technologies.
The Financial Stability Board (FSB) keeps an eye on the global financial sector and flags emerging risks that might impact your operation. Their recommendations often turn into rules you’ll need to follow.
Top Fintech Regulatory Compliance Challenges
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Fintech companies in the EU and UK are staring down an even more complicated regulatory landscape in 2025. Adapting quickly isn’t optional anymore, especially as enforcement tightens and penalties get steeper.
- Data privacy regulations keep changing fast, so you’ll need solid systems for handling data. Balancing innovation with protecting customer info is hard, especially since requirements differ from one country to another.
- AML and KYC requirements got tougher this year. Regulators want to see more advanced risk assessments and monitoring to stop money laundering and terrorist financing. Compliance processes like KYC checks during customer onboarding are becoming more integrated and essential.
- Cybersecurity rules are stricter now, too. You’ll have to use better threat detection and run regular penetration tests to show you’re meeting new standards.
- Regulatory fragmentation is a real issue. Your compliance team has to juggle different requirements across the EU and the UK, and sometimes those rules contradict each other.
- Licensing complexities can slow down your expansion. Every new market brings its own set of local regulations and authorizations you’ll need before getting started.
- Financial crime prevention eats up more resources than ever. Your systems have to spot suspicious activity without throwing up too many false positives that frustrate good customers. The US Financial Crimes Enforcement Network (FinCEN) and its AML frameworks influence global standards that UK/EU fintechs indirectly follow.
- Compliance costs just keep rising. You’re forced to weigh investments in regulatory tech against other business needs, but you still need solutions that actually reduce compliance risk.
Regulatory reporting requires more detailed data, and you have to submit it faster. Your systems need to capture and organize everything efficiently so you don’t get hit with penalties for late or incomplete reports.
How Legal Nodes Helps You With Fintech Regulatory Compliance
Legal Nodes offers a platform built for fintech companies trying to keep up with the EU and the UK’s regulatory scene. Our service connects you with vetted legal, tax, and privacy experts in over 20 jurisdictions—all through one integrated solution to track and manage your compliance efforts.
When you’re dealing with fintech compliance requirements, your dedicated Virtual Legal Officer (VLO) translates your business needs into hands-on legal solutions. It saves you both time and money compared to traditional law firms.
Your VLO teams up with boutique law firms and independent local providers who know the ins and outs of each jurisdiction, making sure your fintech stays compliant as the rules evolve. This global-local combo means you can expand with more confidence.
Key services for fintech companies:
- KYC & AML compliance setup and maintenance
- Privacy and data protection compliance
- Entity formation in optimal jurisdictions
- License acquisition and regulatory compliance
- Token issuance legal opinions (for crypto fintechs)
- Tax structuring and optimization
You can manage all legal projects from one dashboard, so you always know where you stand across markets, including the EU and the UK.
If you’re ready to make your fintech compliance journey less painful, reach out to our team. We’ll talk through your specific regulatory issues and show how our platform can help.
Key Areas of Fintech Regulatory Compliance
The following list outlines critical areas of fintech regulatory compliance in the EU and UK for 2025.
We'll explain relevant regulations such as GDPR, PSD2, AMLD 6, and DORA, their requirements and how they impact your financial technology operations.
Company Setup And Regulatory Licensing
Starting a fintech company in the EU or UK requires understanding the various regulatory frameworks and ensuring compliance for specific financial services.
What you’ll need to do depends on your business model and which activities you want to offer.
PSD 2 (Reg 2015/2366) authorization vs. registration pathways
The Payment Services Directive 2 (PSD2) gives fintechs two main paths into the payment space.
Authorization is for full payment service providers—credit transfers, direct debits, and payment initiation. According to Article 7, you’ll need at least €125,000 in capital, a solid risk management framework, a detailed business plan, security policy documentation, AML/KYC compliance setup and a professional indemnity insurance.
The registration pathway is for smaller payment institutions with limited transaction volumes, moving less than €3 million monthly. It’s less demanding (just €50,000 in capital) but also limits what you can do. You can find relevant details under Article 32 of PSD2.
Your decision comes down to your growth goals, available capital, and what you plan to offer. No matter which path you pick, PSD2 means you’ll have to use Strong Customer Authentication (SCA) for transactions over €30 and keep your data security tight.
EMD 2 (2009/110/EC & UK EMR 2011) for e‑money issuers
The Electronic Money Directive 2 sets the rules for e-money institutions in the EU, and the UK follows similar guidelines under EMR 2011. To become an e-money issuer, you’ll need at least €350,000 in initial capital (Article 4), and you have to safeguard customer funds.
Key obligations include:
- Keeping customer money separate from company funds
- Setting up strong AML/KYC procedures
- Having clear policies for redeeming e-money
- Staying on top of reporting requirements
While timelines vary, the process usually takes 6-12 months. The UK FCA tends to move a bit faster than some EU authorities. E-money licenses are especially useful for digital asset businesses that offer wallet services or stablecoins that act like e-money.
Taxation And Accounting Compliance For Fintech
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Fintech companies face unique tax and accounting hurdles in the EU and the UK. Staying compliant means maintaining accurate financial records, knowing the reporting frameworks, and keeping up with the rules as they change.
VAT OSS/IOSS (Reg 2020/282) for multi‑country digital sales
The One-Stop Shop (OSS) and Import One-Stop Shop (IOSS) systems have changed VAT compliance for fintechs selling digital services across the EU. Now, you can register in just one EU country instead of everywhere you have customers.
Key benefits include:
- Simplified reporting: File a single quarterly VAT return for all EU sales
- Less admin annoyance: Handle VAT with just one tax authority
- Cost savings: Cut compliance costs by skipping multiple registrations
You'll need to register if you hit €10,000 in cross-border B2C sales. VAT rates still vary by country, so your systems have to calculate VAT based on your customers' locations.
Don't forget—you'll need to keep transaction records for 10 years and make sure your financial system can track sales by country.
DAC 7 (platforms) reporting
The Directive on Administrative Cooperation (DAC 7) brings in new reporting requirements for digital platforms that help sellers transact. By January 31, 2025, your platform had to send its first annual report covering 2024 activities.
DAC 7 covers platforms that enable:
- Sale of goods
- Personal services
- Rental of immovable property
- Transportation services
This robust compliance program asks you to:
- Collect seller identification information
- Verify seller data with due diligence procedures
- Report financial transactions value and earnings by seller
This directive enhances tax transparency and reduces tax evasion. Penalties for non-compliance can be severe, possibly amounting to millions of euros, based on your operating location.
FATCA IGA (US‑UK agreement) for US‑connected accounts
The Foreign Account Tax Compliance Act (FATCA) Intergovernmental Agreement between the US and UK means companies in the fintech industry have to identify and report accounts held by US persons.
It applies to payment services, investment platforms, and other financial products.
Your obligations?
- Account identification: Screen new and existing customers for US indicia
- Due diligence: Verify US status through documentation
- Annual reporting: Submit required information to HMRC by May 31 each year
For accounts over $50,000, you'll need to step up verification. Financial institutions that don't comply could get hit with a 30% withholding tax on US-source payments.
FATCA compliance also intersects with consumer protection regulations. Customers have to get clear notices about information sharing, so make sure your agreements include the right consent language for FATCA reporting.
Agreements, Contracts, And Regulatory Obligations
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Financial institutions juggle complex contractual requirements while adhering to compliance regulations. These obligations set the tone for customer relationships and spell out how services get delivered within legal boundaries.
PSD 2 RTS (Reg 2018/389) SCA & API‑access contract requirements
The Payment Services Directive 2 Regulatory Technical Standards (PSD2 RTS) lay out contractual obligations for Strong Customer Authentication (SCA) and API access.
Your fintech should include clear terms about authentication procedures in all customer agreements.
API access agreements need to spell out:
- Data access limitations (scope and frequency)
- Security protocols for data transmission
- Liability provisions for unauthorized access
- Breach notification procedures
Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs) need detailed contracts with banks. These should define technical specs for API connectivity and clarify response times and availability.
Regular contract reviews help keep you in step with changing PSD2 standards, especially as regulators change their interpretations.
EMI T&C must-haves (e-money safeguarding & consumer disclosures)
Under the Electronic Money Directive (EMD2) and the UK EMR, Electronic Money Institution (EMI) terms and conditions have to include specific safeguarding rules to protect customer funds.
Your agreements should clearly state how customer money gets separated from operational funds.
Key EMI contract requirements:
- Safeguarding mechanisms—name the banks where funds are held
- Fee structures—be transparent about every charge
- Redemption rights—explain any limits or timeframes
- Complaint procedures—make escalation paths clear
Per EMD2 and FCA rules, disclosures need to explain how e-money differs from bank deposits, especially when it comes to deposit protection. Make sure these appear front and center in your customer materials.
Build regular audits of your T&C documents into your compliance process. Staying vigilant here helps avoid regulatory issues and builds trust with customers.
Legal Memos And Licensing Strategies
For fintechs working in the EU and UK, getting the right paperwork sorted, knowing the rules, and picking the right license are key. It helps you stay on the right side of the law while still being able to innovate.
EMI vs. PI license gap memo
The choice between Electronic Money Institution (EMI) and Payment Institution (PI) licenses isn’t always easy. EMIs can issue electronic money and offer payment services, while PIs are limited to payment services only.
EMI licenses require higher starting capital (€350,000 versus €125,000 for PIs) but give you more flexibility. EMIs can hold customer funds indefinitely, which PIs can’t do beyond the execution of payment transactions.
Your legal strategy should lay out this analysis clearly. Draft a memo comparing the regulatory requirements, what each license lets you do, and where you can operate.
Think about your growth plans. Many fintechs start with a PI license and upgrade to EMI as they scale. It’s a way to save capital early on while building a strong compliance foundation.
MiFID 2 carve‑out for payment services
Payment service providers need to watch out for overlap with investment regulations. MiFID 2 (Recital 9 and Article 3) does exclude pure payment services covered under PSD2.
However, if your platform dips into investment advice, portfolio management, or order execution, you might trigger MiFID 2 requirements, even with an EMI or PI license.
Common triggers to watch out for:
- Rewards programs that look like investment products
- Cashback features tied to securities
- AI-driven financial recommendations
- Account aggregation showing investment performance
Write a memo explaining why your features don’t fall under MiFID 2. It gives you an audit trail to show your compliance efforts.
Keep reviewing your services against this memo, especially when you roll out something new or use AI for financial guidance. It’s easy to drift into regulated territory without realizing it.
Data Privacy And Protection
Consumer data privacy is only getting bigger for the financial services sector in 2025. New rules demand strict protection of consumer info while keeping up with cross-border compliance.
GDPR and UK GDPR lawful basis for transaction data
The GDPR and the UK GDPR set the tone for fintech compliance in 2025. You need a clear and lawful basis under Article 6 to process transaction data.
Most financial firms lean on these legal grounds:
- Contractual necessity: Processing is needed to provide services
- Legal obligation: Required by financial regulations
- Legitimate interest: Processing helps your business without overriding customer rights
The UK Information Commissioner's Office (ICO) has been focusing on "fair and transparent" online tracking lately. Their new strategy is keeping consumers safe while allowing new ideas to come through.
The rules around transaction data have changed a lot lately. Keep track of why you're collecting data and check back on it as your services grow.
If you need help, you can reach out to Legal Nodes.
We provide comprehensive GDPR packages with essential documents, policies and training.
NIS 2 (EU 2022/2555) cybersecurity for payment platforms
The NIS 2 Directive (EU 2022/2555) ramps up cybersecurity requirements for payment platforms. As a fintech, you've got to set up strong security measures to protect both your systems and customer financial data.
Key requirements:
- Risk management frameworks—cover supply chains and vulnerability handling
- Incident reporting within 24 hours of discovery
- Regular security testing and proof of ongoing monitoring
- Board-level responsibility for cybersecurity governance
The directive now covers more financial services, including payment processors and crypto exchanges. According to Article 34, penalties can reach €10 million or 2% of global turnover.
Full compliance is due by October 2025. Start gap analyses now to spot where your payment infrastructure needs upgrades.
Digital Operational Resilience (DORA)
European financial institutions face more digital reliability and resilience demands in their financial operations. The regulations keep growing, with new timelines and frameworks targeting tech risks.
DORA (EU 2022/2554) incident reporting
The Digital Operational Resilience Act (DORA) sets a framework for financial entities across the EU. It came into force on January 16, 2023, and enforcement began January 17, 2025. DORA also coordinates with the NIS 2 Directive to prevent overlapping cybersecurity requirements.
For incident reporting under DORA, you have to:
- Report major ICT-related incidents within 72 hours of detection
- Provide updates as the investigation moves along
- Submit a final report after root cause analysis
DORA applies to banks, insurance companies, investment firms, payment platforms, and crypto businesses. The regulation stresses strong ICT risk management frameworks and oversight of third parties to cut operational risks.
Your team needs solid monitoring systems to spot incidents fast. Make sure you’ve got escalation paths and people in charge of regulatory reporting.
FCA Tech Resilience rules (PS21/3)
In the UK, financial companies follow resilience rules set by the FCA PS21/3, which run alongside DORA, to keep their digital operations dependable.
Key requirements:
- Governance: Clear accountability for operational resilience
- Testing: Regular vulnerability and penetration testing
- Recovery: Defined impact tolerances and restoration timelines
- Third parties: Oversight of critical service providers
You’ll need to document how you handle digital payments, security, and transaction monitoring. The FCA expects you to identify your key business services and set limits on how much disruption you’ll tolerate.
Test your compliance procedures regularly to meet FCA and DORA standards, especially if you operate in more than one jurisdiction. Your security measures should keep up with new threats but not bog down your operations.
Regulatory Watchlist And Upcoming Compliance Deadlines
With international regulations, digital currency frameworks, and anti-money laundering rules on the horizon, planning is non-negotiable.
ECB's Digital Euro Pilot legal guidelines
The European Central Bank's digital euro project is growing, with legal frameworks expected in 2025. As a fintech, you'll need to get ready for pilot phase guidelines that will shape how you deal with this new central bank digital currency (CBDC).
Here's what you should be doing:
- Check your technical infrastructure for CBDC compatibility
- Update compliance frameworks to handle the digital euro
- Train staff on new reporting requirements
The ECB will likely roll out specific reporting protocols and transaction monitoring standards. Start allocating resources now so your systems can integrate with digital euro settlement and meet the strict privacy controls that are coming.
EU's AMLD 6 (2023) for Virtual Asset Service Providers
The 6th Anti-Money Laundering Directive puts virtual asset service providers (VASPs) under much tighter regulatory scrutiny.
If your fintech business deals with cryptocurrencies or digital assets, you'll need to get serious about compliance. Starting July 2027, stricter rules for customer due diligence, reporting, and registration will be enforced.
Here's what AMLD 6 means for VASPs:
- Enhanced KYC procedures: You'll have to verify customers more thoroughly.
- Expanded transaction monitoring: Real-time detection of suspicious activity is now a must.
- Cross-border reporting: New rules start for international transfers.
The directive also expands criminal liability and adds new predicate offenses. Your compliance team should review customer onboarding right now to spot any gaps.
It's not always easy to keep pace, but it's necessary to stay out of trouble.
Conclusion About Fintech Regulatory Compliance
Keeping up with fintech rules in the UK and EU takes serious attention. New regulations are emerging to address digital payments, crypto assets, and data protection challenges.
Your fintech company needs to prioritize compliance strategies to keep up with these changes. Strong governance frameworks and regular compliance audits are key to minimizing risks and preventing penalties.
Cross-border operations demand special attention as you navigate the different requirements between the UK and EU frameworks. Regulatory divergence continues to create complexities that require specialized knowledge.
How quickly you can adjust to changes will really set you apart from the competition.
Need expert guidance for your fintech compliance journey? Legal Nodes can give you customized advice to help you tackle the strict rules in the UK and EU markets. We'll make sure you stay on the right side of the law while also helping you reach your growth goals.
FAQs About Fintech Regulatory Compliance
What regulations apply to fintech?
Fintech companies have to deal with a mix of rules—AML/KYC requirements, data protection laws like GDPR in the EU and the UK Data Protection Act, and payment regulations such as PSD2.
Compliance with consumer protection rules is also necessary.
Depending on your offering, you'll answer to different EU and UK regulatory bodies. The key ones include ESMA, EBA, PSR (UK) and FCA.
What are the 5 D's of fintech?
The 5 D's sum up the big shifts in fintech: Digitization, Disintermediation, Democratization, Decentralization, and Disruption.
These ideas shape how fintechs approach markets and build compliance strategies that fit their business models.
How do regulators respond to fintech?
Regulators have tried to strike a balance with sandboxes and innovation hubs, hoping to support fintech growth without leaving consumers exposed. The fintech risk landscape keeps shifting as authorities roll out more specialized frameworks.
You'll see regulators zeroing in on data security, operational resilience, and algorithmic transparency right now. Those are the hot topics that are unlikely to change anytime soon.
What is the ISO for fintech?
ISO 27001 covers information security, and ISO 20022 sets standards for financial messaging. These certifications show up on almost every fintech compliance checklist out there.
It's also smart to look at ISO 22301, which helps with business continuity planning. ISO 31000 focuses on risk management, and both play a bigger role as fintech faces more regulatory pressure.
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