Coredo

The future of offshore jurisdictions has long arrived: transparency, digital identification, and risk‑based compliance are setting new rules. In the past it was enough to incorporate a company in the BVI or the Cayman Islands and manage flows carefully. Today offshore tax planning without economic substance, proper KYC and reporting stops working and generates an increased risk of de‑banking and payment blocking.

In this article I have compiled the practice of COREDO through the prism of the challenges faced by entrepreneurs and CFOs from Europe, Asia and the CIS. There are no slogans or “silver bullets” here. There are proven approaches, cases and tools that help safely register companies abroad, obtain financial licenses, build AML compliance and maintain access to correspondent banks in the era of total financial transparency.

The Future of Offshore Jurisdictions

The role of FATCA and CRS in de-anonymization is obvious: banks, service providers and tax authorities can see the ultimate beneficiary (beneficial ownership) and the structure of the ownership chain. The automatic exchange of tax information makes the “don’t show” strategy obsolete. It is now more important to build a correct reporting model and demonstrable economic substance in offshore jurisdictions than to try to hide behind nominee directors.

At the same time, BEPS’s influence on offshores is strengthening: rules on controlling passive income, limits on interest deductions, CFC approaches and real-activity tests cut the margin of “empty” structures. The COREDO team has carried out dozens of restructurings in which abandoning offshores in favor of onshore or mid-shore solutions increased access to financing and reduced overall risk.

Risks and benefits of offshore registration

Registering a legal entity in an offshore jurisdiction still provides advantages: flexibility of corporate law, fast administration and neutrality for holding functions. On the other hand, de-banking and strict criteria for access to correspondent banking relationships make the standalone existence of an offshore structure difficult. Banks assess PE risk (permanent establishment), substance and UBO as carefully as tax authorities.

Reputational risks of offshore structures for public companies have grown: investors request reputational due diligence in the style of Transparency International standards and assess the impact of the UBO structure on the ESG profile. In COREDO projects public issuers increasingly choose alternatives to traditional offshore jurisdictions: Cyprus, Malta, Ireland, Luxembourg, the UAE and Singapore provided there is real activity, an office and resident directors.

Economic substance: requirements

Economic substance (economic substance) is not a set of “tick-boxes”, but a managerial necessity. Requirements for a local director and substance in island jurisdictions are increasing: an office, employees, on-site management decisions, contracts and key risks in the jurisdiction. Relying on nominees no longer works: nominee director risks (nominee director risks) manifest in bank refusals, tax issues and fines.

From an economic standpoint, substance requirements help reduce PE risk, confirm the center of management and control (mind and management), and pass bank scoring. COREDO’s practice confirms: when the board of directors actually meets in Cyprus or Dubai, and the CFO and risk function operate in the EU, regulators’ concerns are resolved faster. This is reflected in lower financing costs and greater resilience of the operating cycle.

New contours have appeared in reporting: substance reporting and reporting against shell company criteria. Regulators request minutes of meetings, employment contracts, leases and local tax payments. Our experience at COREDO has shown that it’s better to invest in a real team and processes than in “paper” substance. It’s easier to defend with banks and tax authorities, and it reduces overall costs over a three-year horizon.

Compliance of offshore structures: KYC and DAC6

In working with offshore structures, compliance covers a wide range of requirements – from KYC and AML procedures to mandatory reporting under DAC6. Below we consider practical approaches, including e-KYC, that help minimize risks and ensure compliance with international standards.

How to comply with AML/KYC and e-KYC for offshore structures

Complying with AML when using an offshore is not a question of legal form, but of the quality of data and processes. I use a risk-based approach: AML risk scoring based on geography, business model, source of funds and transaction profile. AML/KYC automation tools (SaaS), integration of compliance processes into ERP/CRM and regtech solutions for KYC reduce onboarding friction and improve client UX without loss of quality.

AMLD5 and AMLD6 require beneficial ownership verification, enhanced (Due Diligence, EDD) for complex structures and ongoing monitoring. Transaction monitoring systems and sanctions screening are now standard not only for banks, but also for fintechs and payment companies. The COREDO team developed an e-KYC framework and digital identification using pseudonymization to balance privacy vs. transparency, which facilitates cross-jurisdictional data exchange.

International reporting: CRS, FATCA, CbC

Automatic exchange of information (CRS) and offshore jurisdictions are in a new linkage: account and beneficiary data are transferred under international data exchange agreements. FATCA strengthens checks for clients with US ties, and banks form additional requirements for describing flows, sources and control over UBOs. At COREDO we build a reporting calendar to synchronize CRS, local declarations and corporate obligations.

Consultants’ obligations: DAC6 and ATAD

DAC6 and reporting obligations for advisers require declaring “schemes” with indicators of tax advantage. This changes the role of advisors: the legal liability of advisers and directors becomes personal and requires strict procedures. The solution developed at COREDO includes “red flags” checklists, a roles matrix and a board decisions log to confirm business purpose and compliance with anti-avoidance rules and ATAD.

Directors increasingly must be residents of the relevant jurisdiction and actively participate in management. Requirements for director residency and the elimination of nominee directors strengthen the resilience of the structure and help with banking compliance. This approach gives confidence to investors and reduces the likelihood of being classified as a shell company.

Restructuring: from secret to transparent

Restructuring strategies help organize the transition from secret structures to transparent ones, reducing risks and improving business manageability. Below is a practical step-by-step transition plan that shows which actions and priorities need to be implemented at each stage.

Steps for transitioning to transparent structures

The transition from secret structures to transparent ones begins with a map of risks and objectives. I propose a step-by-step plan: audit of the structure for UBO and PE risk, benchmarking substance, assessment of TCO and ROCI, aligning the roadmap with regulatory and banking timelines. Then: phased compliance and possible sunset clauses to close old links without impacting cash flow.

The next stage: aligning corporate documentation, updating contracts, notifying banks and counterparties. COREDO’s practice confirms that a pre-prepared communication package for banks and auditors shortens lengthy approvals and keeps correspondent channels open. This is especially important when licensing payment institutions and fintech providers.

Redomiciliation vs closing an offshore company in the EU

Migration of a company from an offshore to the EU is possible via re-domiciliation or liquidation followed by registration. Migration cases — re-domiciliation vs closure — depend on assets, contracts and licenses. The COREDO team implemented scenarios where re-domiciliation provided continuity of contractual relationships, and in others: closure and transfer to a new legal entity reduced regulatory risks and simplified bank scoring.

I always include an assessment of the impact on CbC, transfer pricing and possible triggers for anti-avoidance rules. Legal support for international holdings at this stage is critical: taxation agreements, substance in the new jurisdiction, and ATAD requirements for controlled foreign companies must align without contradictions.

Beneficial ownership and the UBO registry

Rebuilding the ownership structure and the UBO registry is not only a formality but also an element of trust in the group. The register of beneficial owners (UBO registry) and beneficial ownership verification require complete and up-to-date information, as well as compliance with local definitions of control. At COREDO we implement an annual re-verification procedure so that changes in shareholdings, option agreements or trusts are timely recorded in the registry.

The consequences of disclosing beneficial owners for investors are usually positive with correct governance settings. A transparent board of directors, clear voting rights and minority protection strengthen the company’s valuation and reduce the structural discount. This is especially noticeable in transactions with institutional investors and in industry due diligence standards for venture investments.

Tax risks associated with dividend repatriation

Dividend repatriation requires synchronization of double taxation agreements, a beneficial ownership test for the income and substance at the holding. I recommend agreeing tax rulings or an APA in advance for significant flows, and also documenting mind and management at the level of the dividend recipient. This reduces the risk of requalification and claims under ATAD and local anti-avoidance rules.

It is important to link this with transfer pricing documentation and CbC so that dividends and intra-group services do not conflict in the logic of functions, risks and assets. The COREDO team builds tax planning models with economic substance, where profit allocation is supported by real centers of competence and personnel in the relevant jurisdictions.

Offshore doesn’t work: fintech licensing

When licensing payment institutions, forex dealers, crypto providers and electronic money issuers, an offshore form often slows access to banking infrastructure. De-banking and access to correspondent banks depend on transparency, sanctions profile and jurisdiction of registration. Our projects in the EU, the UK, Singapore and Dubai show that onshore structures open doors faster and provide stable operations.

Fintech and open APIs for banks require provable control over transactions and customers. Asset tokenization and smart-contract compliance help here, along with a built-in blockchain audit trail for transparency and the use of blockchain for transparent reserve reporting. The COREDO solution integrates regtech tools into core banking and processing, which eases licensing and compliance verification.

Company registration in the EU, Asia and Africa

Legal company registration in the EU for international business requires attention to ATAD, substance and local accounting and audit requirements. Cyprus, Estonia, Czechia and Slovakia set clear rules of the game, and e-residency and digital company registration in Estonia shorten onboarding times and allow managing processes remotely. It’s important to establish KYC processes for clients and suppliers from the start to avoid having to rework infrastructure for the bank.

Business registration in Asia and Africa: the compliance checklist covers sanctions risks, local requirements for an office and directors, and specifics of currency control. Singapore demonstrates a high standard of governance and access to financing, while a number of African jurisdictions require closer engagement with banks and regulators. The COREDO team adapts checklists by industry to speed up account openings and integration into payment networks.

Responsibility in tax planning

Advance pricing agreements and tax rulings reduce uncertainty, especially for IP centers and service hubs. Transparent intellectual property management schemes that take into account marketing and R&D functions in the relevant locations help avoid being classified as a shell company. At COREDO we design the corporate structure of the holding so that transfer prices reflect reality, and that CbC and local files do not contradict each other.

Requirements and due diligence for trusts

Trust structures and requirements for registration of trusts have tightened: trust register, disclosure of the settlor, protector and beneficiaries, as well as trustee due diligence have become the norm. The beneficial owner in the context of a trust is interpreted more broadly than in corporate structures and requires additional communication with banks. I recommend using independent trust administrators with a proven track record and a transparent KYC policy.

Beneficial ownership verification for trusts relies on evidence of the source of funds and mechanisms for controlling distributions. The COREDO team builds procedures under which distributions from the trust align with their purposes and are documented in a single register, available for audit and to banks. This increases the likelihood of successful account openings and reduces operational delays.

Metrics and the return on transparency

The cost of maintaining transparency for a business is an investment that pays off by reducing risks and providing access to capital. I use three metrics: TCO of the structure taking substance into account, ROCI as the effect of compliance on margin, and probability × impact × cost as the basis for risk scoring. This approach allows the CFO to defend the compliance budget before the board of directors.

COREDO cases: from legacy to onshore

In COREDO cases we analyze real business transformation scenarios: the move from legacy structures to onshore solutions, covering jurisdictional, managerial and tax changes. The first example is dedicated to relocating a fintech group from the BVI to Cyprus and to the Czech Republic with a detailed breakdown of the stages, risks and benefits of such a transition.

Relocating a fintech from the BVI to Cyprus and the Czech Republic

Practical cases: moving a business from offshore to onshore delivers a measurable effect when a bank starts lowering limits or dragging its feet on letters of credit. For a fintech group with processing, we migrated the holding from the BVI to Cyprus and moved the operational office to the Czech Republic. Substance: the director, risk officer and product management were placed in Cyprus, which opened new correspondent lines and sped up licensing approvals.

Re-domiciliation of the holding company to Singapore

For an investment holding, we carried out re-domiciliation (jurisdiction transfer) from the Cayman Islands to Singapore. The LP investor market required a more “regulated” domicile and improved access to Asian banks. We strengthened governance, reinforced the board with an independent resident director and implemented transaction monitoring systems with e-KYC, which reduced onboarding friction for portfolio companies.

As a result, the holding gained access to several banks with strong correspondent banking relationships. The project was completed without loss of contractual continuity and improved the fund’s valuation among institutional investors, as confirmed by their due diligence.

Closure of the Malta SPV and creation of substance

In the third case we chose to close the Malta SPV due to rising compliance costs and banking restrictions. Instead, we opened a holding and an operating company in Dubai, where we formed a real team, office and board of directors. Payment services licensing went through faster than expected, and a blockchain audit trail for reporting on client funds increased banks’ confidence.

Preparation for an international AML review

How to prepare a company for an international AML review should start with a gap analysis and process maps. I recommend implementing AML risk scoring, sanctions screening, EDD triggers for high-risk clients, and automatic transaction monitoring. This is the basic layer that banks and regulators expect to see in any licensed company.

Next comes digitization: e-KYC and digital identification, regtech for offshore compliance, pseudonymization of client data (pseudonymization) and secure data exchange with providers. Integrating compliance processes into ERP/CRM reduces manual work and human error. COREDO’s practice confirms that such a stack reduces bank response time and facilitates scaling to new markets.

When to close an offshore company

Sometimes the best choice is to close an offshore company. An exit strategy for offshore structures is justified when TCO grows faster than the benefits, the jurisdiction lands on an offshore blacklist, and banks impose strict limits. In these cases a phased exit with the redistribution of functions and assets to onshore reduces shocks and preserves the client base.

Legacy structures and restructuring require a clear plan for transferring contracts, IP and personnel. Reputation risk management models for investors include proactive communication about the reasons for changes, updating the UBO registry and confirmation of compliance standards. The COREDO team helps carry out this process without payment interruptions or operational risks.

Transparent transfer pricing

Transparent intellectual property management schemes are based on real R&D and marketing functions. The identification of shell companies and substance tests quickly reveal discrepancies if the IP hub “exists on paper”. We recommend early dialogue with tax authorities, an APA request and establishing a product management function in the jurisdiction where the IP is located.

Transfer pricing documentation, master/local file and CbC create a single narrative for the auditor, the bank and the tax authority. This way the business avoids penalties for non-compliance and reduces the risk of retroactive assessments. Within COREDO we support such projects comprehensively: from licensing and bank account opening to regtech integration and building substance.

Transparency by default and partnership

The future of offshore is about both offshore structures and transparency. creating an offshore company in 2026 is possible and rational if the structure relies on economic substance, proper compliance and a clear business purpose. The alternative: a deliberate move away from offshore in favor of onshore jurisdictions with a strong banking infrastructure and access to capital.

I see every day how the financial technology market is maturing. Regulators are raising the bar for cybersecurity, partners are tightening due diligence, and customers expect impeccable data handling. Since 2016, the COREDO team has supported international fintech projects – from company registration and obtaining licenses to AML consulting and technology compliance, in the EU, the United Kingdom, the Czech Republic, Slovakia, Cyprus and Estonia, as well as in Singapore and Dubai. On this path, cyber insurance has become not just “good practice”, but a management tool that reduces the volatility of operational losses and speeds recovery after incidents.

Why fintech needs cyber insurance

financial licenses in Europe and Asia are increasingly tied to expectations of mature cyber resilience. PSD2 and operational resilience requirements for payment operators effectively elevate cyber risks to first‑tier business risks. GDPR adds obligations for personal data protection and breach reporting, while NIS2 broadens the scope of covered entities and raises the bar for security measures for operators of digital infrastructure. At this point, cyber insurance becomes part of a risk transfer strategy that complements ISO/IEC 27001, SOC 2 Type II and internal controls.

When fintech needs cyber insurance

There is not yet a direct, universal legal mandate, but requirements are emerging indirectly:

• Payment institutions and electronic wallets in the EU, under PSD2 and supervision by competent authorities, are required to confirm incident response plans and financial resilience, where cyber insurance often serves as a component for covering residual risks;
• supervisors in Singapore (MAS), Australia (APRA) and Hong Kong (HKMA) publish benchmarks where having a policy improves the assessment of operational resilience and the maturity of risk governance;
• partner banks, card issuers and global acquirers include a cyber policy as a condition of cooperation and limit types of coverage — for example, a sub‑limit on ransomware payments or a mandatory first‑party block with business interruption.

The answer to the question “Is a cyber policy mandatory for an electronic wallet and a payment institution?” in COREDO’s practice is: formally not always, but de facto it is harder to pass partner Due Diligence and meet operational resilience requirements without a policy, especially in a cross‑border model.

Structure of cyber policy coverage

Cyber insurance for fintech should cover both own losses (first‑party) and liabilities to third parties (third‑party liability):

• First‑party coverage for data breaches: forensic investigation costs, breach notification expenses, system restoration, PR support (brand rehabilitation), customer remediation and client compensation, a policy for business interruption due to a cyberattack (including contingent business interruption (CBI) coverage in case of a failure at a key supplier);
• ransomware insurance and extortion: payment for negotiator services, system restoration, potential ransom payments, taking into account a sub‑limit on ransomware payments and special terms;
• third‑party liability cyber: protection against claims from customers and partners, class action defense and cost of litigation, regulatory fines and compliance costs where they are insurable under the law of the relevant jurisdiction.

How to assess ROI, cost‑benefit and risks

How much should a cyber policy cost and how to justify the purchase to the board of directors? Our experience at COREDO has shown the usefulness of quantitative models:

• FAIR model for quantitative assessment of cyber risks helps break down scenarios by frequency and severity, and also build a loss exceedance curve for cyber CAT events;
• VaR and CVaR for cyber risks provide a consistent language for communication with the CFO and CRO, including when determining the breakeven analysis of purchasing a cyber policy;
• Monte Carlo simulation and scenario analysis allow accounting for aggregation risk: the probability of a large correlated loss across multiple jurisdictions, for example in the event of compromise of a key third‑party vendor.

Underwriters’ metrics

Good terms depend on data. Underwriters look at metrics MTTD/MTTR, logging completeness (SIEM), maturity of EDR/MDR, coverage of critical vectors in MITRE ATT&CK, frequency and results of pen testing and bug bounty. For negotiations with an underwriter I use a set of security KPIs: percentage of MFA coverage, share of privileged accounts under PAM, regularity of tabletop exercises, the presence of SOC 2 Type II or ISO/IEC 27001.

How to read policy wording without surprises

Legal “small print” in cyber policies decides everything. The policy must match the business model, architecture and geography of losses. The COREDO team regularly conducts policy wording analysis, identifying ambiguity issues and closing carve‑outs that are critical for fintechs.

Setting the limit, sub-limit and franchise

• Aggregate limit determines the total payout for the period, while sub‑limit and sharing clause manage limits for individual blocks — for example, for ransomware payments or forensic vendors;
• retention, deductible and franchise in cyber policies form the “lower” part of the loss that the company covers itself; proper retention settings reduce the premium but require an adequate reserve;
• coinsurance allocates the share of loss between the insured and the insurer and helps balance interests at high limits.

Exclusions and contentious areas

• War exclusion and state‑sponsored attacks: for fintechs the wording that separates “cyberterrorism” and state‑sponsored attacks is critical, because attribution is difficult and disputes are frequent;
• silent cyber and retroactive exclusion: ensure that the retroactive exclusion clause (retroactive date) does not exclude events whose roots predate the discovery of the incident;
• third‑party vendor: seek clarity on “what the cyber policy covers in the event of an attack via a third‑party vendor”, including supply chain compromise and vendor due diligence obligations;
• continuous underwriting and security controls as a condition precedent: some insurers impose an obligation to maintain controls at a specified level; this requires discipline and transparent monitoring.

Parametric solutions

Parametric cyber insurance offers fast payouts on clear triggers, for example, a critical API malfunction or the duration of downtime. Such solutions accelerate liquidity but do not cover complex legal claims.

Compliance and the cost of cyber insurance

In open banking API security: the dominant risk vector. Good API governance, segmentation, minimization of privileges (least privilege), secret management and strict SLAs with partners form a better security posture assessment. For payment services, fraud loss mitigation, chargeback coverage and AML/KYC processes are also important, since AML/KYC data leaks increase third-party liability.

What insurers require from fintechs

• MFA everywhere, including admin access and remote connections, PAM for critical systems;
• offline immutable backups and regular recovery tests;
• EDR/MDR on all workstations and servers, event correlation in SIEM;
• network segmentation, zero trust principles, vulnerability management;
• a formalized incident response plan, incident response retainers and a panel of forensic experts under the policy;
• regular pen testing, bug bounty, vendor due diligence with clear SLAs for notifications.

Organizing the client’s purchase project

When an entrepreneur asks “does a startup need cyber insurance”, I look at the value chain: if the startup already processes payments, stores personal data or builds partner APIs, then a cyber policy is a rational step. The COREDO team has implemented dozens of such projects and established a transparent process.

Due diligence and legal arrangements

Negotiations with the underwriter

At the negotiation stage I bring MTTD/MTTR metrics, results of stress testing and scenario analysis, an improvement plan with concrete deadlines. If it’s necessary to include extortion and ransomware coverage in the base policy or increase the sub‑limit on ransomware payments, we write conditions regarding backups, segmentation and ransom negotiation procedures. An important part — how to account for reputational losses and customer compensation: we include brand rehabilitation, customer remediation and PR expenses with clear triggers.

Integrating BCP/DR into practice

Cyber insurance doesn’t work in a vacuum. I ensure that coverage is embedded into BCP/DR plans, and that the incident plan is regularly tested through tabletop exercises.

COREDO Case Studies: neobank and crypto services

В ЕС команда COREDO сопровождала регистрацию и Licensing платежного агрегатора, который интегрировался с крупными банками и маркетплейсами. Партнеры запросили полис киберстрахования для платежного агрегатора с first‑party покрытием, CBI и sub‑limit на fraud‑инциденты через компрометацию API. Мы провели quantitative risk assessment по FAIR, обосновали aggregate limit, настроили retention и добились скидки за внедрение MDR. Через полгода у клиента прошла атака на third‑party vendor; полис покрыл forensic, уведомление клиентов и PR, а также часть бизнес‑простоя: урок о важности CBI подтвердился на практике.

В Дубае мы поддержали криптосервис при получении лицензии и построении AML‑контуров. Клиенту нужен был акцент на ransomware‑страхование и покрытие extortion. После tabletop‑упражнений с участием панельных переговорщиков страховщика удалось согласовать расширенный sub‑limit на ransom и четкие условия выплат. Отдельно закрепили покрытие затрат на forensic и уведомление клиентов в нескольких юрисдикциях, учитывая трансграничную базу пользователей и требования GDPR.

Frequently Asked Questions

• Is a cyber policy mandatory when working with Open Banking and PSD2? Formally: no, but partners and regulators expect mature operational resilience; a policy helps pass due diligence and close residual risks.
• Are there premium discounts for implementing MDR and EDR? Yes, with proven effectiveness and SIEM integration many insurers give premium credits.
• What coverage is important for API‑compromise and fraud attacks? First‑party for investigation and restoration, third‑party liability, fraud/chargeback sub‑limits and CBI for supplier outages.
• How do SOC 2 / ISO 27001 affect the cost of cyber insurance? They lower the premium and expand available limits due to transparency of processes and controls.
• What is critical among exclusions (war, state‑sponsored)? Wording on attribution and criteria for “hostilities”; it’s important to avoid broad carve‑outs.
• How does the retroactive date work? The policy covers events after the specified date; ensure that investigations do not point to roots of the incident before the retroactive date.
• How long does settlement take with major insurers? With a good IR plan and vendor panel, from several weeks for operational expenses to months for complex third‑party claims.
• Is an independent security audit required for favorable terms? Often yes; an external assessment helps to better pass underwriting questionnaires.
• How to prepare an incident response plan for an insurer? Describe roles, MTTD/MTTR objectives, RTO/RPO, communications, escalations, contacts of the vendor panel and the frequency of tabletop tests.
• When does it make sense to consider a captive or retrocession? When there are large limits, high premium and mature risk management, and the group is ready to retain part of the risk.
• How to account for reputational losses? Include brand rehabilitation and customer remediation as explicit sections of the policy with measurable triggers.

Consider branches of an international fintech

A cross‑border structure complicates claims settlement. In the policy terms, agree in advance the choice of law and jurisdiction, as well as the rules on cross‑border claims issues. It’s important to understand how to assess aggregated losses across multiple jurisdictions and how one event vs series of related events ties to the aggregate limit.

How to calculate deductibles and limits

I use a three-level methodology. First we build scenario analysis and stress testing, including a worst‑case for ransomware with double extortion and a supply chain compromise. Then we assess VaR/CVaR and build a loss exceedance curve to set the limits corridor. Finally, we align retention with liquidity and the reserving plan so that the balance between premium and “self-insurance” is sustainable in any of the key jurisdictions.

Market trends: budget and strategy

The market is showing premium growth and a tighter underwriting policy – market trends that are also confirmed by EIOPA’s observations. Reinsurers are strengthening control over insurer aggregation and concentration risk, and Solvency II affects the availability of catastrophe limits. In Asia, supervision by MAS/APRA/HKMA is pushing fintechs toward mature board-level reporting and the role of the CRO. Against the backdrop of increasing cyber catastrophes, interest in parametric cyber insurance is rising: rapid payouts close cash gaps during downtime.

Cyber insurance: more than just a policy

Cyber insurance for fintech is not about “buying a piece of paper”, but about building a balance between risk transfer strategies and investments in security. When a policy is integrated into BCP/DR, backed by SOC 2/ISO 27001, when MTTD/MTTR metrics and vendor controls are transparent, the cyber policy becomes a mechanism for protecting revenue and capital. In COREDO’s real-world cases this helps obtain licenses, pass partner due diligence and withstand regulatory pressure without operational disruptions.

Digital euro (CBDC euro): not an abstraction from presentations, but a real factor transforming the business models of banks, payment service providers (PSP), e‑money institutions and corporate treasuries. In this article I will lay out the impact of the digital euro on payment intermediaries and infrastructure, show practical approaches to integration, and also share COREDO’s cases on licensing, AML/KYC and building operationally resilient solutions.

CBDC Deployment Models and Architecture

The registry architecture remains a matter of choice: permissioned ledgers and centralized registries simplify control and scalability, while a distributed ledger and CBDC expand possibilities for interoperability and programmability. In our techno‑economic assessments we compare TPS throughput and scalability, evaluate the feasibility of layer‑2 solutions and sharding for CBDC, and also model off‑chain settlement and atomic settlement to reduce costs during peak load.

EU regulation PSD2 MiCA GDPR AML/KYC

GDPR and the digital euro: a separate topic. Privacy by design and data pseudonymization, CBDC transaction confidentiality and privacy modes, as well as possible use of zero‑knowledge proofs for transaction privacy, all of this must be combined with anti‑money‑laundering compliance (AML) for CBDC. I insist on a risk‑based approach: differentiated limits, multi‑level authentication and real‑time sanctions screening allow combining GDPR and AML requirements/KYC for the digital euro without degrading UX.

Eurosystem: TARGET2, TIPS, RTGS, SEPA

Integration of the digital euro into existing payment systems: a matter of practice, not slogans. TARGET2 and integration with central infrastructure set the standards for real‑time gross settlement (RTGS) and finality, while TIPS and real‑time settlements in the Eurosystem provide a benchmark for latency and availability. Our methodology maps TPS, SLA and RPO/RTO parameters to target business flows to determine where gross vs net settlement implications are appropriate and when it is advantageous to use netting within a PSP before sending to central infrastructure.

Cybersecurity for CBDC infrastructure requires special attention to cryptographic keys, HSMs and custody. Custody models and key storage for the digital euro must take into account multisig, hardware security modules and segregation of duties. In projects on sites in Singapore and Dubai we validated the design through independent pentests and stress tests, including failure scenarios and business recovery during CBDC outages, so that BCP and DRP are not just documents but working procedures.

Impact on banks, PSPs and the ecosystem

The impact of CBDC on banks and PSPs goes far beyond IT integration. The risk of bank disintermediation when introducing a CBDC is directly linked to deposit outflows and banking stability. Differentiated access and minimum balances, liquidity reservation and liquidity management through LMP instruments: operational mitigation mechanisms. I recommend that banks set wallet limits and incentivize customers to keep deposits by offering bundles with tokenized deposits and overdraft lines.

Which business models will PSPs retain after the CBDC launch? Onboarding services, KYC/KYB, risk scoring, fraud detection, data tokenization and value‑added services for merchants will retain value. Monetization strategies for CBDC for fintechs lie in programmability (programmable money): escrow orchestration, conditional payments, smart contracts for automated settlements, B2B subscriptions and micro‑payments for IoT. Partnerships between banks and fintechs around CBDC will become the norm: some provide licenses and access to liquidity, others — development speed and UX.

Gateways, settlements, and enterprise liquidity

The COREDO team is preparing transition checklists for merchants, including UX and adoption of corporate wallets, refund rules and disputes.

Offline payments with the digital euro deserve special attention. They are critical for retail and transport, but add requirements for security and subsequent conflict resolution during synchronization. We implement double‑spend mitigation policies and local limits, as well as criteria for choosing a CBDC infrastructure provider, taking into account the frequency of point‑of‑sale scenarios and requirements for hardware wallets.

Pilots, programmability and scenarios

Interoperability of payment networks and token standards (token standards) are important for compatibility with corporate ERP and treasury platforms. In the COREDO projects in Singapore and Dubai we tested off-chain orchestration and on-chain confirmations to maintain compatibility with ISO 20022 and simplify auditing. Central bank pilot projects and use cases confirm: the market is ready for micropayments in IoT and automatic payments for resource usage, where CBDC addresses the ‘pain’ of transaction cost and delays.

Pressure on interchange fees will inevitably increase demand for alternative rails.

AML/KYC compliance, sanctions and privacy

Anti-money laundering compliance (AML) for CBDC is about accuracy and speed. Real-time sanctions screening, fraud detection and transaction analytics in CBDC must operate with low latency so as not to break the UX. At COREDO we implement risk scoring that accounts for device context, behavioral biometrics and geoprofile, integrating the travel rule and beneficiary requirements for corporate wallets.

Privacy and GDPR requirements for the digital euro imply privacy by design and pseudonymization regimes. We use architectural patterns that separate identification and transaction processing, with optional use of zero-knowledge proofs where justified. This reduces regulatory risk and simplifies audits while remaining within lawful interests and the fight against financial crime.

BCP, DRP and cybersecurity

Operational resilience risks for PSPs in the context of CBDC are coming to the forefront. Operational resilience, BCP and DRP require scenario modeling: from performance degradation to the complete unavailability of some nodes. At COREDO we run war‑game sessions with technical and business teams to test failure scenarios and business recovery in case of CBDC outages, and we formalize the procedures in agreements with providers.

ROI, fees and servicing costs

Planning ROI for payment intermediaries when transitioning to the digital euro begins with a cost-to-serve analysis. Transaction costs and operating expenses under the digital euro depend on the custody model, routing, required SLA and chosen providers. The COREDO team prepares unit economics by segment, models scenarios of declining interchange-dependent revenues and restructures fee structures for value-added services.

Which business models will remain for PSPs? Those that can monetize risk management, programmability and analytics.

Plan: from architecture to pilot launch

How to prepare a payment intermediary for the digital euro? I use a four‑phase plan that has proven effective across different jurisdictions.

1. Readiness assessment and architectural sketch: analysis of current APIs, AML/sanctions controls, custody options, performance (TPS throughput) and reliance on card networks. Defining target KPI/KRI and failure scenarios.
2. Regulatory and licensing framework: checking compliance with PSD2, preparing for MiCA alignment, updating GDPR policy, describing AML/KYC for the digital euro and the travel rule, as well as setting up real‑time sanctions screening.
3. Integration and security: designing API gateways and wallet integration, selecting a custody provider for digital currencies, HSM and key hierarchy, testing offline payments and privacy modes. Setting up monitoring, fraud analytics and logging in ISO 20022 format.
4. Testing and pilots: regulatory sandboxes (sandbox) for CBDC solutions, testing and pilot scenarios for the digital euro with merchants and corporate wallets, stress tests BCP/DRP, preparation of reporting and a business case for scaling.

COREDO case studies – licensing and AML

Plan 12–24 months for banks, PSPs, corporates.

The strategy looks pragmatic. Banks need to test a two‑tier digital euro model with limits and non‑reducing balances, integrate LMP tools and update client wallets taking into account privacy modes and offline scenarios. At the same time I recommend conducting stress‑tests of deposit outflows and developing an offering for tokenized deposits for corporate clients.

Why should you start preparing now?

The digital euro’s impact on payment intermediaries, the card payments ecosystem and corporate settlements affects not only technology but also margin, product strategy and compliance. I see not a threat here, but an opportunity to relaunch high value‑added services, from programmable payouts to intelligent liquidity.