Since 2016 I have been building COREDO as a platform where entrepreneurs receive not just company registration abroad and access to banking, but a resilient architecture of payment flows and compliance processes that withstand regulatory audits and business growth. Over these years the COREDO team has implemented projects in the EU, the Czech Republic, Slovakia, Cyprus, Estonia, the United Kingdom, Singapore and Dubai, as well as in a number of CIS countries, and I have a clear understanding of the pain points of high-risk segments: from de-banking and account freezes to fragmented AML and licensing requirements. This article is my condensed experience and a working methodology that we apply daily in payment organizations, fintech, crypto (VASP), forex, e-commerce and related verticals.
My goal is to provide practical support: how to structure registration solutions and obtain licenses, how to build control over payment flows and reduce AML risks in high-risk businesses, how to implement compliance programs for high-risk industries so that scaling does not break the system. COREDO’s practice confirms: predictability and transparency of processes reduce time-to-market, increase the trust of banks and acquirers and make compliance a driver of growth, not a brake.
Registration of payment infrastructure
registration of a legal entity for the high-risk segment: not a formality, but part of the risk profile. Our experience at COREDO has shown that ownership structure (UBO), corporate transparency and availability of beneficial ownership registers in the EU and Asia directly affect access to banks, correspondent accounts and payment providers. I recommend starting with risk-based jurisdiction mapping: we assess the regulatory regime (AMLD5/AMLD6, PSD2), case law, banks’ attitude to MCC classifications and high-risk models, as well as local requirements for an AML officer and reporting.
Registering a legal entity in the EU to access banks makes sense if the payment model is thought through in advance: SEPA/SWIFT routes, possible access to local acquiring, requirements for KYB and source of funds/source of wealth. The solution developed at COREDO for clients in the Czech Republic and Estonia includes preparation of a KYB package, UBO verification, geographic and jurisdictional risk analysis and a transaction monitoring implementation plan. This increases the likelihood of passing the bank’s risk committee and reduces onboarding time.
Correspondent banking and counterparty risk remain critical. In the SWIFT payment chain sanctions monitoring, OFAC and international sanctions compliance are important, as well as control of exotic routes through third-party payment processors. In COREDO cases we implement combined checks: sanctions, PEP, adverse media and continuous synchronization of sanctions lists. Such duplication reduces the likelihood of false negatives in cross-border payments and maintains the required SAR rate.
Migration of payment providers during de-banking is a separate task. I’ve seen high-risk PSPs lose an acquirer due to chargeback ratio and non-compliance with PSD2 and AMLD. We restarted the infrastructure through reserve acquiring partners, reworked MCC coding and anti-fraud strategies for PSPs and aggregators. Important lesson: prepare a “warm” reserve — an alternative PSP, a PayFac model, and also a package for rapid repeat KYB with a new provider.
Payment facilitators and merchant onboarding require precise profiling of merchant risk, MCC validation and implementation of KYC and KYB for high-risk merchants. The COREDO team implemented multi-level onboarding schemes: basic KYC/KYB, then EDD (enhanced Due Diligence) for complex clients, including documenting sources of funds, beneficiary verification and adverse media. Such segmentation reduces frictions for low-risk sellers and protects from accumulation of latent risk in the long tail of merchants.
Compliance: risk-based approach and EDD
risk-based approach to transaction screening is a standard that turns AML into a probability-management system. I insist that the risk appetite be formalized in policy: which geographies are acceptable, which goods/services are excluded by MCC, how we assess payment structuring (smurfing) and layered schemes. This approach makes it easier to tune AML rules and reduce false positives without compromising security.
KYC/KYB: it’s not just collecting identity documents and corporate extracts. In a high-risk environment combined checks are needed: document verification (OCR), liveness, customer authentication, biometric verification and beneficial ownership (UBO) checks. In COREDO projects we combined data enrichment via global data providers, entity resolution for corporate clients and adverse media monitoring to rule out synthetic identity and hidden connections.
In the VASP and AML segment when working with cryptocurrencies the linkage is important: licensing requirements (for example, registration in Estonia or in several Asian hubs), blockchain analytics and a travel rule policy. Using blockchain analytics to trace transactions enables detection of high-risk sources (mixers, sanctioned wallets) and supports preparation and filing of SARs/reports of suspicious activity. In one COREDO case EDD procedures for a VASP reduced risk by 40% according to an internal model, and escalation time was halved.
Trade-based money laundering (TBML) in payment flows is often underestimated. We encountered document forgery/substitution, false valuation of goods, inflated invoices and anomalous refund schemes. TBML control requires matching logistics, price benchmarks, counterparty profiles and graph analytics across the supplier network. Paired with sanctions monitoring this is a powerful barrier against circumventing restrictions via trade transactions.
Geographic and jurisdictional risk must be measurable. I rely on FATF recommendations and risk assessments, as well as on local regulatory requirements in the EU, Asia and the CIS. We adapt scoring models taking into account FinCEN guidance on high-risk sectors, local lists and the specifics of bank de-risking. This is especially important in transit jurisdictions where counterparty risk and de-banking can flare up suddenly.
Transaction monitoring and anti-fraud
AML architecture: real-time vs batch monitoring: a key design decision. In high-risk verticals you can’t avoid real-time: instant payments, cards and crypto move quickly, and time-to-detect determines losses. The solution developed at COREDO combines real-time alerts for high-priority scenarios and batch processing for complex transaction graph analysis and counterparty network analysis. Such a hybrid reduces load and improves TPR while keeping FPR under control.
Transaction monitoring rules and scenarios should cover patterns: structuring, geo-velocity, spikes in amount/frequency, chains through related counterparties, indicators of money laundering on refunds, fraud schemes with intermediaries and escrow abuse. We also include sanctions screening in cross-border payments at the counterparty and beneficiary level, plus management of false negatives through regular scenario validation.
Integration of AML with KYC authorization and 3DS is an important loop for card-present and card-not-present operations. Add device fingerprinting, behavioral biometrics and dynamic risk rules. For PSPs and aggregators, anti-fraud strategies should account for acquiring risk, chargeback fraud and maintain a healthy chargeback ratio for relationships with the acquirer. In one COREDO project, optimizing 3DS routines reduced fraud by 32% with no noticeable drop in conversion.
Data enrichment, entity resolution and graph analytics close the “blind spots”. I welcome the use of external sources, but insist on GDPR and data privacy: minimization of personal data, transparent retention policies and encryption at rest. From a channels perspective, control risks in SWIFT, SEPA and local ACH: differences in cut-off times, returns and reconciliation create operational gaps that bad actors exploit.
Scoring and explainability
Machine-learning-based transaction scoring models are applicable when you have enough labeled events and a mature validation process. In a high-risk environment ensemble models for transaction scoring that combine gradient boosting and simple rules perform well. For detecting anomalies using clustering and semi-supervised approaches we use reference profiles of merchants/payers and monitor spikes in activity.
Explainability of ML models and model validation are not a luxury. Regulators expect transparent reasons for alerts: feature importance, reason codes, threshold stability, and a protocol for drift detection and model retraining. The COREDO team implements regular challenger models, bias checks and calculation of metrics: FPR, TPR, precision, recall, as well as operational KPIs: time-to-detect and time-to-resolve. This disciplines product decisions and minimizes “blind spots”.
A cost-benefit analysis of implementing AML systems and the ROI from automating AML and anti-fraud systems: a question for the CFO. We calculate the total compliance costs, the cost of SARs (in addition to direct operational hours this includes the risk of fines and lost revenue from false blocks), the economics of reducing chargebacks and fraud loss. In COREDO projects, RPA automation for alert handling and SAR preparation reduced TAT by 25–40%, and a 20% reduction in false positives often paid off the project within 6–9 months.
Managing false negatives requires careful tuning: regular analysis of “caught/missed” cases, retro-simulations and backtesting. I recommend allocating an independent quality control (QA) for compliance alerting to avoid confirmation of one’s own hypotheses and to maintain an objective assessment of risks.
Compliance: people, processes, outsourcing
AML duties officer and building the compliance function are the foundation. The AML officer sets the risk appetite, approves policies, oversees regulatory monitoring and AML reporting, escalates complex cases, and organizes preparation for regulatory audits and internal inspections. In mature PSPs and VASPs we also see separate roles for sanctions, KYC/KYB, monitoring and investigations, as well as a model owner for ML.
Outsourcing vs in-house AML: advantages and risks are balanced between control and speed. AML outsourcing allows you to quickly scale alert processing, implement 24/7 coverage and cover rare competencies (for example, TBML or crypto analytics). When choosing a provider and SLA I insist on checking quality controls, TAT speed, the possibility of an independent audit, staff redundancy and incident-management procedures. In a number of cases COREDO acted as an integrator: we built an in-house core and handed off peak load under SLA.
Regulatory requirements in the EU, Asia and the CIS vary, but the common framework includes: FATF, AMLD5/AMLD6 in the EU, PSD2 for cards and payments, OFAC and international sanctions, and FinCEN guidance for high-risk. I recommend a single global standard with local add-ons to avoid a ‘zoo’ of policies. This makes regulatory reviews and audit preparation easier, and simplifies staff training and the awareness program.
Data privacy, GDPR and data retention are mandatory lines of defense. I adhere to the principles of privacy by design: data segregation, role-based access control, encryption, masked data in analytics, and archiving and audit logs for investigations. We separately maintain incident management and escalation of suspicious cases: who makes the decision to block, how the client is notified, when a SAR is filed, and within what timeframe we perform a post-incident review.
Third-party and counterparty management is an area of heightened attention. Counterparty checks and supplier due diligence include risk profile, sanctions/PEP/adverse media, testing return and chargeback processes, as well as control of payment agents. If you operate as a PayFac, regular reviews of the merchant portfolio, MCCs and monitoring of transaction patterns are mandatory.
COREDO real-world cases
Case 1: PSP and merchant profiling. An aggregator approached us facing a rise in chargeback fraud and the threat of losing its acquirer. We implemented merchant risk profiling, reviewed MCC coding, integrated KYC with the CRM and payments platform, and implemented transaction monitoring rules. The chargeback ratio dropped below the threshold, the SAR rate stabilized within acceptable limits, and the acquirer confirmed continuation of cooperation.
Case 2: VASP and blockchain analytics. The crypto provider required a license and an AML platform to detect high-risk flows. The COREDO team deployed blockchain analytics, implemented EDD for complex clients, configured sanctions filters and a source-of-funds policy. As a result compliance processes became scalable, and the regulator approved the license without additional rounds.
Case 3: de-banking and payments migration. A fintech from a high-risk vertical faced account closure and acquirer refusal. Within 30 days we prepared a package for a new bank in the EU, restored SWIFT/SEPA routes, switched part of the traffic to a backup provider, and optimized anti-fraud. Downtime was minimal, and correspondent risk was reallocated to more reliable partners.
Case 4: TBML in cross-border e-commerce. Invoice and logistics mismatches indicated possible TBML. We implemented graph analytics, matched prices against benchmarks, and tightened counterparty checks. Suspicious patterns were documented, SARs were filed, and vulnerabilities in returns processes were closed.
90–180 days to compliance: manager’s plan
- Diagnostics. Audit of payment flows and AML risks, jurisdiction map, geographic risk assessment, inventory of MCCs and merchant portfolio, review of KYC/KYB and EDD. I record current metrics: FPR, TPR, precision, recall, time-to-detect, time-to-resolve, SAR rate.
- Policies and risk appetite. We approve a risk-based approach, sanctions rules, SAR procedures, roles of the AML officer, third-party controls. We prepare compliance with AMLD5/AMLD6, PSD2 and local regulations, and synchronize OFAC/sanctions lists.
- Monitoring architecture. We define real-time vs batch pipeline, transaction monitoring scenarios, integration of KYC with 3DS and anti-fraud, add device fingerprinting and behavioral biometrics. We connect data enrichment and entity resolution.
- Automation and ML. We introduce RPA for handling alerts and preparing SARs, launch pilots of ML models (if data is available), set up explainability and model validation, and monitor drift detection. We define a plan to reduce false positives/negatives.
- Operational resilience. SLAs for internal teams and outsourcing, incident management plan, escalation procedures, archiving and audit logs. We prepare documentation for regulatory inspections and internal audits.
- Banking and providers. We update KYB packages for banks and PSPs, check correspondent chains, prepare fallback routes in case of de-banking. We update due diligence for vendors and payment agents.
- Training and culture. Awareness program, training on TBML, sanctions screening, chargebacks and escrow abuse, regular tabletop exercises for compliance and risk management teams.
Private aspects are often forgotten.
- verification of the source of funds (source of funds) for large transfers should be standardized: standard templates, lists of acceptable documents, affiliation checks. This reduces TAT and lowers conflicts with clients. For source of wealth, keep decision logs and a link to external sources: this helps during audits.
- Models «refund = low risk» are flawed. Refunds are often used to “clean up” traces, and money-laundering indicators related to refunds should be included in the rules. Add checks for the time between payment and refund, the frequency, and beneficiary overlaps.
- Corporate transparency is more important than «speed of registration». Nominee directors and complex trusts without a business purpose raise questions with banks. I prefer simple structures with a clear UBO and understandable business logic – this increases trust and speeds up access to banks.
- Sanctions compliance is not a one-time check but an ongoing process. Sanctions lists and automatic synchronization, adverse media monitoring and updating scoring weights should be scheduled. Ignoring updates: a direct path to operational risks.
Maturity metrics and reporting
Key AML metrics — SAR rate, false positive rate, TAT and TTR — indicate not only efficiency but also the health of the process. Regulatory monitoring and AML reporting should include alert trends, escalation rate, share of EDD cases and the ratio of real-time to batch processing. In mature, well-tuned systems I see FPR steadily trending down while TPR remains stable and SAR volume is adequate.
Cost of SAR and overall compliance expenses: practical financial metrics. They can be optimized through automation and SLA review, but it’s important not to “cut back on security.” You should also capture savings from prevented fraud, reduced chargebacks and fewer fund freezes: this is what creates the ROI from automation.
Regulatory audits – no panic
Preparing for regulatory audits and internal inspections is about order in documentation and consistency of practice. I ask teams to keep an “audit shelf”: policies, playbooks, investigation examples, escalation logs, training reports, model cards and ML validation reports. The solution developed at COREDO includes a pre-audit review and dry run interviews with responsible persons to eliminate discrepancies.
The legal consequences of AML non-compliance can strike not only with fines but also through banks: de-risking, account freezes, and termination of correspondent banking relationships. Timely SARs, transparent reporting and effective communication with the regulator reduce reputational damage and demonstrate maturity.
Scaling without losing control
Scaling AML processes as a company grows is about modular architecture, backup providers, a unified data dictionary and a flexible risk model. I recommend roadmaps for 12–24 months: phases of geographic expansion, planning new licenses (including payment services and forex), updating anti-money laundering policies for payment service providers and an integration plan for new channels.
Scoring and anti-fraud models must evolve. Anomaly detection, graph analytics and ensembles are living components that require regular retraining and review. COREDO’s practice confirms: discipline in models and metrics reduces operational surprises and makes growth manageable.
Managing payment agents and PayFac: an area where a small oversight turns into a systemic problem. Regular portfolio reviews, MCCs, geographies, due diligence for suppliers and reputation risk checks through adverse media are not bureaucracy, but insurance against the “domino effect”.
What’s important to do today
If you run a business in a high-risk industry, take three steps. First, fix your risk appetite and a map of payment flows with clear “red zones”. Then check the resilience of onboarding: KYC/KYB, EDD, UBO, sanctions and sources of funds — without gaps and manual “workarounds”. And finally, assess the economics of automation: where RPA and ML will deliver quick wins in TAT, FPR and fraud reduction, and where it’s more critical to strengthen the team and processes.
COREDO is a team that brings together jurisdiction registration, Licensing (including VASP, payments and forex), AML consulting and an engineering approach to transaction monitoring. I am open to a conversation in the language of metrics, architecture and regulatory requirements. If you see that it’s time to turn compliance into a lever for growth, let’s discuss how to adapt the practices described to your scale and vertical.