If 2024 was defined by turbulence, 2025 may very well be shaped by divergence. This is particularly likely in sanctions policy, where U.S. and European approaches may diverge, with Europe under pressure to enforce its own regime. Financial institutions will also face stricter regulatory demands, particularly corporate transparency and beneficial ownership. In addition, as real-time payments gain further traction in the U.S., non-bank providers will tap into payment rails, fueling innovation. Finally, public-private partnerships will also advance, driven by compliance professionals pushing for stronger collaboration to address regulatory challenges.
Let’s dive into these a little more. Here are my top four predictions for the fintech space this year:
1. With Trump in power, U.S. sanctions will diverge from European allies, placing greater pressure on Europe to lead and enforce its own sanctions regime.
Historically, Western governments have considered the U.S. the leader in implementing sanctions. However, with Trump’s Republicans in the majority across the federal government, such measures will be applied more unpredictably. As a result, we could see major sanctions divergence between the U.S. and Europe in the hottest geopolitical conflicts — Ukraine and the Middle East — for the first time in recent memory.
Donald Trump’s campaign focus on economic protectionism could even make 2025 the year conventional sanctions begin to be replaced by tariffs. The efficacy of many sanctions regimes has long been questioned, and we know from his first term that Trump sees punitive economic measures as the best way to push for U.S. interests abroad. A convergence of these trends could see the U.S. issue more tariffs than sanctions in 2025.
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2. Financial institutions face a new threat to their bottom lines – and reputations – as regulators ramp up the pressure on corporate transparency. Expect to see greater compliance resources spent on beneficial ownership.
The legally binding beneficial ownership registration requirements introduced by the Corporate Transparency Act came into force in the U.S. on Jan. 1, 2024. Despite this, uptake has remained lower than expected due to limited awareness of the requirements.
In the U.K., the registrars of Companies House now also have greater powers to ensure information is reported correctly. In an October 2024 threat assessment, the CEO of Companies House said, “It is almost certain that the scale of money laundering through U.K. limited companies is underestimated,” and noted that the body would no longer be “a passive acceptor of duly delivered documents.”
Furthermore, across both sides of the Atlantic, beneficial ownership registries and reporting requirements have been beefed up in recent months. This reduces the risk of false reporting by illegitimate companies and shows legitimate firms that enforcement agencies see beneficial ownership data as more than a “nice-to-have” add-on to their “more serious” due diligence requirements. With regulators having focused in 2024 on information-based campaigns to educate firms on their requirements, as we head into 2025, we can expect to see greater implementation through enforcement — for example, reprimands and even financial penalties. These could hit firms’ bottom lines and pose a reputational risk if enforcement actions are covered in the media.
3. As consumer adoption of real-time payments accelerates in the U.S., non-banking providers are ready to access payment rails and drive further innovation in the sector.
There is a notable gap between financial institutions and customers taking advantage of real-time payments. For instance, financial institutions’ adoption of the FedNow real-time payment service has risen by more than 2,100% in the last 12 months, yet real-time payments still account for less than 2% of the U.S. payment transactions.
This indicates that while the infrastructure is now largely in place, more needs to be done to educate and inspire consumers about the opportunities surrounding real-time payments. Given the higher uptake levels in other developed economies, there is no reason to think U.S. consumers won’t also take greater advantage of faster payments in 2025.
Moreover, all the ingredients are there to accelerate real-time payments in the year ahead. The U.S. also remains the only G7 country prohibiting non-banking providers from accessing payment rails. This is an issue that policymakers are looking at, and if we see progress on this in 2025, it could add further fuel to the expansion of real-time payments in the next 12 months by allowing more non-traditional financial institutions – incumbents or emerging challengers – to offer consumers real-time payment services without having to open a new account or switch providers.
4. Public-private partnerships will make an important leap forward in 2025 – if compliance professionals get their way
According to ComplyAdvantage’s upcoming 2025 State of Financial Crime report (full results to be shared in mid-January), 47% of compliance professionals say stronger public/private partnerships and data-sharing protocols would have the greatest impact on fighting financial crime, while only 38 percent say larger fines. To that end, the report shows that global compliance professionals do not believe fines are the best way to improve the enforcement of anti-money laundering regulations.
If fines were the answer to all regulatory enforcement challenges, every financial institution would function perfectly. As we all know, that isn’t the case. While we believe government bodies like the National Crime Agency and OFAC would benefit from greater resources, one silver lining to the current situation is the need to “do more with less” and find creative ways to improve enforcement. Our survey shows public/private partnerships – which have enormous wider strategic value in fighting financial crime – could support enforcement, too.
Only time will tell what happens in the industry in 2025, but continued innovation and collaboration will combine to make a positive impact on financial institutions, government entities, FinTechs, and consumers alike.
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