The importance of Compliance in Payments: On Focus Interview with Daniel Watson, Chief Compliance Officer at CatalystPay

Following our previous interview with our Head of Sales, Goran, we're thrilled to present the second installment of our On Focus series featuring Daniel Watson, Chief Compliance Officer at CatalystPay. In this interview, Daniel provides his unique insights on the role of Compliance Officer in the payments industry, common compliance challenges for payment providers and merchants, and key compliance areas that need focus in 2023 (also read Dan's take on 2024 key Fintech trends). He also offers three valuable pieces of advice to online merchants to stay ahead of compliance. Read on to learn from a seasoned compliance professional and gain a deeper understanding of the importance of compliance in the payments industry.

Can you please briefly introduce yourself?

I’m Daniel Watson, the Chief Compliance Officer here at CatalystPay. I live and work in the UK; and have been working in Compliance roles for over 25 years now (!). Before joining the CatalystPay team, I have worked in senior Compliance and financial crime roles at other E-Money and Payments firms with significant footprints across the whole of Europe and the wider world; and I’ve been an MLRO for the last 10 years.

Out of work, and now we’re in a post Covid world (fingers crossed!), I’m looking forward to picking up travelling again now that we can – I have a few exciting long haul trips on the horizon. At home I do quite a bit of swimming – I live right on the North Sea coast and there is quite an active outdoor swimming scene going on. It’s very cold but good for you in so many ways ☺

 

Why did you decide to join the CatalystPay team?

The business is led by experienced people who have an ambitious and (importantly) a realistic vision of what they want to achieve. They are already successful in their Payment Gateway product; and are always looking at new ways to enhance their overall product to support their customers and to achieve their growth plans.  It’s a good opportunity to join a growing business working with like-minded professionals; and to get it right first time by having the opportunity to build a compliance framework from the ground up.

Can you explain the role of the Compliance officer in the payments industry?

It’s pretty diverse - it has been a long time since the role of Compliance Officer was to tell the business what they could NOT do – I don’t think even the dinosaurs share that view anymore. Yes of course where we work in a heavily regulated environment (which payments is) we need to make sure we do things the right way; and this is certainly part of the Compliance Officer’s role; but a lot of it is also about finding solutions to everyday situations we face to provide a good product to customers. The payments industry is full of innovation and that needs innovative approaches to compliance too.  

Regulation wise – it’s a dynamic landscape – regulations are always evolving, and we need to make sure the business is properly informed about them well in advance, so our product develops too.  

Lastly - we need to be able to weed out the bad actors who try to use our products to benefit themselves and harm others.  Trying to prevent money laundering is challenging and you can’t lose sight of your responsibilities in this area.

 

What are the most common Compliance challenges that payment providers and merchants face?

I think if you just look at Compliance as a cost to the business you’re off on the wrong footing – like I say there’s a lot to do and the range of responsibilities is always widening. Firms need to keep a watching brief on their compliance responsibilities and make sure they are resourced properly.  There are invariably so many different providers behind the scenes who make a payment product work; and often the responsibility for the actions of third parties falls on you as Compliance Officer as you are outsourcing your regulatory responsibilities to them. Understanding what is going on, where and how is a key challenge in this business.

What are the key compliance areas that payment providers and merchants need to focus on in 2023?

This is a timely question - you only need to look at the recent FCA’s ‘Dear CEO letter’ (March 2023) to show what the FCA wants us to focus on – and there are a lot of themes there.

Aside from the Consumer Duty reminder, the topics in the FCAs letter are not particularly new and are all things which the industry should be getting tight; but like I said earlier, the reason many firms don’t get things right is down to how much they outsource to others – where a third party effectively carries out a control function for which you hold the risk and, in the case of a Compliance Officer, often the personal responsibility. It can be a headache.

What would be your top 3 advice to online merchants to stay ahead of compliance? 

• Be alert to the fact that financial crime happens, and don’t be complacent that you won’t be affected by it;
• Never be satisfied with mediocrity – don’t just ‘do’ to get by, try to be the best in class;
• Choose your partners carefully – listen to their advice and experience and keep adapting.

 

Check out the rest of the On Focus interviews with our team or check our team page to get to know us better:

• Common issues that online merchants face with online Payments - Interview with Head of Sales, CatalystPay
• Risk Management & Fraud Prevention in Payments - Interview with Risk & Monitoring Analyst, CatalystPay