Merchant Onboarding: Global Updates – May 2025

Regulatory changes are transforming how PSPs, ISOs and FinTech's onboard merchants—creating fresh friction points, compliance challenges and opportunities to optimise. This month's update highlights key developments in AML standards, crypto asset frameworks and sanctions enforcement, with a sharp focus on their practical impact:

• Tougher due diligence prolonging approvals for high-risk merchants
• Diverging regional rules adding complexity to cross-border processes
• Manual bottlenecks driving attrition and revenue delays

We examine what each change means for your onboarding operations—and how to adapt while maintaining both speed and compliance.

‍

‍Global

‍Initiative Name: Joint Financial Action Task Force (FATF) , INTERPOL & UNODC Measures on Financial Crime and Asset Recovery

Effective Date: Announced 19 May 2025 (ongoing)

Issued by: Financial Action Task Force (FATF), INTERPOL, United Nations Office on Drugs and Crime (UNODC)

Summary: A unified global front is strengthening AML standards and fraud prevention efforts. Collaborative action by FATF, INTERPOL, and UNODC is raising the bar for onboarding, especially in high-risk sectors. PSPs, ISOs, and FinTech's must prepare for tighter due diligence and greater complexity.

Key Changes:

• INTERPOL Silver Notice: Now active in 51 countries, making cross-border enforcement smoother.
• AML Standards: Updated FATF guidelines push for faster reforms and stronger safeguards.
• Public-Private Cooperation: Closer alignment between regulators, law enforcement and financial institutions to implement risk-based approach.
• New Investigative Tools: Cross-border frameworks and tools set to launch by late 2025.

What This Means for Merchant Onboarding:
‍PSPs, ISOs and acquirers will face stricter AML due diligence, especially with high-risk merchants. Manual checks will slow down the verification process, while uneven regional standards add further complications. To keep onboarding swift and maintain conversion rates, automation, real-time risk scoring and flexible KYC controls are vital.

Recommended Actions:

• Streamline Workflows: Adopt dynamic risk scoring to evaluate applications instantly and cut manual delays.
• Update Screening: Ensure sanction, PEP's and adverse media checks evolve automatically alongside new FATF and INTERPOL requirements.
• Improve Collaboration: Build stronger ties with law enforcement, acquirers and AML experts to share intelligence promptly.
• Scale Compliance: Use audit-ready systems adaptable across regions without sacrificing onboarding speed.

How OnBoard Helps: Onboard provides automated, scalable onboarding solutions designed to reduce time-to-revenue, improve conversion, and simplify compliance. This enables PSPs and ISOs to confidently navigate shifting regulatory sands with ease.

Source: Financial Action Task Force

‍

Initiative Name: Bitget Wallet and Paydify Partnership for Global Crypto Acceptance

Effective Date: Announced 6 May 2025

Issued by: Bitget Wallet

Summary: Bitget Wallet and Paydify launched a partnership to address fragmentation in crypto payments by enabling stablecoin transactions at merchants without requiring blockchain-specific integrations.

Key Changes:

• Aims to reduce complexity in crypto payments by allowing merchants to accept USDT and USDC through Paydify’s infrastructure without custom blockchain setups.
• Introduced instant stablecoin settlement for merchants, removing the need for them to manage wallets or crypto infrastructure.
• Seeks to expand crypto acceptance to over 10,000 merchants globally, across sectors like retail, travel, and e-commerce.
• Highlights ongoing challenges in crypto adoption, such as limited merchant acceptance and technical barriers, which the partnership aims to mitigate.

What This Means for Merchant Onboarding:
‍The growing integration of stablecoin payments into mainstream commerce requires onboarding teams to assess crypto payment readiness, conduct enhanced due diligence on merchants operating in or adjacent to digital asset ecosystems, and implement risk-based onboarding frameworks to address exposure to fraud.

Recommended Actions:

• Dynamic onboarding workflows: Design flexible onboarding processes that adapt in real time based on a merchant’s crypto involvement, allowing for faster approvals or deeper reviews depending on risk signals.
• Custom risk models: Build tailored risk scoring systems that factor in crypto-specific variables like asset type, transaction behavior, and blockchain exposure to better assess merchant profiles.
• Modular onboarding journeys: Create onboarding flows with interchangeable components that activate crypto-specific checks only when relevant, improving efficiency without overburdening low-risk merchants.

How OnBoard Helps:

OnBoard enables faster, smarter merchant onboarding through dynamic workflows tailored to all risk levels, real-time custom risk models for approval decisions, and adaptive smart forms that streamline processes and reduce manual effort.

Source: Bitget Wallet

‍

EMEA

United Kingdom

Regulation Name: HM Treasury and FCA UK Crypto-asset Regulatory Regime

Effective Date: Draft Statutory Instrument (April 2025), FCA Discussion Paper (May 2025)

Issued by: HM Treasury (HMT), Financial Conduct Authority (FCA).

Summary: The UK is launching a comprehensive regulatory regime for cryptoassets, dramatically raising onboarding requirements for crypto merchants. PSPs and FinTech's must adapt to diverse risk profiles and stricter authorisation rules.

Key Changes:

• Crypto will be brought under the Financial Services and Markets Act (FSMA), meaning firms must be FCA-authorised to offer crypto-related services in the UK.
• Specific cryptoasset activities (e.g., custody, trading, issuance) will be regulated similarly to traditional financial services, requiring detailed applications and governance standards.
• Firms currently registered under anti-money laundering rules (MLRs) must reapply for full FCA authorisation.
• Foreign crypto firms serving UK clients must establish a UK presence and become authorised.
• Firms must demonstrate strong risk management, cybersecurity, and governance frameworks, aligning with the FCA’s Consumer Duty standards.

What This Means for Merchant Onboarding:
‍These changes bring fresh challenges for PSPs, ISOs, and FinTech's working with crypto merchants. Onboarding processes will need to adapt to accommodate diverse activity types and risk profiles, with more rigorous due diligence on merchant structures. The result is greater complexity, longer onboarding times, and higher chances of delays or losing merchants.

Recommended Actions:

• Introduce pre-screening: Identify crypto-related activities early using dynamic triage to tailor onboarding routes.
• Streamline workflows: Use real-time risk scoring and automated routing for applications involving staking, custody, or CATPs.
• Update policies: Refresh onboarding checklists to comply with FCA consumer communication and risk disclosure standards.
• Assess cross-border risks: Review onboarding for overseas crypto firms targeting UK users to manage jurisdictional exposure.
• Keep an eye on developments: Follow FCA consultations (e.g., stablecoins, DeFi) and proactively refine onboarding processes.

How OnBoard Helps: OnBoard’s platform automates onboarding with real-time risk scoring, adaptable workflow management, and seamless compliance reporting. It helps PSPs and ISOs pre-screen applications, route them by risk, and stay aligned with regulations—cutting onboarding delays, reducing merchant loss, and embedding complex crypto compliance right from the start.

Source: HM Treasury and Financial Conduct Authority

‍

‍European Union

Initiative Name: Cyprus National Sanctions Implementation Unit & Financial Sector Reforms

Effective Date: May 2025 (ongoing)

Issued by: Government of Cyprus, EU, Cyprus Finance Ministry

Summary: Cyprus is centralising sanctions enforcement and enhancing cooperation with global authorities to crack down on sanction evasion and other risks. Payment firms face more rigorous sanctions screening and ongoing monitoring responsibilities.

Key Changes:

• Cyprus has failed to establish a centralised unit to oversee sanctions enforcement, increasing uncertainty for onboarding merchants based in or linked to Cyprus.
• The delay in implementing the EU-mandated sanctions framework means ambiguity remains around who enforces sanctions, complicating due diligence during onboarding.
• Pushback from the Cyprus Bar Association highlights potential gaps in AML and sanctions reporting, raising red flags for onboarding merchants using Cypriot legal or financial intermediaries.
• Cyprus now faces increased EU scrutiny, which may affect the risk profile of merchants operating from or through Cyprus—important for onboarding risk assessments and KYC processes.

What This Means for Merchant Onboarding:
‍For payment service providers, independent sales organisations, and fintech firms onboarding merchants in Cyprus, expect tighter scrutiny on merchant identity verification against updated sanctions lists. Ongoing Customer Due Diligence (OCDD) will play a critical role in detecting potential sanctions evasion throughout the customer lifecycle, adding complexity and risk to the process.

Recommended Actions:

• Integrate Sanctions Checks: Update onboarding procedures to include the new enforcement unit’s checks.
• Enhance Risk Scoring: Use dynamic, real-time risk scores to identify high-risk merchants early and cut down on manual reviews.
• Leverage Intelligence Sharing: Connect with API to share sanction-related data across borders and stay ahead of evolving rules.
• Maintain Ongoing Monitoring: Activate alerts to spot suspicious activity as it happens, not afterwards.

How OnBoard Helps: OnBoard automates sanctions screening and risk scoring, significantly reducing onboarding times and manual workload. Its continuous monitoring safeguards compliance, helping PSPs, ISOs, and fintechs onboard merchants quickly and securely amid these evolving sanctions regulations.

Source: International Consortium of Investigative Journalists (ICIJ)

‍

‍America

United States

Initiative Name: U.S. Department of Justice Fines Credit Suisse USD 510.6M for Tax Evasion Scheme

Effective Date: Announced 6 May 2025

Issued by: United States Department of Justice

Summary: The DOJ’s hefty fine against Credit Suisse signals intensified scrutiny on cross-border financial crime and tax evasion. For PSPs and ISOs, this means elevated risks and the urgent need to sharpen onboarding processes, especially for clients with offshore ties.

Key Changes:

• Repeat Offence: This follows a 2014 settlement of USD 2.5 billion, signalling tougher penalties for recurring breaches.
• Offshore Structures: Accounts operated from Singapore included forged documents and undisclosed holdings over USD 1 billion.
• Jurisdictional Reach: US enforcement now extends beyond its borders, increasing risk for payment service providers (PSPs) and independent sales organisations (ISOs) involved in international operations.

What This Means for Merchant Onboarding:
‍While centred on tax evasion, this case serves as a warning about the reputational and financial dangers of onboarding high-risk clients without thorough oversight. PSPs, ISOs, and acquiring banks must focus on real-time risk scoring, flexible workflows, and ongoing due diligence—particularly for clients with complex offshore arrangements.

Recommended Actions:

• Refine Processes: Develop dynamic onboarding journeys that highlight tax-risk factors like offshore ownership and jurisdiction risk.
• Real-Time Risk Scoring: Use risk engines to escalate checks on suspicious applications without slowing down low-risk onboarding.
• Partner Screening: Regularly review correspondent banks and partners for exposure to offshore risks, aligned with your risk appetite.
• Automate Verification: Employ automated document checks to spot fraud early and maintain thorough, accessible audit records.

How OnBoard Helps: OnBoard’s platform supports PSPs and ISOs by automating real-time risk scoring and document verification, cutting delays while ensuring compliance. Its adaptable workflows respond to emerging risks, helping avoid costly fines and reputational damage.

Source: United States Department of Justice‍

‍

APAC

Hong Kong

Regulation Name: Stablecoins Bill and Regulatory Regime for Fiat-Referenced Stablecoins

Effective Date: Passed 21 May 2025 (implementation expected later this year)

Issued By: Hong Kong Government, Hong Kong Monetary Authority (HKMA)

Summary: Hong Kong’s new stablecoin licensing regime sets high bars for market integrity and investor protection. PSPs onboarding stablecoin issuers will face tougher checks and longer timelines—making automation and real-time risk assessment essential.

Key Changes:

• Licensing Required: entity issuing stablecoins pegged to fiat currencies (like the Hong Kong dollar) must obtain a license from the HKMA.
• PSPs and FinTech's cannot onboard merchants that accept or settle in unlicensed stablecoins.
• PSPs and ISOs must verify that stablecoins used by merchants are from licensed issuers.

What This Means for Merchant Onboarding:
‍For PSPs, ISOs, and fintech institutions, the HKMA’s new stablecoin regime introduces stricter licensing, and compliance—requiring enhanced due diligence and regulatory alignment when onboarding merchants or partners involved in fiat-referenced stablecoin activities.

Recommended Actions:

• Check Licensing: Make sure all stablecoin issuers in your network are licensed or actively working towards it.
• Strengthen Due Diligence: Apply deeper onboarding checks and ongoing monitoring for merchants dealing in stablecoins or digital assets.
• In-Built Risk Scoring: Embed dynamic risk scoring models to assess merchant risk based on stablecoin usage, jurisdiction, and transaction behavior.

How OnBoard Helps: OnBoard streamlines compliance without slowing you down. From automated KYC/AML checks to smart risk scoring and audit-ready reporting, it helps you meet regulatory demands and onboard faster. That means fewer delays, higher conversion, and peace of mind – even in the face of changing rules like those in Hong Kong.

Source: Hong Kong Monetary Authority

‍

Australia

Regulation Name: AUSTRAC Enhanced AML/CTF Oversight on Non-Bank Lending Sector

Effective Date: Announced 15 May 2025 (ongoing sector oversight)

Issued By: Australian Transaction Reports and Analysis Centre (AUSTRAC)

Summary: AUSTRAC is stepping up oversight on non-bank lenders amid widespread AML/CTF deficiencies. PSPs and FinTech's working with this sector must tighten risk controls and modernise onboarding to avoid costly delays and compliance risks.

What’s Changing:

• Mandatory Audits: Independent checks will assess how firms are managing AML/CTF obligations.
• Broader Sector Focus: AUSTRAC is urging all non-bank lenders to sharpen their systems. Alarmingly, 89% of businesses said they had no high-risk customers at all.
• Stricter Monitoring: Firms must improve how they flag and escalate unusual activity.
• Reporting Expectations: More suspicious matter reports will be expected—and required.

What This Means for Merchant Onboarding:
‍These changes will increase onboarding pressure for PSPs, ISOs, and FinTech's working with non-bank lenders. Stronger compliance rules demand tighter risk controls from day one. If you're still relying on manual reviews or disconnected systems, expect slower onboarding, higher customer drop-off, and greater compliance exposure.

Recommended Actions:

• Streamline Risk Reviews: Use real-time scoring to identify high-risk applications early and prioritise them for deeper scrutiny.
• Upgrade Monitoring Tools: Automate transaction checks and make sure escalations follow AUSTRAC’s expectations.
• Improve Reporting: Implement smart alerts and dashboards to surface suspicious activity faster.
• Stay Engaged: Work openly with auditors and regulators to close any gaps quickly.

How OnBoard Helps: OnBoard takes care of the heavy lifting—automating real-time risk scoring, routing applications based on risk, and triggering alerts instantly. You’ll stay ahead of complex AML/CTF requirements without slowing down the customer journey. By embedding compliance directly into your onboarding flow, OnBoard reduces delays, cuts drop-offs, and gives you the confidence to scale responsibly.

Source: Australian Transaction Reports and Analysis Centre (AUSTRAC)

‍