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Compliance Titans: Craig James, Neopay

By Loraine DeBonis, Editor-in-Chief

Craig James never planned on becoming the foremost authority on e-money licensing in Europe, at least not at first. The founder and CEO of compliance consultancy Neopay says his road to being a Compliance Titan began with a disastrous start in sales. “I was probably the worst-performing salesman in history,” he laughs. But James loved the technical aspects of financial services, so he switched departments.

After interviewing for two positions, one for compliance and one for underwriting, his fate was sealed. “I worked through a series of compliance roles, learned as much as I could in a particular job and then applied for a new one,” James says. It didn’t take long for the youngest of three children to decide that he wanted to be his own boss. “I didn’t like being told what to do. I’m not always right, but I have definite ideas of where to go and how to get there. My success (or failure) will be because of me.”

In addition to the technical aspects of his work, James compares the appeal of compliance to that of playing chess. “You have to understand the board better than everyone else, so nothing ever surprises you. That’s the challenging and interesting part of it—the strategy,” he says.

Birth of an Industry

What drew him to compliance in e-money and prepaid in particular was the dynamic nature of a young industry, where his early work was in online gaming and e-wallets. Prior to that, he worked in investments. “I was used to working for a 200-year-old institution where it took five years just to change the font in the logo,” James says. “Suddenly, I was working with two-month-old companies. It was exciting.”

What Are the Biggest Compliance Challenges Your Clients Are Facing?

There’s the banking challenge on both sides of the pond—banks denying account services to e-money issuers and startups. Think Operation Choke Point in the U.S.

If you look at the U.K. and Europe, one of the biggest issues is exiting the EU. It’s not that the exit itself is the challenge. Leaving the EU is not the same as leaving the single market. But the worst-case scenario is that you’d need two licenses for operating in Europe and the U.K. I think the challenge really is holding your nerve. There’s a temptation to make rash decisions. Within six to 12 months we will have clarity and then we will still have at least another year or two years to react. There’s no need to panic right now and that’s a real challenge for a lot of people.

In the U.S., what I’ve learned is that compliance and risk are universally hated. I find it absolutely fascinating. Compliance is viewed as the business-prevention unit, and there’s a sense that it’s better to ask forgiveness than permission. It reminds me of where compliance was in the U.K. 15 years ago. Now compliance teams are trusted business partners and are involved in product development from day one. A lot of our work in the U.S. is about helping businesses work with their compliance teams more effectively and turning compliance into a business facilitator. There are a lot of complex regulatory challenges, but we need to shift the thinking. It’s not compliance saying, ‘no’. It’s looking to them to say, ‘Here are three other ways to do it.’

After the U.S. Congress in 2006 passed the Unlawful Internet Gambling Enforcement Act, which restricts the use of the payments system for Americans who gamble online, it shut down the business model for the company where James worked. At that point, he left the organization and began consulting. In 2008, he incorporated Neopay, which claims a 100 percent success rate at getting clients licensed as e-money issuers or payment services providers. With a staff of 13, headquarters in London and a new office in Los Angeles, James is racking up more frequent flier miles than usual, which he welcomes.

The business in the U.S. is everything from startups and small fintechs to larger institutions, some of them seeking advice on how to work more effectively with their compliance teams (see sidebar). For those on the cutting edge of new payments technologies, i.e., the largely unregulated sector, James joined with regulatory lawyer Adam Vaziri to form another company, Diacle Ltd., which has offices in London, the Isle of Man, Hong Kong and Los Angeles.

Diacle is spending a lot of time with regulators and governments around the world talking about mitigating risks without stifling innovation. It’s a conversation that’s familiar to James, who has spent the past six years involved in the Prepaid International Forum. He’s been chairman for the past three. For him, being involved with PIF—and, more recently, joining the NBPCA in the U.S.—is about promoting and protecting the industry of which he’s a part.

“It made absolute sense that I should be involved, and it has taken years to get the message out that prepaid is a highly regulated sector and that it’s preferable to cash because it provides an audit trail.”

James is passionate about his work and can’t imagine doing anything else. “I don’t actually have a plan B. If you go into a venture with a fallback option, I think you’re more inclined to fall back,” he says. “My commitment has never wavered. That’s the thing that drives me.”

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