USA TRENDS AND DEVELOPMENTS Contributed by: Donald J. Mosher, Melissa G. R. Goldstein, Adam J. Barazani and Leel Sinai, McDermott Will & Schulte LLP
HB 700 imposes registration and disclosure require - ments on MCA providers and brokers, and restricts automatic account debits unless the provider holds a perfected first-lien security interest. Louisiana’s HB 470 similarly requires disclosure of financing terms while presuming the transactions are not credit. Oth - er states, including California and New York, impose loan-like obligations, including APR disclosures. In New York, 2025 brought increased enforcement and litigation over whether purported receivables pur - chases functioned as loans. Elsewhere, MCAs are treated as non-loans which remain subject to general consumer-protection laws, but still must ensure trans - parency and fair dealing. Countermeasures Against Fraud, AML, and Risk The fintech sector continues to experience tech - nological innovation aimed at mitigating fraud and financial crime risks, including the expanded use of AI-powered fraud detection tools, AI-assisted iden - tity verification and biometric authentication, and real-time payments monitoring. These developments are occurring against a regulatory backdrop in which state regulators are scrutinising anti-money launder - ing (AML) and fraud controls during licensing reviews, supervisory exams, and consumer protection inves - tigations, in addition to engaging in related enforce - ment actions where warranted. In September 2025, NYDFS issued an industry letter reinforcing that New York-regulated banks and virtual currency firms are expected to integrate blockchain analytics into their AML and risk management pro - grammes. The department also issued another let - ter that tightened custody standards, including strict asset segregation, enhanced disclosures, and prior approval for material sub-custody arrangements. Several notable 2025 state consent orders highlighted failures by fintech firms to appropriately scale AML and fraud frameworks in line with business growth. Common findings included weaknesses in customer identification and verification processes, inadequate customer risk-rating methodologies, ineffective trans - action monitoring rules and alert thresholds, delayed or incomplete suspicious activity reports (SARs), insufficient oversight of high-risk products and coun - terparties, and under-resourced compliance gov -
ernance and staffing structures. These enforcement actions underscore regulators’ expectations that fin - techs adopt risk-based controls that evolve alongside transaction volumes, product complexity, and geo - graphic risk. State-level AML frameworks for digital assets con - tinue to diverge, and, in some cases, intensify. For example, although New York’s BitLicense AML regime remains one of the most stringent AML and compli - ance frameworks applicable to virtual currency firms, California’s laws are changing. In July 2026, the Cali - fornia Digital Financial Assets Law is scheduled to take effect, introducing a comprehensive licensing regime for firms engaged in digital asset activities, alongside introducing stringent AML, disclosure, and transaction transparency requirements. Digital asset firms operating nationally must maintain AML pro - grammes that comply with federal Bank Secrecy Act (BSA) requirements while also accommodating differ - ing state licensing standards, supervisory priorities, enforcement approaches. At the federal level, the Financial Crimes Enforcement Network’s (FinCEN) approach in 2025 reflected the Trump Administration’s broader deregulatory agenda, with an increased emphasis on prioritising higher-risk activity and reducing perceived regulatory burdens. Most notably, it is anticipated that FinCEN will publish a final rule in 2026 amending the existing AML pro - gramme requirements to require them to be tailored to risk and permitting financial institutions to allocate compliance resources accordingly. In addition, the Treasury Department and federal banking agencies issued joint guidance clarifying SARs expectations, with the stated objective of discouraging low-value filings and allowing institutions to focus resources on higher-risk activity. Notwithstanding this more targeted supervisory pos - ture, FinCEN continues to issue risk-based advisories and take regulatory actions in areas viewed as pos - ing heightened threats. In 2025, FinCEN published a notice warning financial institutions of increased fraud, cybercrime, and money-laundering risks asso - ciated with convertible virtual currency kiosks, citing their growing use in consumer scams and reiterating applicable BSA monitoring and reporting obligations.
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