Trade Finance for Non-Traditional Lenders: Navigating Regulatory and Compliance Landscapes

May 7th, 2025

Traditional and non-traditional business lenders alike face a complex web of international, regional and local financial regulations that ultimately determine the difference between success and failure. For non-traditional lenders, these regulatory, licensing and compliance challenges can be daunting, given their often innovative business models and rapid market expansion. Navigating these landscapes requires a deep understanding of operational risks and the opportunities compliance frameworks can present.

As these non-traditional lenders seek to enter new markets, introduce innovative new products and/or partner with other established financial institutions and investors, regulatory requirements create both operational advantages and potential constraints. Adhering to compliance frameworks can open doors to new funding sources and partnerships, while gaps in regulatory alignment may limit growth or expose firms to heightened scrutiny and risk. The need to meet these evolving regulatory expectations has spurred innovation, driving the development of new products and services that benefit the broader trade finance ecosystem.

At the heart of these efforts is the goal of building a stable and trustworthy financial environment for investors, lenders and borrowers. Companies committed to balancing innovation and strong compliance are the ones best suited to navigate today’s dynamic global and regional financial markets. In doing so, they provide much-needed working capital to emerging and SMEs underserved by traditional bank lenders, while ensuring sound investor profit margins and mastering the art of finance multi-tasking.

Legal, Regulatory, Licensing and Compliance Terrain

Just like traditional lenders, non-traditional lenders must obtain licenses or register with the appropriate regulatory bodies based on their specific operations. Payment services, for example, require central banks or other financial regulatory authorities, whereas lending platforms are likely subject to consumer protection laws and additional licensing requirements. Those involved in cryptocurrency exchanges typically face stricter registration requirements to legally operate.

Anti-money laundering (AML) regulations, know your customer (KYC) rules, data privacy laws (e.g. General Data Protection Regulation in the EU), and associated regulations differ from country to country and even regionally. Every country has them. Failing to comply with these regulations not only results in potential penalties and legal liability but also destroys the credibility and reputation of lender businesses and places borrowers in far greater risk situations.

Thorough consumer protection regulations ensure that non-traditional finance companies treat customers fairly. They must stay transparent with terms and conditions, engage in fair lending designed to prevent discriminatory or predatory behaviour, and meet disclosure requirements. While all of this is very important to the borrower, how a company approaches compliance is often among the key determining factors for investors that fund the non-bank lending world. 

The way that non-traditional lenders adhere to compliance frameworks within ethics, policy, and corporate culture compass can, should and does underpin investor and borrower decisions when it comes to doing business. Non-Bank lenders who are not willing to anticipate and welcome additional cost and effort inherent in navigating the complex regulatory and compliance landscape risk their own business operations alongside their clients and investors, particularly those operating in multiple countries and regions.

Mapping Constraint and Innovation Opportunities

Trade Finance rules and regulations can create operational constraints and complications for non-traditional finance companies when expanding operations into new markets. This is due to the diverse regulatory frameworks and varying complexity in obtaining required licenses, all of which can slow down expansion regionally and internationally. Identifying, understanding, mapping and complying with all that is the difference between businesses that sink or swim.

For example, the introduction of new products and the launch of innovative lending models will often result in additional regulatory scrutiny as well as the need for additional licensing. There will always be varying regulations in different countries and regions that govern partnerships, risk-sharing arrangements or joint ventures with other financial institutions such as banks, insurance companies, development banks, or private investors When engaging in cross-border business operations, regulatory divergence can become a major issue. Things like data storage and sharing rules, capital adequacy requirements and international transaction reporting and taxation are all part of the mix.

Industry leaders recognise that what may be viewed as constraints are in fact opportunities to drive innovation within the industry, increase and enhance the client base, and arrive at the designated point of success with everyone on board.  

Zvilo Leading the Way

Zvilo recognises and embraces regulatory and compliance requirements because, put simply, it is good for business.

By doing so proactively, deliberately, and seriously, we are advancing the shared interest of the Zvilo corporate family and business model, Zvilo’s Clients in countries and across continents, and Zvilo’s Investors Internationally.

Zvilo takes pride in its regulatory and compliance team, which works in unison with our world-renowned corporate leaders and seasoned and professional tech, legal, customer, and investor relations departments. This ensures we actively mitigate a wide range of risks, protect customers and investors, prevent financial crime, and continue to build Zvilo’s reputation as a premier, credible, trustworthy and reliable nontraditional lender.