David Schwartz, President & CEO, Financial & International Business Association

In an interview with Invest: David Schwartz, president & CEO of the Financial & International Business Association (FIBA), highlighted key milestones such as celebrating FIBA’s 45th anniversary, expanding membership, and addressing evolving compliance challenges.

What have been some recent achievements or milestones for FIBA?

This year has been especially significant for FIBA as we celebrated our 45th anniversary in July. We’re closing in on 50 years, and we’re already looking forward to a big celebration at that time.

One of our key achievements has been the restructuring of our membership base. Initially, we were strictly a banking organization with some supporting members, such as law firms, accountants, and consultants. Today, we’ve expanded to include fintech companies, software providers, and technology firms. Banks remain central to our organization but we’ve diversified, reflecting the evolving landscape of the financial industry.

Another important milestone was having a non-banker chair of our board for the first time in FIBA’s history. This year, the chair is from Kaufman and Rossin, an audit and consulting firm, marking a shift in leadership that brings fresh perspectives.

Lastly, we held the 24th annual Anti-Money Laundering Compliance Conference. It was our first post-pandemic conference, and we returned to pre-pandemic attendance levels with over 1,000 participants from more than 50 countries! We filled the Intercontinental Hotel to capacity showcasing the continued global importance of this conference.

What are some of the significant challenges your members are facing?

No matter how much we diversify the content we offer to members, it always circles back to compliance and regulation. Our most active committees are Legal & Regulatory Affairs and AML Compliance. Regulations continue to grow and evolve. Over the past four years, there’s been a recalibration from the U.S. Treasury Department regarding regulatory compliance.

For the first time in 50 years, they updated the Bank Secrecy Act, and we’ve spent the last few years implementing those changes. We’re now getting clarity on how these new rules should be applied. Of course, complications arise because the people passing these laws in Congress aren’t bankers, and they may not fully understand the unintended consequences of new regulations. However, we’ve maintained strong relationships with Congress and regulators at both the state and federal levels, allowing us to work through these challenges together.

While compliance remains the No. 1 concern, cybercrime and cybersecurity have quickly risen as a close second. CEOs and board members frequently emphasize the significant financial resources being allocated to compliance, which used to account for 10% of the bottom line and now can reach as high as 30%. They also point out that cyber threats are equally concerning.

Advances in technology, particularly in artificial intelligence, have enabled criminals to become more sophisticated. In today’s digital world, banks must figure out how to verify and validate identities when customer onboarding often doesn’t involve face-to-face interactions. Tools like deepfakes and voice cloning further complicate this process. Virtual currencies, like cryptocurrencies, are also being used as payment for these cybercrimes, adding to the challenges banks face.

The good news is that financial institutions remain committed to protecting their customers, even in the face of these growing threats.

How has South Florida’s status as a hub for international business shaped the association’s role in the global financial services sector?

We go where our members take us. There is increasing diversity not only in the countries that our financial institution members come from, but there has been a return of banks to South Florida. At one time, South Florida had about 200 banks, but due to mergers, acquisitions, and the rising cost of compliance, many left the market. Today, 49 banks that were once members of FIBA are either no longer in existence or have been acquired.

However, banks are making a comeback. For example, BNP Paribas, a long-time member of FIBA, had closed its Miami office, but they have now returned. Additionally, Latin American banks are looking to enter the market, often by acquiring local community banks, though there are very few available for acquisition.

At the state level, there’s encouragement for new banks and acquisitions to support the region’s growth. South Florida continues to be a key financial hub, second, only to New York in the United States. We remain the gateway to Latin America and the Caribbean, as evidenced by the number of Latin American banks that maintain a presence here through branches, agencies, or acquisitions.

Finally, it’s important to note that South Florida was largely built by the Hispanic community. Immigration from Cuba in the 1960s brought professionals — bankers, lawyers, and builders — who were instrumental in Miami’s development. Our location and cultural ties to Latin America have made us a natural entry point for businesses from the region.

What key industry trends is FIBA focused on that will impact your members in the coming years?

We’re nearing the end of the implementation process for the Anti-Money Laundering Act of 2020, with just one final regulation from the Treasury Department regarding beneficial ownership pending. After that, we’ll likely submit our final comment letter on the Corporate Transparency Act. Recently, we issued a detailed 38-page comment letter in response to the Treasury’s proposed rulemaking on strengthening AML/CFT programs. Many proposals need further clarification, which is why regulatory issues remain a key focus for us.

A significant challenge for the industry is Florida’s 2023 House Bill 3, requiring banks to use a quantitative, risk-based, and impartial approach before denying service. Banks must also certify compliance with the law annually. The law arose from concerns that banks were denying services based on political views or certain industries like oil, marijuana, or firearms. A 2024 amendment introduced a complaint process, allowing customers to file grievances with state regulators if they feel wrongfully denied. This poses a challenge, especially for banks dealing with high-risk countries like Venezuela, as they now have to justify their decisions through this process.

The law applies to both Florida-chartered and national banks, as well as internet banks serving Florida customers. How state regulators will manage enforcement across state lines remains to be seen.

How are banks adapting to new technological challenges, especially with the rise of AI and cybercrime?

On the technology front, artificial intelligence (AI) and innovation are areas we’re closely monitoring. Some of our member banks have already implemented AI and machine learning platforms, particularly within compliance systems to flag suspicious transactions. While AI can analyze vast amounts of data quickly, human oversight is still required to make final decisions. In this sense,  AI is a tool, not a replacement for human judgment.

However, criminals are also leveraging AI. For instance, OpenAI has developed technology that can clone a voice in just 15 seconds. Deepfakes are another concern, and they’re no longer just a TV phenomenon — they’re real. One example involves a multinational company in Hong Kong that was tricked into transferring $26 million after participating in a video conference with what appeared to be their CFO and other colleagues. The conference turned out to be a deepfake. Criminals had used video clips and voice cloning technology to create a convincing scam.

This is a real challenge as reliance on digital means to open accounts and authenticate customers continues to grow. With innovations like synthetic IDs and advanced forgery techniques, criminals can easily exploit vulnerabilities. One of the biggest issues is that technology is advancing faster than the regulatory safeguards being built to contain it.

Cybercrime remains a significant challenge as well, with these emerging technologies giving criminals even more sophisticated tools to commit fraud. In fact, during a recent trip to Ecuador and the Dominican Republic, I was asked about how these new technologies can be addressed. One solution we’re seeing is dual authentication — using codes sent to an agreed-upon device. But even that’s not foolproof.

How have relationships between banks and Fintechs changed over time?

Initially, banks viewed Fintechs as competitors, particularly when they began offering services like cross-border payments without the same strict regulation. Over time, Fintechs have become more regulated, classified as money services businesses by FinCEN, requiring compliance programs and officers. However, banks still bear much responsibility for overseeing Fintechs. If a Fintech uses a bank’s services, the bank must ensure its compliance program is robust, its customer base is properly managed, and its cybersecurity is solid. This has become a focus, especially after enforcement actions last year. Banks now treat Fintech partnerships with the same scrutiny as correspondent banking, which has led to increased compliance costs.