The adult industry is classified as “high risk,” and every business in this field needs to ask itself some tough questions to ensure smooth operations and trusted partnerships. Ready to evaluate your position? For each point below, answer “Yes” or “No” to see if your business is up to the task!

1. AML and KYC Practices

Have you implemented processes to verify customer identities and monitor transactions?

• Yes / No

If you answered “No,” it’s time to review your practices! Payment partners expect thorough processes to minimize risk and maintain accountability.

2. Data Protection and Privacy

Does your business respect data protection and privacy obligations, such as safeguarding sensitive customer information?

• Yes / No

A “No” here could result in lost customer trust. Make sure you’re protecting personal data with secure practices.

3. Payment Security and Fraud Prevention

Do you have systems in place to detect and prevent fraud, especially chargebacks?

• Yes / No

A “No” exposes your business to potential financial losses. Payment partners require strong anti-fraud solutions for safe transactions.

4. Content Compliance and Quality Control

Do you have strict quality control and moderation for published content?

• Yes / No

A “No” here can lead to legal trouble. Ensure your content meets required standards and reflects well on your brand!

5. Banking Relationships and Payment Partner Management

Do you maintain transparent and regular communication with your payment partners?

• Yes / No

If you answered “No,” beware! Transparency is essential for maintaining payment partnerships and avoiding service disruptions.

6. Ethics and Staff Training

Are your employees trained on industry-specific risks and your internal policies?

• Yes / No

A “No” here means potential risk exposure. Training is essential to ensure your team understands and respects compliance and ethical standards.

7. Reputation Risk Management

Do you have an action plan to manage potential crises and monitor your online reputation?

• Yes / No

A “No” here could be costly in the event of a scandal. Be prepared to handle crises quickly and proactively manage reputation risks.

Conclusion

By answering this checklist, you’ve taken the first step in assessing your business’s risk management strength. If you have multiple “No” answers, it might be time to revisit your practices to avoid major risks and secure a stable future for your business. Compliance isn’t just a formality – it’s your best ally in the high-risk adult industry.

We can help you 😉

In Europe, there is a wide variety of payment systems, including both traditional payment methods and modern digital solutions. European payment systems fall into several broad categories, including :

• Payment card networks (Visa, Mastercard, etc.)
• Bank transfers (SEPA in Europe for euro payments)
• Digital wallets (PayPal, Apple Pay, Google Pay)
• Regional online payment systems (such as iDEAL in the Netherlands, Bancontact in Belgium)
• Mobile payment solutions (Twint in Switzerland, MobilePay in Denmark)
• Direct debit payment methods

It’s difficult to give an exact number, as each European country may have its own methods and systems, but it’s estimated that there are over 200 different payment systems across Europe, taking into account local, national and international solutions.

Compliance Requirements

• Payment systems must adhere to strict European regulations, particularly concerning Anti-Money Laundering (AML) and Know Your Customer (KYC) laws.
• This means the business must provide detailed documentation on its operations, financial flows, and shareholders.

Industry Sector

• Businesses in “high-risk” sectors (such as adult entertainment, gambling, or cryptocurrencies) often face more challenges in opening accounts.
• Payment providers, wary of risk exposure, typically impose additional requirements for these sectors (enhanced compliance policies, thorough checks).

Financial Stability and Business History

• Payment systems also assess the financial stability and transaction history of the business to ensure its credibility.
• Newer businesses or those without a substantial history may encounter extra obstacles.

Internal Validation Processes

• Each payment provider has its own validation criteria, which can cause delays, especially if additional checks are required.
• For instance, digital wallets like PayPal may be stricter with high-risk businesses and could even restrict certain services.

Opening an account for a business with European payment systems is possible but may involve extra steps and delays for high-risk sectors. To improve their chances, businesses typically need to prepare a strong compliance profile and demonstrate transparency in their financial operations.

Most RegTech tools are designed to meet the requirements of large financial groups and other traditional regulated sectors.

They are optimized for classic compliance management scenarios, which don’t always match the unique needs of “high-risk” companies.

These companies often have to navigate more complex environments, where atypical transactions and customer profiles require in-depth, customized analysis that standard RegTech solutions can’t offer.

In the high-risk sector, regulatory changes and the expectations of financial partners are frequent and sometimes unpredictable. RegTech solutions, while effective, often lack the flexibility to adapt to these rapid changes and to the specificities of each company.

A service like Compliance-Edge provides specific, adaptable expertise, essential to supporting these companies and enabling them to remain compliant in an ever-changing environment.

The high-risk sector benefits from a human approach to compliance, with specialists who understand the industry’s unique challenges. Compliance-Edge provides this level of personalized, strategic advice, whereas automated RegTech solutions offer only a technical approach, often insufficient to address the relational challenges and sensitivities of high-risk businesses.

For high-risk companies, compliance is not just a regulatory issue, but also a question of credibility with payment partners and banks. Compliance-Edge specializes in building relationships of trust, assuring financial partners that the company complies with the highest standards.

RegTech, while useful, is no substitute for specialists able to offer credible, reinforced validation for sectors perceived as risky.

In summary, RegTech represents an important step forward in compliance management for large companies and traditional sectors. However, for companies operating in high-risk sectors, this standardized technology does not fully address the specific and complex needs of their business. Compliance-Edge provides a specialized, flexible and human solution, essential for ensuring solid compliance and building trusting relationships in other sectors.

Let’s face it: compliance is nobody’s idea of fun. It’s that necessary but tedious set of hoops businesses have to jump through just to keep the doors open. But before you sigh and say “who cares about regulations anyway,” let’s talk about reputation. That’s right, the all-important, painstakingly curated public image that can take years to build and, without compliance, about five seconds to destroy.

Imagine the scene: your company gets a fresh headline, but instead of “Record-Breaking Revenue!” it reads more like, “Corporate Giant Busted for Non-Compliance Scandal.” News spreads fast, and the internet loves a juicy takedown. And let’s be honest, your competitors would love nothing more than to watch you self-destruct in a firestorm of bad PR. You could end up as the unfortunate case study in “What Not to Do” for compliance seminars everywhere.

Now, you might be thinking, “Surely, it won’t happen to me.” Well, many a fallen CEO thought the same, right up until they were escorted from the building. But here’s the kicker: Compliance as a Service (CaaS) is a simple, headache-free option that could prevent all this. It’s like hiring a bodyguard for your reputation—always there, spotting risks and keeping things in line. They handle the paperwork, the rule-following, the stress—leaving you free to focus on, well, anything else.

One of the most high-profile examples of high-risk business in recent years has been the Pornhub Affair and Compliance Issues (2020). In 2020, Pornhub, one of the largest adult content platforms, came under investigation following accusations of illegal content. Following these revelations, payment partners Mastercard and Visa immediately suspended their services on the platform, putting Pornhub’s business model in jeopardy. Articles revealed the presence of inappropriate and unverified content on the site, triggering a huge reputational crisis for Pornhub. Visa and Mastercard considered the site to present a high risk of non-compliance and discontinued their payment services. Result ?To restore trust, Pornhub implemented enhanced compliance measures, including strict identity verification of all contributors and the removal of millions of unverified videos. Despite this, the withdrawal of financial partners has severely impacted their business and reputation.

Without a solid compliance framework, every transaction, every new partnership, and every tiny misstep is a potential PR grenade waiting to explode. CaaS helps you manage these minefields, so you don’t have to deal with them yourself—or worse, deal with the fallout.

So next time compliance feels like just another pesky budget line item, remember: in the game of reputation, it’s the difference between being a trusted, respected brand and becoming tomorrow’s tabloid headline.

You decide which sounds better 🙂

Businesses operating in high-risk sectors, such as the adult industry or online gaming, face stricter compliance requirements than those in less regulated industries. When companies in these sectors seek partnerships with banks or payment providers, they must meet a set of specific demands to mitigate financial and legal risks. Understanding these requirements is essential for securing financial partners and maintaining smooth operations.

Why Are These Sectors Considered High-Risk?

Banks and payment partners classify certain industries as “high-risk” due to factors such as stringent regulations, negative public perception, financial volatility, and increased risks of fraud and money laundering. In the case of gaming and adult services, specific risks include:

• Fraud: These sectors are often associated with high levels of fraud and chargebacks.
• Reputation: Businesses in these areas may damage the reputation of financial partners.
• Complex Regulations: Compliance requirements vary across jurisdictions, making international operations challenging.
• Money Laundering Risks: Transactions in these sectors must be closely monitored to prevent illegal activities.

Typical Compliance Requirements

While requirements may differ between banks and payment providers, certain expectations are common across the board:

1. Know Your Customer (KYC)

KYC is a standard in the financial world. Banks require businesses to provide detailed information about their owners, directors, and operations. The following documents are typically requested:

• Valid identification and proof of residence for owners and directors.
• Company history, including the nature of operations and business partners.
• Contracts with third-party service providers.

High-risk businesses must demonstrate that they operate legally and transparently, with all key individuals properly identified.

2. Anti-Money Laundering (AML) Policies

Companies must often provide evidence of robust internal policies to prevent money laundering and terrorist financing. This may include:

• Transaction monitoring procedures.
• Systems to detect suspicious activity.
• Customer verification processes to ensure funds come from legitimate sources.

3. Anti-Fraud Measures

Given the high risk of fraud in these sectors, banks expect companies to demonstrate how they prevent fraudulent transactions. This may involve:

• User behavior analytics to flag suspicious activity.
• A dedicated fraud management team.
• Steps to limit chargebacks, such as enhanced identity verification.

4. Data Protection Procedures

With the enforcement of the General Data Protection Regulation (GDPR) in Europe and similar laws worldwide, companies must show they take data protection seriously. This involves:

• Implementing technical safeguards to secure customer data.
• A clear and accessible privacy policy.
• Procedures for responding to requests to access, modify, or delete user data.

5. Licensing and Local Regulations

Some banks and payment partners require proof that a company complies with local laws in the countries where it operates. For adult businesses or gaming companies, this often means:

• Obtaining local or international licenses to operate legally in certain territories.
• Demonstrating compliance with gambling, betting, or adult service regulations.

6. Transparency of Revenue

High-risk businesses must be able to prove the sources of their revenue. Banks and payment partners frequently ask for documentation that traces the origin of funds and cash flow. This includes:

• Regular financial audits.
• Clear and accurate bank statements and accounting reports.
• A transparent organizational structure identifying the ultimate beneficial owners of the business.

7. Ethical and Social Policies

Businesses in sensitive sectors, such as adult entertainment, may need to demonstrate that they uphold ethical standards. This could involve proof of policies against human trafficking, exploitation, or coercion.

The Role of Compliance in Relationships with Banks and Payment Partners

For businesses in high-risk sectors, compliance is not optional—it is a necessity. Failure to meet these requirements can result in bank account closures, discontinued payment services, or even legal penalties. As a result, companies must view compliance not just as a cost, but as an investment in the continuity and stability of their operations.

How Compliance-Edge Supports High-Risk Businesses

At Compliance-Edge, we understand the unique challenges faced by businesses in high-risk sectors like online gaming or adult entertainment. We offer tailored services to help you implement the necessary documentation to satisfy the compliance requirements of your banks and payment partners. Whether it’s setting up AML policies, creating a robust KYC procedure, or developing your data protection strategies, we ensure that your business remains compliant and protects its banking relationships.

In conclusion, high-risk businesses can thrive by maintaining strong relationships with banks and payment partners through proactive and rigorous compliance management.

In an increasingly controlled world, companies operating in sectors deemed “high-risk” often face immense pressure from regulators, financial institutions and investors. For these companies, maintaining stable banking relationships can quickly become a nightmare if they fail to meet current compliance standards. It was against this backdrop that Compliance-Edge, experts in “Compliance as a Service”, stepped in to support a Austrian company specializing in the adult entertainment sector, a sector often stigmatized and deemed risky by banks.

The Context: A Financially High-Risk Company

The company in question has been in business for over 5 years, offering a variety of services related to adult entertainment, with a strong physical presence and commercial activities in several European countries. Although highly profitable, the company began to encounter obstacles when it came to renewing some of its credit lines and maintaining its banking partnerships.

European financial institutions, particularly in Germany, are increasingly demanding in terms of compliance, especially for high-risk companies. Sectors perceived as sensitive – gambling, crypto-currencies and adult entertainment – are subject to increased scrutiny. For our customer, this meant a real threat to his future: several banks began to scale back their services, citing concerns over money laundering risk and regulatory obligations.

Potential loss of financial partners

The company, which mainly used local banking services to manage its cash flow and process payments, saw three of its partner banks restrict their business relationships. These institutions feared that the company’s activities would expose them to increased risks of non-compliance with anti-money laundering (AML) and terrorist financing (CFT) regulations.

Faced with the risk of banking isolation, the company turned to Compliance-Edge to help protect its financial partners. The objective was clear: to strengthen its internal compliance policies in order to prove to the banks that the company was complying with all current regulations, and thus regain the trust of these institutions.

The Compliance-Edge intervention

Our team began with a comprehensive assessment of the situation. As compliance specialists, we knew that to convince the banks, the company had to go beyond the usual minimum requirements. It had to demonstrate its ability to identify, assess and manage the financial risks associated with its business.

We undertook a Gap Analysis to take an in-depth look at existing anti-money laundering (AML), data protection and risk management policies. The results revealed several gaps, notably in customer verification procedures (KYC), management of sensitive data and documentation of high-risk transactions.

Implementing sound policies

Based on this analysis, we worked with the company to develop a series of tailored compliance policies and procedures. These included :

1. A strengthened AML and KYC policy: We put in place rigorous processes for verifying customer identity, analyzing suspicious transactions and reporting any activity deemed to be at risk. These measures enabled the company to demonstrate that it had the means to protect itself against potential abuses linked to money laundering.

2. Ongoing staff training: It was crucial that the entire team understood and applied the new policies. We therefore provided basic but effective training materials to raise staff awareness of financial risks and compliance obligations.

3. Compliance and audit reports: We developed a monitoring and audit system enabling the company to produce quarterly compliance reports for its partner banks. These reports clearly showed that the company was monitoring its transactions, managing risks and complying with regulatory obligations.

After several months of close collaboration, the company was able to present its new policies and procedures to its partner banks. Thanks to these efforts, the company was able to regain the trust of two of the three institutions that had initially expressed reluctance.

The banks were impressed by the transparency and rigour of the company’s new practices. One of the main successes was to be able to show that the company had implemented proactive measures to manage financial risks. This also helped to reinforce their image with other potential partners.

A Compliance Model for High-Risk Companies

This story shows how a company perceived as “high-risk” can, thanks to a robust compliance framework, not only survive but thrive in an increasingly stringent banking environment. At Compliance-Edge, we understand that compliance is not simply a set of rules to be followed, but a strategic lever for building business credibility and resilience.

Thanks to a proactive approach, our client not only preserved its banking relationships, but was also able to present its compliance model as a competitive advantage. Today, this company continues to grow, knowing that its compliance rigor is a key factor in attracting new financial partners and protecting its business for the long term.

Compliance, when properly applied, becomes much more than a legal obligation. It becomes an insurance against uncertainty, a safeguard against risk, and, in the case of this Austrian company, the means to guarantee its long-term future in an often misunderstood sector.

Internal control involves putting measures in place to:

1. Ensure reliable information: like accurate financial records.
2. Protect company assets: prevent theft or fraud.
3. Make sure everyone follows the rules: comply with laws and regulations (e.g., data protection).
4. Increase efficiency: make sure resources are used wisely.

🚀 Why is it Important?

Think of internal control as a safety net for your business. It helps you identify risks before they happen and allows you to quickly correct errors. Without it, problems like fraud, financial losses, or poor management could go unnoticed.

🔑 The 5 Key Elements of Internal Control:

1. Control Environment: a company culture that promotes ethics and accountability.
2. Risk Assessment: identifying where potential risks (like fraud or mistakes) could arise.
3. Control Activities: actions that reduce those risks (e.g., task separation, regular checks).
4. Information and Communication: making sure important information flows effectively across teams.
5. Monitoring: regularly reviewing processes to ensure they’re working and making improvements when necessary.

🏆 Examples of Internal Control in Action:

• Dual approval for payments: one person makes a payment, another person approves it.
• Regular inventory checks: keeping track of stock to prevent losses.
• Frequent password updates: improving security by regularly changing passwords.

💡 In a Nutshell:

Internal control is like having a smart system that keeps your business safe from surprises and helps it grow in a stable, secure way. Even though it might sound technical, it’s practical and essential for managing any business, no matter its size.

Trusting compliance experts is crucial for any company wishing to navigate a complex regulatory environment. These professionals are constantly up-to-date on the ever-changing laws and regulations, enabling them to ensure that your company complies with all legal requirements. By working with compliance experts, you significantly reduce the legal and financial risks associated with potential violations. Their expertise enables them to identify gaps in your processes and implement appropriate corrective measures, protecting your company from sanctions and fines. In addition, compliance experts help build a culture of transparency and ethics within your organization, reinforcing the trust of customers and partners.

They also provide training to educate your employees in compliance best practices, helping to minimize human error. In the event of a crisis or audit, these experts are there to support you, enabling you to manage delicate situations effectively.
Ultimately, investing in compliance services is a strategic choice that can enhance your reputation and profitability in the long term. Don’t let the risks of non-compliance threaten the viability of your business, call on compliance specialists today.
➡ We’re here.

Opting for Compliance as a Service (CaaS) to manage regulatory compliance offers several advantages, especially for businesses aiming to stay compliant while optimizing resources. Here’s why it can be a beneficial choice:

1. Specialized expertise:

CaaS providers offer access to compliance experts, allowing businesses to tap into specialized knowledge without needing to train or hire dedicated internal teams. This is particularly valuable in highly regulated sectors where laws change frequently (e.g., GDPR, anti-money laundering).

2. Cost reduction: 

Outsourcing compliance through a service model often reduces costs compared to managing it in-house. It eliminates expenses associated with recruitment, training, and updating technological tools.

3. Time and efficiency gains:

CaaS solutions are designed to automate much of the compliance process, reducing the administrative burden and allowing companies to focus on their core activities.

4. Risk reduction:

By relying on compliance experts, companies lower the risk of errors, fines, or sanctions related to non-compliance. CaaS providers ensure thorough monitoring and regular audits to identify risk areas.

5. Scalability:

CaaS solutions are flexible and scalable, enabling businesses to quickly adjust to new demands or business growth without needing to overhaul their entire compliance strategy.

In summary, Compliance as a Service helps businesses manage their regulatory obligations more efficiently and cost-effectively, while minimizing risks and maintaining flexibility.

-> we are here!