The aim of this study is to explore the effects of anti-money laundering (AML) legislation on fintech lending platforms in the European context, focusing on the balance between protecting market integrity and safeguarding the expansion of innovation in the financial field, a tension that is encapsulated by the innovation trilemma. By analysing the current state of fintech lending and the evolving anti-money laundering regulatory landscape in Europe, the paper investigates how rigid compliance requirements can unintentionally suppress innovation. Furthermore, it discusses how these challenges can be overcome and assesses potential solutions, such as regulatory sandboxes and innovation hubs. The study concludes that AML rules are essential to strengthen financial stability; however, a more harmonized and technologically adaptive regulatory approach is necessary to promote innovation without compromising risk mitigation. Strengthening international cooperation and taking advantage of digital regulatory tools could be key in determining the future of fintech compliance and sustainable growth.
Nicole Smith (2026) studied this question.