Compliance when payments are final
Arival Bank president Tom Hugh on why instant, irrevocable settlement forces the analysis to happen before the transaction.
For as long as banks have moved money, the systems they moved it through have had natural breaks. Cutoff times, nightly batch windows, next-day settlement, and the ability to recall a wire or return an ACH debit days later all created a pause between the moment a customer instructed a payment and the moment the money was genuinely gone, and bank compliance existed in the space between that pause.
Holds, reviews, requests for information, and fraud investigations were all designed around it, because that was the natural time for review before settlement became permanent.
That pause is disappearing. Real-time rails move funds in seconds with no mechanism to reverse them, and stablecoin transfers settle on a Saturday night as readily as a Tuesday morning. The combination of instant, irrevocable, and always open removes the window that bank compliance was built to use.
The underwriting problem
Banks serving companies that already move money this way are encountering this problem first. Arival Bank works with cross-border businesses that hold fiat and stablecoins side by side and expect to move both without waiting for a business day to begin, which has put it in front of a question most institutions have not yet had to answer.
The answer is to finish the analysis before the transaction rather than after. But finishing the analysis in advance only works if the bank can complete the analysis at all. For most of Arival’s clients, that was the part banks could never do, and would therefore get labeled as high-risk.
"High risk used to mean saying we just don't have the data to compare you.”
The comparison he draws is to the professional services account that every bank is comfortable with. A bank will lend against a veterinary practice without much hesitation because it processes the practice's card payments and can watch the revenue arrive, so the underwriting is straightforward long before anyone asks for a financial statement.
An OTC desk moving value across three jurisdictions offered nothing equivalent, and in the absence of comparable data the file was labeled and declined.
Reading the onchain record
Hugh's argument is that the equivalent data now exists.
"The stablecoin blockchain and the immutable record gives you that data. The bank just has to start using it."
An onchain record is durable and auditable, but reading it requires understanding the business it belongs to, the counterparties on the other side of the flows, and the people who ultimately own the company. Arival does that work at the start of the relationship, which is what lets it approve activity in real time that a bank starting from scratch would have to stop and investigate.
"You actually have to put in the work, understand the business, understand the flows, understand who the UBOs are, and do it up front."
Why incumbents move slow
The obstacle inside a large bank is rarely technical, and Hugh describes it as a straightforward asymmetry of consequences for the person who has to sign the approval.
"Compliance and risk in a traditional bank, they aren't rewarded for onboarding a good crypto digital customer. What they are hammered for is if they actually onboard the wrong one. They get all the blame when things go wrong, but none of the rewards when things go right."
The economics point in the same direction. An institution funded by a large base of low-cost deposits is being asked to introduce a product that competes with its own funding, so a stablecoin offering that pays a market rate cannibalizes the balances sitting beside it.
Hugh is more generous about the banks being built for this market now, which in his view get the starting point right by beginning as banks, with the balance sheet and the compliance program in place from the first day and without treating the customer as a problem to be tolerated. His criticism is that most of them are being built to serve one country, and that the deeper opportunity sits in markets where settlement is slower and financial infrastructure is shallower than in the United States, because that is where the improvement a customer actually feels is largest.
Arival itself banks customers in more than 50 countries.
The cost
Moving the work forward is not free, and Hugh is candid that it makes his own operation harder rather than easier. Customers encounter more friction at onboarding, they supply more information earlier than they are used to, and they still expect to be able to transact at three in the morning.
Serving a company that sources from vendors in one region, sells into another, and is domiciled in a third requires either a local presence or a local partner in each jurisdiction, and that coverage has to exist before the first payment rather than after a question arises.
What customers can do
Fiat and stablecoin balances sit in the same place without cutoff times, so a company holding liquidity on Saturday can pay a vendor on Saturday. Settling in stablecoins moves float from the bank to the company that owns the money. Outside the United States, Hugh says some Arival customers earn yield on balances that would otherwise sit idle between payments. Operating this way used to require a corporate treasury function.
Regulation as backdrop
Following the GENIUS Act, Arival’s customers who had been wiring money out to exchanges and external wallets began consolidating that activity back with their bank, and partner banks stopped asking him to explain the business from first principles.
Over the same six months, the number of accounts Arival holds grew 81% and the total value of payments moving through it more than quadrupled.
As the CLARITY Act stalls, Hugh's position does not move with the outcome: he treats the underlying obligation as unchanged regardless of rail.
"Whether you're moving a stablecoin or you're moving fiat, you're moving value. And that's really what the regulation is built to. You need to understand the flows."
Where HIFI fits
HIFI supplies the accounts and the movement: US dollar virtual accounts Arival's clients can be paid into, transfers between those accounts and stablecoins, cross-border payouts, and the treasury tooling to manage balances across both. This lets businesses outside the US accept dollars without standing up US entities of their own.
Part of a HIFI series on how global money movement is changing, told by the institutions building it.
