Financial Institutions vs. Non-Financial Entities
When working with Conduit, correctly classifying your organization as either a Financial Institution (FI) or a Non-Financial Entity is essential. This classification affects everything from your onboarding experience to your compliance requirements and access to certain features like named accounts.
This article will help you understand the distinction and determine which category your business falls into.
What Is a Financial Institution (FI)?
A Financial Institution is a legal entity that handles money on behalf of others. These businesses often serve as intermediaries, moving, holding, or exchanging funds that don't belong to them.
Your company may qualify as an FI even if you don’t have a financial license or don’t identify as one.
Common FI Activities:
- Holding funds on behalf of users
- Processing payments between third parties
- Facilitating foreign exchange (FX)
- Providing wallets or custodial accounts
- Acting as an intermediary between a sender and recipient
- Redistributing funds in a payroll or payouts model
Examples of FIs:
- Banks and credit unions
- Payment processors and remittance companies
- Digital asset platforms and crypto exchanges
- Fintechs with licensed financial services
- Investment firms and FX dealers
What Is a Non-Financial Entity?
A Non-Financial Entity is a business that uses financial services for its own operations—not for third parties. These companies make or receive payments for their own goods and services and do not act as intermediaries.
Common Non-FI Activities:
- Paying vendors or suppliers directly
- Receiving payments for own products/services
- Managing internal treasury or payroll
Examples of Non-FIs:
- Retailers and manufacturers
- Logistics companies
- SaaS or software companies
- Exporters/importers sending cross-border payments for operations
FI vs. Non-FI: Why It Matters
The classification affects how Conduit handles your account during onboarding and ongoing compliance.
Misclassifying your business could result in delayed approvals or limited access to Conduit’s features.
Still Not Sure?
If you’re unsure whether your company should be treated as a Financial Institution or not, contact us at support@conduitpay.com. We’ll help you clarify your status and ensure your KYB process is smooth from the start.
