Financial Institutions vs. Non-Financial Entities | Conduit Guides
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.
Requirements by Entity Type
| Requirement | Non-Financial Entity | Financial Institution |
|---|---|---|
| KYB Documents | Standard documents | Additional documentation required |
| AML Obligations | Not applicable | AML policy, governance, and risk controls required |
| Named Accounts | Available | Available with full KYB and attestation |
| Treasury Management | Available | Available with attestation |
| EDD Review | Not applicable | Required for certain customers transacting in USD |
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.
Frequently asked questions
My beneficiary is in pending status, how long does it take to get approved?
If the beneficiary is created within Conduit's operational hours, the review should take no more than 10 minutes.
Why doesn’t the USDT amount match the amount I sent or expected to receive?
When converting between USD and USDT - whether sending or receiving - clients sometimes expect the amount to reflect only the agreed fee (e.g., 10 bps). For example, sending $10,000 USD with a 10 bps fee might suggest you’ll receive exactly 9,990 USDT.
However, USDT is not always worth exactly 1.00 USD. Like any asset, it has a market price that can fluctuate slightly depending on liquidity and trading conditions.
This means that the final amount of USDT delivered or received reflects both:
- The agreed fee
- And the current market price of USDT at the time of the transaction
What this means for you:
Even if your fee is fixed, the market price of USDT can lead to an amount that is slightly above or below your expectations.
To avoid surprises, we recommend checking the live market rate of USDT before confirming an on/off ramp transaction.
Can I send or receive funds from an individual?
Incoming payments: Personal accounts cannot send funds to Conduit (blocked/rejected).
- Exception: Transfers over $100K USD may be allowed with prior compliance approval.
Outgoing payments: Funds cannot be sent to personal accounts.
- Exceptions: Payroll providers and approved payroll transactions for staff/contractors (subject to due diligence).
For more details, check out our blog on Payments to and from Individuals.
Do you support payments to high-risk or sanctioned countries?
Please refer to our prohibited countries list for details on restricted jurisdictions.
A list of restricted countries can be found here.