The financial services industry has a reputation for opacity. Decisions that affect thousands of businesses and millions of consumers are made in regulatory offices, compliance departments, and consultancy boardrooms that most people never see inside.
Aleksandr Kazak has spent the better part of a decade inside all three. A former professional at MIG Bank and SwissQuote – two of Switzerland’s better-known financial institutions – Kazak co-founded Zitadelle AG in 2017, an international regulatory consultancy firm that has since helped companies including ICM Capital, Amana Capital, FxPro, ActiveTrades, and SticPay establish compliant operations across Europe, Mauritius, Malaysia, and Africa.
What he’s observed over those nine years is, in his own words, “unimaginable.” And it’s worth paying attention to – because the forces reshaping financial regulation aren’t just industry insider concerns. They determine who gets to participate in financial markets, who gets protected, and who gets left holding a worthless piece of paper they were told was a license.
The Cost of Entry Has Become Structurally Prohibitive
Start with the numbers, because they tell the story more clearly than any regulatory consultation document.
A decade ago, launching a regulated financial business in Europe was demanding. Capital requirements were real. Compliance costs were real. But for a well-organised team with a credible business model and sufficient backing, the door was genuinely open. A regulated Lithuanian EMI – the kind of entity that allows legitimate cross-border money movement – could be acquired for under €350,000. A securities brokerage could be launched for under a million euros.
Today those figures have multiplied several times over. The effective cost of a new licensing application, combined with staff, compliance infrastructure, and capital requirements, now sits above €2-3 million as a realistic minimum – with €5 million representing a more comfortable working figure for a business with genuine growth ambitions.
This isn’t ordinary inflation. While general price levels in most developed economies have been rising at 3-7% annually, the effective cost of regulated financial market entry has been inflating at 20-25% per year – compounding, year on year, in a way that has progressively closed the door on smaller operators.
The scale players have accelerated this dynamic. Revolut, Robinhood, and Adyen – operating at a scale that allows them to absorb compliance costs as a rounding error – have fundamentally altered competitive conditions for every smaller participant in the markets they’ve entered. When a platform with tens of millions of users competes on price, the structural disadvantage for an SME operator isn’t a gap to be closed with better marketing. It’s a mathematical reality.
Three Events That Permanently Altered the Landscape
From Zitadelle AG’s vantage point – advising clients through nearly a decade of market shifts – three specific events stand out as having changed financial regulation in ways that are still being felt today.
The Wirecard collapse was the first. When the fraud unravelled, it triggered one of the most significant regulatory responses in European financial services in a generation. Authorities across the continent, understandably determined to prevent a repeat, tightened licensing requirements, expanded oversight, and raised the bar for what it means to operate as a regulated entity in Europe. The intent was sound. The execution, in some cases, went further than the problem required – and the result was that legitimate smaller operators, unable to meet the new requirements, were effectively pushed offshore. The consumer protection that regulators were trying to enhance was, in certain respects, reduced.
The rise and fall of crypto as a regulatory category represents the second major disruption. Five to seven years ago, crypto was to financial services what AI is today – a technology that seemed to promise a fundamental reshaping of how money works, and that attracted enormous investment and regulatory attention on those terms. What followed was a wave of fraud, cybertheft, and mis-selling that left regulators with no real choice but to respond aggressively. Starting a compliant crypto business today is, in many jurisdictions, harder than starting a traditional financial services business – a reversal that few predicted and that has left a long tail of businesses operating in grey areas they did not anticipate.
The proliferation of fraudulent licensing jurisdictions is the third – and perhaps the most damaging for the businesses and consumers caught in it. “The fad started with Comoros and Anjouan,” Kazak explains, “promising easy entry requirements – turned out to be fake licenses printed for easy money.” What followed was a wave of imitation across multiple exotic jurisdictions: newly registered websites presenting themselves as official regulatory authorities, paper licenses sold for $40,000 to companies that genuinely believed they were obtaining legitimate authorisation, and consultancies willing to facilitate the transaction for significant fees.
“It’s insane how companies and consumers fall for this obvious fraud,” Kazak says. “At Zitadelle AG we caution everyone from engaging such practices – even if it means other consultancies cash in hundreds of thousands printing these licenses to gullible companies and business start-ups.”
The damage from this wave of fake licensing is real and ongoing. Companies operating on fraudulent licenses have no meaningful consumer protection obligations, no regulatory oversight, and no recourse when things go wrong. The businesses themselves face potential criminal exposure in the jurisdictions they’re actually operating in – regardless of what the paper says.
What Nine Years of Honest Advisory Work Looks Like
Against this backdrop, Zitadelle AG’s approach has been deliberately, sometimes commercially inconveniently, conservative.
Proper jurisdictions. Real regulators. Transparent advice even when turning away business that other consultancies will happily take. The firm has expanded its jurisdiction coverage – from early work in Labuan, Malaysia, Mauritius, and Cyprus to a current roster that includes Curaçao, Estonia, the UK, and the Netherlands – in direct response to where legitimate client demand has actually moved.
The client list that has accumulated over nine years – ICM Capital, Amana Capital, FxPro, ActiveTrades, SticPay, and many others – reflects what that approach produces over time. In a market full of shortcuts, the longer path has proven the more durable one.
“We cherish our reputation as a transparent, caring consultant,” Kazak says. In an industry where reputation is easy to claim and hard to build, nine years of evidence is worth more than the claim.
