Level Up Your Customer Onboarding Game in just 5 steps!
The compliance burden for financial institutions is increasing as they are held accountable for KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance.
Meeting these regulations can be costly and time-consuming for financial institutions.
However, technology can help make KYC and AML compliance more straightforward and efficient.
By automating the compliance process, financial institutions can reduce the risk of non-compliance and save time and money.
Below are 5 simple steps to streamline your customer onboarding process.
Step 1: Collect Customer information
- The first step in the KYC process is to collect customer information.
- This can be done through various means, such as online forms, in-person interviews or document submissions.
- The collected data should include the customer’s name, address, date of birth, phone number and email address.
Step 2: Verify Customer Identity
- The second step in the KYC process is to verify the customer’s identity.
- This can be done through various means, such as online searches, social media checks, or document verification.
- This step aims to ensure that customers are who they claim to be.
Step 3: Conduct Customer Due Diligence
- The third step in the KYC process is to conduct Customer Due Diligence (CDD).
- This involves verifying the customer’s identity and ensuring that they are not on any lists of known or suspected criminals or terrorists.
- This step is essential to protect your business from being used for illegal activities.
Step 4: Ongoing Monitoring
- The fourth and final step of the KYC process is ongoing monitoring.
- This step is crucial because it ensures that the customer’s information is up-to-date and accurate and helps identify any changes in the customer’s risk profile.
- Ongoing monitoring can be done in several ways, such as periodic reviews of customer information, transaction monitoring, and communication with the customer.
- Periodic customer information reviews help ensure that the customer’s information is accurate and up-to-date.
- This can be done by comparing the information on file with the information provided by the customer during account opening and periodically after that.
- If there are any discrepancies, further investigation will be needed.
Step 5: Risk Management
- After completing the KYC process, you will understand your customer’s risk profile well.
- Depending on the results of the KYC process, you may need to take additional measures to mitigate risk.
- For example, if a customer is classified as a high risk, you may need to place limits on their account or require them to complete additional documentation.
- Risk management is integral to the KYC process and should not be overlooked.
Risk Management
- Many banks and financial institutions have developed risk ratings for customers.
- This rating helps the company identify customers needing extra attention and determine the level of expertise that should be used to manage their accounts.
- 6% of small businesses don’t do any risk analysis when dealing with customers.
- They feel they have done enough to reduce the need for additional security measures.
- These attitudes are dangerous, as risk can change over time.
- It’s a good practice to evaluate the level of risk your customers pose regularly.
Overall, the 5-step KYC process is not complicated, but it is vital to get it right.
- By taking the time to verify your customer’s identities, you can help protect your business from fraud and financial crime.
- At the same time, you can also build a better relationship with your customers by showing that you value their privacy and security.
