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.
Do you need help with compliance issues? We offer video consultation via Lawyer Anywhere so that you can get the help you need. We can walk you through the process and answer any questions. Contact us today to get started!
Important Disclaimer
The information contained here only provides general information on the covered subject. Nothing in this publication should be regarded as constituting legal advice concerning any particular business, operational or other situations you might face. Further, the law may have changed since the first publication, and the reader is cautioned accordingly. Please seek professional advice before taking any action.