A Quick Guide on KYC and AML Compliance

As technology has grown by leaps and bounds, connecting businesses and consumers from two different points has never been easier. It has opened a wave of new opportunities and avenues for businesses to pursue and possibly consider into their business strategies. However doing so, has also increased the complexity of doing cross border transactions and business.

Companies are increasingly pressured to adhere to regulations that place importance on identifying and verifying their customers. These regulations are globally known as KYC – Know Your Customer and AML – Anti Money laundering directives. Specific AML and KYC requirements vary from region to region, however the core compliance requirements originate from the FATF recommendations. To which each region considers as their baseline on KYC and AML directives.


Understanding Your Compliance – AML & KYC

KYC is the process of identifying the suitability of customers and also verifying the information they provide by authenticating who they say they are. KYC by itself involves three other key containing elements that signify further measures under the greater KYC umbrella term.

Customer Identification or KYC – As the first part of the process which involves as stated earlier the authentication of the user. Where customer details are verified with external sources to confirm the particulars actually belonging to the person.

Customer Due Diligence – This part involves the collection of all available data in respect to the compliance requirements and assessing the suitability of the customer for the services they intend on acquiring. This includes, nature of business relationship, continuous monitoring, point of origination of funds, and purpose.

Enhanced Due Diligence – a customer can be deemed as higher risk on factors that contradict the greater compliance requirements of the FATF recommendations and hence EDD measures are applied. These include if a person is from regions with minimal or unsatisfactory AML implementation or deemed as ‘High Risk Third Countries’. Whether a person is currently a PEP or held a status as such previously.

AML is the greater term that includes KYC within, as one of it’s core requirements. AML constantly evolves with laws and regulations to prevent money laundering and terrorist financing. Being more comprehensive, it’s wise to tackle AML by being informed, with changings laws to stay ahead in the foresight game. Secondly, a definite KYC framework should be in place for mandatory client assessment. Thirdly, create an organizational environment that facilitates AML through responsibility that cross in business processes and ethical practices. Lastly, apply risk-based measures in business processes and associated customers and also ensure risk is considered broadly across the whole organisation.

The best way to become KYC compliant is to first establish understanding of what needs to be done, in respect to an organization’s specific requirements and the jurisdiction they operate in and accordingly apply them through above mentioned practices. It can be difficult and time-consuming to start your KYC journey from scratch. In process, enlist the help of dedicated KYC services that specialise in global onboardings, with multi-document coverage and language support for global business and you’ll have a good baseline to start off from!

What You Need To Know About Your Customer

Customers, clients, potential leads, these are all lifeline to the successful functioning of a business. The continuous influx of customers not only provides a continuous stream of revenue to a business but also signifies growth and strength of a business. In highly competitive markets, businesses are fighting on minimal statistics that make the most difference. Consisting customer retention, churn, drop-off and conversions. However, all these converge on post client statistics, where businesses are not focusing on the suitability of potential leads before the business relationship is established.

In the highly competitive market environment across any business industry, businesses are oblivious of the potential gold mine in pre-client state processes for onboardings through KYC. How customer suitability and assessment earlier on can make a difference to post client drop-out rates and churns. It’s vital for businesses to know their customers.

Utilize KYC to Boost Customer Statistics and Stability

Who are You Targeting – as a business your first aim should be to assess who your primary target market is that you wish to do business with? Identify the relevant age and gender groups that you wish to onboard on your platform. If you are aiming for a specific business type, look into if it’s a domestic businesses or multinationals. Having this information will potentially allow you to look for similar businesses.

What does your customer do – understanding the nature of your business is important in KYC. it will help you identify the appropriate measure to be applied in respect to what they do, if they are individuals or companies. Knowing what their motives will eventually help companies lessen on their search from scratch. Eventually securing you in the process through efficient business-relationship monitoring.

Understand there need – Knowing why the customer reached out to you is important. It will ensure you remain focused on solving the key concern addressed by the prospect. This will let companies identify more potential companies in similar requirements and address their matters in a similar and efficient fashion. As long as you remain the key issue solver, business and customers will keep flowing. It’s all about tapping into what they are falling short in.

Competitor Knowledge – Lost customers by competitors could become your customers. In order to stay on top, it’s good to know what your current customers or in the process of onboarding say about your competitors. This will ensure, you don’t lose them to somebody else in the future and keep your customers rightfully engaged. This point overall refers to client interaction and using existing KYC information to best use against potential prospects or recently inducted customers.

KYC should not be considered as a straightforward process to implement, mandated by regulations and directives. If considered holistically, the information acquired through KYC measures can prove beneficial in understanding how to deal with present customers and potentially deal with future customers of similar profiles and nature. This establishes a company mindset, that is optimized to utilize all available information and better prepared in the process. Companies should look into incorporating KYC if not previously employed, to reap the potential benefits that surround Know Your Customer – KYC knowledge

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