Complete Toolkit for Customer Onboarding & KYC/AML Compliance

In today's business environment, businesses tend to pay particular attention to customer onboarding and the observance of all Know Your Customer (KYC) and Anti-Money Laundering (AML) processes. The introduction and execution of these KYC/ AML compliance processes reduce the risk of fraud; however, these are not the only benefits. They promote compliance with the law, and regulatory requirements, and assist in instilling confidence in customers. For appropriate supervision of these processes, appropriate solutions are a must. 
 

Let's discuss the systems and methods that help make the onboarding as well as the compliance processes easier.
 

You can also read Best Tool for Customer Onboarding, KYC and AML Compliance 

What is The Customer Onboarding Process?

Customer onboarding is the starting point of every relationship, in this case with clients. If it is done effectively, it lays down the foundation of trust and commitment and ensures the clients onboarding software gives best features and aligns with regulatory expectations. .

Steps in the Customer Onboarding Process

1. Initial Contact:

The first contact is often very important and memorable. Be it an email in the first contact, a phone call, or a meeting, this stage mainly involves ensuring that the person has some rapport and has been able to get some introductory details.

2. Information Collection:

This is the stage in which customers should have an acceptable level of tolerance towards requests for identity documents and financial information, for example, passport details and other documents. 

It is reported by ABBYY that 90% of customers who are willing to try the service drop out during onboarding due to too much paperwork, which suggests the need to avoid complexity. This means that during the process of data collection, only the needed information should be requested. This rule is also in accordance with the data protection best practices.

3. Verification:

This is the stage in which accuracy counts. Customer verification is necessary to avoid scams and other illegal practices. In fact, for financial institutions, the annual expense of Reputational Risks Expenses and KYC Compliance may equal an astounding $60 million, which indicates the importance of verification. 

4. Account Setup:

Now that the verification is done, the next step in this process is the customer account creation and granting access to the services. 

5. Orientation:

Helping customers to use your platform with either lessons or support assures them encouragingly and prepares them to use the platform effectively.
 

Watch a 24-minute video on How to Set up a Full Customer Onboarding Process.

Also, catch up by reading our resource on the Customer Onboarding Process.

What is KYC Compliance

KYC compliance exists to protect businesses from abuse by ensuring the customers’ true identity is established. This is not just a bureaucratic box to tick, but rather a means to prevent fraud, identity theft, and money laundering, which instils some level of confidence in the customer, which may ultimately lead to the conversion of customers into a paying client.

What are the Key Components of KYC Compliance

KYC (Know Your Customer) compliance involves three components, which are the major tools important for verifying the identity and risk profile of a customer to prevent financial crimes like money laundering, fraud, and terrorism financing:

Let's discuss each of the components of KYC compliance:

1. Customer Identification Program (CIP)

The first component of KYC compliance is the Customer identification program. The primary purpose of a customer identification program (CIP) is to verify a customer's identity using reliable documentation and information.

The process involved in CIP typically includes:

• Collection of basic identification information such as name, date of birth, address, and identification number such as NIN (as found in Nigeria).
• This is usually followed by the validation of the provided information through government-issued IDs (e.g., passport, driver's license) and other documents.
• Use third-party data or digital verification services for cross-checking.

In the end, the customer is proven to be who they claim to be

2. Customer Due Diligence (CDD)

The second component of KYC compliance is customer due diligence. The main purpose of the customer due diligence process is to assess the risk associated with a customer based on their profile and activities.

The process takes this form:

Step 1: Evaluation of the customer's nature of business, source of funds, and expected transactions.

Step 2: Classify customers based on their risk level: Low, Medium, or High.

Step 3: Enhanced Due Diligence (EDD), is performed on high-risk customers which includes deeper investigations into their background and ongoing activities, especially finance.

Step 4: Outcome: Determine the customer's legitimacy and assess potential risks.

3. Ongoing Monitoring and Reporting

The third component of KYC Compliance is ongoing monitoring and reporting. The main aim of ongoing monitoring and suspicious transaction reporting is to continuously track customer transactions and identify suspicious activity.

This process typically includes the following steps:

1. Monitoring transaction patterns to detect inconsistencies or unusual activities.
2. The use of automated transaction monitoring systems for real-time alerts on high-risk behaviour or threshold breaches.
3. Filing Suspicious Activity Reports (SARs) with regulatory authorities if necessary.

All these are done to ensure compliance with regulatory requirements and maintain updated customer profiles 

Interesting read on User Onboarding Compliance: KYC, AML Compliance for User Onboarding 

AML Compliance Solutions

The claim of Anti-Money Laundering (AML) compliance organizations is based on transaction monitoring and risk detection strategies. That goes a little bit further and covers ‘keeping an eye’ on customers’ activities.

Key Components of AML Compliance

1. Transaction Supervision:

Timing every transaction in real-time for alerts on any odd behavior helps fight fraud.

 2. Risk Management:

Understanding clients according to their behaviors helps to decide if they need extra care or not. Clients categorized in high-risk profiles usually require enhanced due diligence (EDD).

3. Filing:

Filing of Suspicious Activity Reports (SARs) and other documents that are required to be submitted to the authorities prepares them for any problems.

You might want to read Best AML Compliance Tools 

Tools for Customer Onboarding and KYC/AML Compliance

To onboard individuals and ensure compliance in an organization, one needs a unique toolkit for customer onboarding and KYC/AML compliance tailored to a business need for efficiency. Below are some of the exceptional tools for client onboarding software: 
 

1. Youverify:

A one-stop solution that incorporates AI-based identity verification and background checks, real-time monitoring as well as automated reporting. As Banks deploy Youverify, once it is needed to confirm the identity of a customer, this ability can be taken to another level where verification occurs instantly, thus adhering to compliance without compromising the speed of operations.
 

2. Onfido:

In terms of biometric and document verification, this platform is at the forefront. Its extensive geographical reach enables Onfido’s partners to carry out identity verification of customers in a matter of seconds. Take fintech startups, for example; to confirm an individual, a mere selfie is submitted.
 

3. Trulioo:

Empowers businesses with electronic identity verification services from more than 400 countries around the world. This makes it ideal for firms that need cross-border regulatory compliance.
 

4. Refinitiv:

This solution provides financial institutions with the ability to evaluate transactional data.  And ascertain any potential exposure to risks with AML compliance using advanced analytics and risk intelligence.
 

5. KYC-Chain:

Employs its patented services for verification processes using blockchain. It is useful for multinationals since they have compliance issues working across different jurisdictions.
 

6. Actimize:

Actimize is widely adopted by premier institutions. Actimize shines in on-the-fly transaction analysis courtesy of its ability to learn through machine algorithms to flag suspicious activities.

7. ComplyAdvantage:

Acts as a helpful tool in due diligence processes that involve providing various types of risks, including screening a firm against sanctions and checking adverse media about it for background information.

8. SEON:

Helps avoid losses due to fraud by augmenting the more traditional transaction monitoring approach with an analysis of individual customers’ digital footprints. This has advanced capabilities which are useful to fintech companies.

9. Ondato:

Ondato focuses on biometric solutions for Know Your Customer (KYC) processes. It provides identity checks that are mostly used by neobanks.
 

10. Token of Trust:

Provides a way to verify customer identities electronically without leaving out any international operations.

How to Choose the Best Customer Onboarding and KYC/AML Compliance Tools.

Tips to help you pick the best client onboarding software:

1. Aim and Functionality

Analyze the goal for which the given tool is designed. Assess the degree of elasticity of the tool and the limits within which it can be bent.

2. Ease of Use and Complexity

Evaluate its use by the organization and customers along with the level of simplicity. The system's effectiveness and usage are also usually dependent on its design.

3. Integration

Confirm that the system in use is compatible with other systems.

4. Security Protocols

Consider looking for equipment that has the ability, for instance, to protect information through access restriction or encryption.

5. Configuration and Alignment

Do not forget to check whether the said tools will be configured to the processes of the user.

Conclusion 

It is not only these activities that are a must due to legislation. Customer onboarding allows for improving the client experience and building trust. Choosing suitable software to facilitate this approach and reduce risks is beneficial to provide adequate service to your clients.

Begin compliance with solutions such as Youverify. Schedule a demonstration today to safeguard your business and ensure safe interaction with your clients.