I’ve written a bit recently about KYC, Beneficial Ownership, and customer due diligence. With technology touching everything we do, especially in financial services, maybe we should take a moment and look at these regulations a bit differently.
First, while we understand that these regulations were borne out of the Patriot Act of 2001, and further clarified by a series of updates from FinCEN, many of which can be found here, we also know that these requirements are also good for banks to have and act upon.
In our digital world, customers are now interacting with us across multiple locations and transaction types. Customers used to go into a branch, fill out paperwork, provide necessary documentation, and then wait while a customer service representative entered information into banking systems, verified documentation and completed in transaction. Now, much of this can be automated – not only improving efficiency and accuracy, but also improving the customer experience, while complying with regulations. I’ll come back to this later in this post, but let’s get to focusing on being compliant.
Compliance rests on collection of Personal Identifying Information, screening of PII against watchlists and politically exposed persons, risk assessments based on money use and profile information, and a monitoring program. While enforcing these requirements initially can be cumbersome, in the long term, they can provide substantial insight into all your customers as time progresses.
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Remember, identifying your customers (or owners/administrators for business accounts) can be streamlined in a digital environment. Customers can verify their identity by capturing a live photo of a driver’s license or passport (you probably don’t want them to be able to upload a saved picture, this could call into question the authenticity of the document). By leveraging technology, these documents can be parsed and automatically fill in forms. Now, customers only need to proofread or validate information instead of re-entering repetitive data. Not only are you getting closer to compliance, but you are also improving your workflow and efficiency.
As you collect additional information and monitor the customer’s account to maintain your compliance, you also gain a better picture of your customer and their interactions with their money and your products. This information is beneficial to FinCEN and to your marketing and sales departments.
We all know that we must remain compliant with regulations to avoid regulatory, reputational and various other risks, and the best approach is to integrate these regulations into how your daily business is transacted. Instead of looking at this documentation as a stumbling block, create a plan to make use of this information to improve the overall customer experience in addition to compliance. Not only will this approach make compliance second nature, it can improve the overall effectiveness of marketing and sales by acting on additional insights to your customer’s use patterns. Vetter can help! Contact us today to learn more.