A Practical B2B Guide: Locating the Best KYC Solution

Financial institutes have to abide by different filtering and regulatory requirements since there are AML (anti-money laundering) rules in various countries and international organizations. Among all AML duties, KYC (know-your-customer) makes up a crucial link with which an institute verifies the customer's identity and identifies his or her financial activities.

What are the differences?

In fact, the term AML has many meanings, including a number of measures, controls, and procedures that businesses take to maintain anti-money laundering compliance.

KYC, on the other hand, is a part of AML, which specifically refers to a set of means used by companies to identify their customers and monitor their financial behavior. Typically, KYC requires the collection and identification of numerous pieces of information used to verify the identity of a customer. Additionally, KYC may also monitor ongoing transactions.

How to rate a KYC solution?

In the finance industry, many who work in the compliance department often need to answer this question, "how to find the best KYC solution"? To answer that, Fazzaco recommends scoring it from the following dimensions (out of 10 points), hoping to help those who are in charge of compliance and client onboarding.

Dimension 1: Can it free you from a lot of paperwork? (5 points)

We have a saying about compliance, and that is "compliance is essentially logistics". It is true, because many compliance workers are typically spending most of their working hours on collecting data, combing through them again and again before categorizing and filing them, making sure no key files are missed out. Therefore, a good KYC solution must be a great time and energy saver for people to seek order in chaos.

To do that, we have multiple options. The easiest and most straightforward way will be adopting a distinctive point for information collection and storage. So, a good KYC solution is like a CRM system, or at least a good CRM built-in.

As a result, we have to give half of the scores to this dimension because we have to save a lot of time for users first, so that they can be freed from heavy desk job, and being able to do that qualifies a KYC solution to demonstrate its other advantages.

Dimension 2: How automated is customer onboarding? (2 points)

It would be nice to automate everything from suitability and appropriateness, client categorization, to politically-exposed-persons (PEPs) etc. But since people's opinion on the term automation vary, so the best definition of the term, for KYC in AML, should be able to act like an auto-pilot that conducts client onboarding easily. But at the same time, it allows the users to set up parameters on their own, and have full control over all - similar to a planes auto-pilot mode.

Dimension 3: What is the coverage of the software? (3 points)

Today, for most financial institutions, their customers may come from any country in the world, so if you want to successfully onboard clients from any country, the KYC coverage must be wide enough. If it doesn't cover enough areas, and client onboarding may fail, which will then lead to financial loss to the business.

However, financial laws and regulations vary from country to country around the world. Fazzaco is now working on the crypto regulation world map project since the regulatory attitudes of various countries towards cryptocurrencies cannot be unified. (Crypto Regulation articles: South Korea, United States) Therefore, many companies use multiple KYC/AML software in order to cover as many countries as possible.

In many cases, having both is something too good to be true. Using more than one KYC solutions might get you covered wide enough, but it makes it challenge to operate: in order to onboard clients from Country A, you have to use KYC A; and then to onboard someone from Country B, you have to switch to KYC B. Besides, you will be billed and invoiced multiple times, and that could be troublesome.

So, say if you could find a KYC solution that offers the widest coverage, allowing the business to onboard clients from as many countries as possible, it will undoubtedly be a huge plus, won't it?

How to locate the best KYC solution?

A satisfactory KYC solution allows businesses to smoothly manage the customer identity verification, automatically rank high-risk customers, and reduce the chance of human error. So, how to locate the best solution? Stay tubed to Fazzaco, where more in-depth analysis articles on B2B solutions are to come.