As regulators crack down harder on AML obligations, all financial services firms need to ensure they have robust and cohesive client-onboarding processes. YouDo’s Tim Packer explains how digital beats paper every time…
The Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) Act 2009 (the Act) places regulatory obligations on New Zealand’s financial institutions to detect and deter money laundering and terrorism financing.
The Act was designed to facilitate cooperation among reporting entities, supervisors, and government agencies, in particular, law enforcement and regulatory agencies to combat money laundering and terrorism financing. The financial institutes that need to comply with this regulation include (but are not limited to):
- Issuers of securities
- Licensed supervisors
- Derivatives issuers and dealers
- DIMS providers
- Fund managers
- Brokers and custodians
- Financial advisers
- Equity crowdfunding platforms
- Peer-to-peer lenders
For any institute that needs to comply with the Act, there are numerous obligations that must be met, including written risk assessments, the need to put in place compliance programs as well as ongoing reporting and auditing requirements.
Whilst the Act is designed to combat money laundering and terrorism funding, it does add significant regulatory burden to new and existing players, causing many traditional institutes to develop long winded, manual processes to onboard/ sign up their new customers and manage existing ones.
With most traditional institutes facing the same manual processes and heavy regulatory burdens, there exists a great opportunity to smooth out the onboarding process to improve a customers experience and retention. Within this opportunity, also lies a risk that a poor implementation may have the opposite effect, alienating your potential customers.
As wealth migrates to younger generations, the expectation of customers is rapidly evolving to a digital first approach from traditional institutions.
Developing your Digital Strategy
To enable a digital first approach, there have been relatively significant changes in both the technology and regulation spaces, allowing for example digital signatures and online ID verification tools to be used to onboard a customer.
The challenge with many of these tools is that they generally only solve one piece of the digital puzzle, with a range of tools from different third parties being required to create a digital onboarding process.
The trick is how you combine these siloed solutions into a cohesive, responsive and engaging process for your prospective customers. If not implemented correctly this can create a disjointed process, involving manual workarounds, impeding the overall process and causing frustration on all sides.
YouDo solve this challenge by working alongside our clients, taking the time to understand their business operation, onboarding requirements and existing processes. Once we have a deep understanding of these aspects, YouDo engineers this process to take full advantage of the tools available, to create a seamless and automated digital onboarding experience.
As developers who specialise in the finance sector we have a good deal of experience working with many of the third party application components, and as such understand the subtle details and behaviours these components and their application programming interfaces (API) expose for integration.
With that knowledge applied and newly enhanced digital processes the end result is a highly integrated solution which fits our clients business like a glove. Furthermore, as a white label supplier, any solution we develop belongs entirely to our clients, much like any other valuable company asset.
New Data Driven Opportunities
In changing from a paper based system to a digital solution, a further opportunity exists to capitalise on the data, now stored in secure structured databases, to lower overall company overheads and gain useful insights on which to better understand customer needs and improve their business opportunity.
For example, the data collected during the onboarding process can be automatically pushed to existing internal systems, significantly increasing back office efficiency and reducing manual entry errors. The same data can be used to generate reports, and trigger alerts based on predefined business rules – automating much of the compliance reporting and reducing regulatory overheads on a financial institute, saving time and freeing up resources to work on generating more business.
By creating a digital onboarding process, our clients give their customers an opportunity to remotely onboard themselves via a company website or by sharing specific links to, say Trustees, giving them the ability to complete the onboarding process from anywhere in the world.
By reducing these barriers and creating a succinct process through a combination of off the shelf tools and a bespoke onboarding process, the friction of onboarding is reduced, whilst the financial institute significantly improves their back office efficiency with a solution that fits 100% of their needs.
Are you ready to make the change? Contact Tim Packer to find out how we can help on +64 21 383215 or email: firstname.lastname@example.org