Verification knowledge hub
Clients fleeing the company might be the sign of missing something important along the customer acquisition journey, or maybe the way itself was wrong to begin with.
The process of verifying users brings the most to businesses—it directly affects the revenue and the attitude regulators adopt towards the company. As a mandatory measure Know Your Customer (KYC) sometimes negatively affects conversion, but not always. With the right approach it stimulates onboarding and substantially increases company’s revenue.
Here, we are going to share our experience and tips on how to improve on both — drive the conversion up and reach a more accurate KYC compliance policy to fulfill company’s regulatory demands and even take a look at some other reputable jurisdictions.
From our experience of working with binary options, they often face difficulties with the further mentioned client acquisition methods.
Some platforms try to attract every lead that they can possibly generate from the general traffic flow. That is why they don’t apply any filters or reduce them to minimum. In reality, there is never enough time for account managers, sales and partners to single out and only process prospects, so they end up processing everybody from the whole of the traffic flow.
Spending too much time on unmotivated clients they do not manage to contribute more time on motivated, which results in inefficiency of the approach and average results.
Binary options can also be very hard on users and put many requirements forward, expecting only the motivated ones to complete verification. By doing that they completely shut down the possibility of unmotivated users ( the majority of the traffic) becoming their clients. The result: low customer ratio.
Despite the growing use of automated systems in client onboarding there are still many companies that make users fill in multiple fields manually. The verification gets slower and proves to negatively affect user-experience. There are many more effective solutions where a user submits a couple of photos and information gets auto filled from them.
As an example, there are many cases in which clients are blocked because of being mistaken for an individual with the same name. By not using a setting that helps reduce or minimize false positives, businesses lose potential customers.
Inability to process PEPs, watchlists and adverse media prevents companies from driving up the hit rates and reducing false positives. For example, compliance specialists and KYC providers are not often aware of how to work with PEPs, blocking them straight away. Although, businesses can and should work with PEPs, they just need to understand how to do it correctly to improve on conversion.
Apart from good client conversion, it is nonetheless important to for onboarding to be compliant with KYC/AML regulations.There are many intricate laws that have to be followed, there are also many changes and upgrades, and, finally, there are reputation damaging fines and punishments for businesses that do not comply — the mistake made by many at a cost of their businesses or imprisonment.
Binary options are subjects to Anti-Money Laundering regulatory compliance depending on the jurisdiction the business was founded under. The jurisdictions vary by the amount of regulations, the level of requirements (from low to high), by prestige, and more distinctly, by country.
To have a rough idea of what AML laws you might have to follow, let’s look at jurisdictions, from high to low requirement:
Bank Secrecy Act and Regulations; USA PATRIOT Act.
Federal Act on Combating Money Laundering and Terrorist Financing; Customer Due Diligence for Banks.
Proceeds of Crime (Money Laundering) and Terrorist Financing Act; FINTRAC guidelines.
Financial Transaction Reports Act and Regulations.
Act on Prevention of Transfer of Criminal Proceeds; Guidelines.
Notices and Guidelines; Guidance for Effective AML CFT Transaction Monitoring Controls; Guidance on Private Banking Controls; Use of MyInfo And CDD Measures for Non Face-to-Face Business Relations.
The Financial Market Money Laundering Act (2017).
Law on the Prevention of Laundering the Proceeds from Criminal Activity (Money Laundering) and of Terrorist Financing; Guidelines on non-face-to-face identification; Regulations on enhanced due diligence (1, 2).
Law and Ordinance on Professional Due Diligence for the Prevention of Money Laundering, Organised Crime and Financing of Terrorism.
Standard on due diligence; Act on Detecting and Preventing Money Laundering and Terrorist Financing.
Act on Measures to Prevent Money Laundering and Financing of Terrorism.
Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1).
Prevention of Money Laundering Act; Circulars by the Reserve Bank of India.
Money Laundering and Financing of Terrorism (Prevention and Control) Act 2011-23 and its amendments.
Anti-Money Laundering and Terrorist Financing Code, 2017, National Anti-Money Laundering Committee.
Anti-Money Laundering Regulations, Anti-money Laundering and Terrorist Financing Code of Practice, Financial Services Commission.
Belize Money Laundering (Prevention) Act 1996, Guidelines for FI by Central Bank of Belize, some financial institutions establish KYC/AML standards that exceed the legal requirements.