Onboarding is often the first impression customers get about a company. Therefore, it’s critical to build this process properly, as it sets the tone for the customer experience.
Today, we’ll delve into how onboarding can be simultaneously smooth, quick, and in line with Anti-Money Laundering (AML) compliance requirements.
AML-compliant customer onboarding (sometimes referred to as the “Know Your Customer (KYC) onboarding process”) is a set of legal procedures businesses must conduct before working with a new customer.
These procedures include collecting and verifying certain data about customers.
The minimum data businesses need in order to identify their customers includes:
This process is required for compliance with Anti-Money Laundering (AML) regulations. The personal data required for collection may vary by country, so always check the AML regulations and guidelines of your jurisdiction.
To verify customer data, businesses need to obtain authentic and valid documentary evidence from the customer. This can be an ID card (or any other valid identity document) and a utility bill (or some other proof of address document like a tax bill, voter roll, or bank statement).
Any AML-obligated industry has to apply KYC procedures during customer onboarding, though non-obliged businesses can also benefit from it.
Regulated businesses include financial institutions and designated non-financial businesses and professions such as:
Non-regulated businesses, such as carsharing services and marketplaces, are also encouraged to apply KYC procedures to prevent fraud and avoid financial and reputational losses.
Customer onboarding requirements usually depend on the regulations of a given jurisdiction. In many countries, it’s enough to remotely verify documents and perform a liveness check. But in Germany, for instance, businesses have to onboard customers through a video identification process, which includes a range of mandatory steps such as an interview.
However, there are some ubiquitous customer due diligence procedures, including:
Regulators determine the required information, documents, and verification methods for passing KYC. But companies can have their own specific requirements for the customer onboarding process.
Companies need to adjust their KYC workflows to specific customer groups. This means building processes that:
To make the onboarding process easier, companies can delegate their KYC duties to a verification provider.
Automating the verification process can make a big difference. In Sumsub’s experience, automation reduces costs by 40%, speeds up verification to one minute, and frees up company resources, with employees spending 70% less time on compliance tasks.
With right KYC provider, businesses can also benefit from:
Assisted image capture—reduces drop-offs during the ID scanning process by automatically capturing required document fields.
Fast fail—users get hints and real-time feedback if they make a mistake and can retry every step of the verification process.
Opportunity to continue verification on mobile—users can proceed or complete verification on other devices.
Reusable KYC—business partners can exchange KYC data to eliminate repeat verification for mutual users.
Not all customers can be onboarded the same way. That’s why it’s essential for companies to customize their onboarding process. Doing this manually is cumbersome, which is why digital solutions are a great help.
Sumsub’s digital solution enables the following:
Verification levels—the number of steps users take to pass verification. Dividing verification into levels is meant to reduce drop-offs during onboarding. For instance, when a user signs up for the first time, they can pass a limited level that quickly identifies them without a complex verification procedure. This makes onboarding easier, and users are more motivated to go through the full verification process once they’ve been acquainted with the service.
Verification flows—the interface the user sees during verification. It can be localized into foreign languages, keeping conversion high for users around the world. Also, it can be adjusted to the brand of the company (colors, style, etc.) and can contain instructions for passing verification.
A standard verification level consists of the following steps:
In addition, businesses can use settings to specify supported countries and documents. For example, a company may choose not to accept a certain document (e.g., a Residence Permit) in one country, while accepting it elsewhere.