Understanding the End-to-End KYC Onboarding Process

Sure, the world has grown more complex. But when it comes to meaningful, lasting client and customer relationships, first impressions are a time-honored path to success.

KYC (know your customer) onboarding is a compliance term used to describe the process of legally verifying the legitimacy of a client or customer’s identity.

While the term KYC is often broadly used to describe onboarding for both individual customers and corporate clients, corporate onboarding requires broader and deeper ‘know your business checks’. We’ll discuss both in this article.

KYB and KYC onboarding is the first interaction clients and customers have with your brand, so making sure they’re fast, smooth and seamless is important to keep customers from losing interest in your application journey.

And as the regulatory consequences and fines of failing KYC and KYB onboarding checks are so large, it’s important to the smooth running of the rest of your business to get it right..

In this guide, we’ll explore the processes of both KYC and KYB onboarding, including their differences. We’ll explore their importance, the right kind of data you need to collect and how to improve your overall KYB and KYC process.

How does KYB onboarding differ from KYC onboarding?

If your customer is an individual, then you should perform KYC checks, but if they’re a business, then you should perform the onboarding KYB checks. However, it should not be assumed that these checks follow the same rules.

Fintechs and other growing financial companies may begin to switch from targeting individual customers to corporate clients as they expand. But the data you need to collect to stay compliant can be far more complicated when conducting KYB checks compared to KYC.

So, what are the differences between KYB and KYC onboarding processes?

What is the KYB onboarding process?

KYB onboarding refers to the safe and compliant onboarding of corporate clients.

By the end of the KYB onboarding process, you should know the legitimacy of a corporation’s financial activities, the source of their capital, AML risk and organizational structure.

Here’s the information and data you need to know when conducting an onboarding KYB check:

1.Basic information

Access things like company name, address, VAT/GST number and category. You should also obtain and verify the company’s legal identity and registration documents, including articles of incorporation, certificate of incorporation and business registration certificate.

2. Organizational structure

Gather the full names, contact details, addresses and date of birth of your potential client’s point of contact then gather the same information on the legal representative, the rest of the C suite and any other Ultimate Beneficiary Owners. You can conduct this through verifying government-issued identification documents like passports and driver’s licenses

3. Banking information

Collect information about the company’s source of funds, including financial statements, bank statements and tax returns. Then, monitor the client’s transactions for any suspicious activity including large transactions, unusual patterns or transactions with high-risk counterparties.

4. Risk

Conduct a risk assessment that focuses on the risk of business activities in the jurisdictions your potential client operates in. If it’s a high-risk jurisdiction or a potential high-risk client, conduct enhanced due diligence checks.

5. AML compliance

When onboarding, AML compliance policies must be adhered to. You can do this by conducting customer due diligence, ongoing monitoring, record-keeping and suspicious transactions reporting.

What is the client onboarding KYC process?

Customer or client onboarding KYC refers to the safe and compliant onboarding of individual customers.

The client onboarding process for KYC is far simpler compared to KYB, but that doesn’t make it any less important.

KYC is the mandatory process of identifying and verifying the client’s identity when, for example,  opening a bank account or subscribing to any kind of financial services.

Here’s the information and data you need to know when conducting an onboarding KYC check:

1.Identification documents

Collect and verify government-issued documents such as passports, ID cards or driver’s license to confirm the customer’s identity (depending on what is used most in the region.)

2. Address proof

Obtain proof of your customer’s residential or business address, such as a utility bill or bank statement to ensure their address is correct.

3. Contact information

Gather customers’ phone numbers and email addresses so you can be in direct contact with them if more information is needed.

Digital onboarding for KYC checks are much faster, easier to complete, and efficient, so setting up your process digitally is vital to ensuring a smooth experience.

Gathering the right KYC and KYB data can improve the onboarding process

The overall aim of a watertight KYB and KYC onboarding process (for clients and customers) is to mitigate risk on your side and make a great first impression on the client and customer side.

With the right client and customer data collected, you ensure:

Faster, efficient onboarding

By collecting the right kind of data upfront, you can supercharge the speed of your onboarding process. The time it takes to review and approve a client’s applications can be cut significantly compared to when you miss important information.

Red flags are caught sooner

You’ll be able to assess the risk associated with a corporate client’s business activities and identify any suspicious behavior much further up the line. So evidence of financial crimes, fraud, money laundering or terrorist financing are not missed.

You remain compliant

Failing regulatory requirements can lead to some pretty harmful business consequences. Collecting the right KYC data helps you avoid legal and financial penalties, as well as reputational damage and loss of customer trust.

Customer experience is smooth

Your clients will always appreciate a faster and more efficient onboarding process, so satisfaction will start on a high note and they are more likely to become loyal to your company.

You’re able to scale faster

Once you have established the right KYC data collecting best practices, you can onboard more clients quickly and efficiently, giving you more room to scale at a pace that suits you.

Why do you need KYC, KYB and AML processes?

The customer onboarding KYC, KYB and AML screening process is at the heart of reducing the risk of fraud at any company. You put a lot of effort into finding and establishing client and customer partnerships, and the consequences of a botched KYC or KYB check are greater than lost time.

If your company is suspected at any level to be remiss in your AML, KYB or KYC onboarding obligations, you could be subject to a long and disruptive investigation process. Resources will have to be taken away from business-critical functions to comply.

If found guilty, fines are usually in order, but you could also be restricted from local or global business activities, or (in extreme money laundering cases) imprisonment.

You can avoid all of this with a strong policy for your business.

Need help managing KYB and KYC onboarding? We know how to do this fast and efficiently across many countries and regions, and can scale up as you grow.

Contact Concentrix

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