Opening new client accounts is an exciting step for your firm. But too often, the process gets muddied by compliance efforts. What should be an excellent time to establish solid relationships with new clients is disrupted by overly complicated compliance processes. But by streamlining new client compliance, the entire process can move more smoothly and allow advisors more time to deliver a great experience instead of chasing after personal information.
Two of the most important components of the new client onboarding and account opening process are Know Your Customer (KYC) and Anti-Money Laundering (AML). Both FINRA requirements are designed to prevent criminal activity and protect your firm and its clients from any illegal activity.
KYC requires advisors to “know and retain the essential facts concerning every customer and the authority of each person acting on behalf of such customer.” Firms must do due diligence to understand their customers and confirm identities before an account is opened. This includes collecting information like name, address, date of birth, and identification number. AML states firms must detect and report suspicious activity, including money laundering and terrorist financing.
These requirements are crucial in keeping your company honest, but they can be cumbersome and time-consuming in practice. Here is how to streamline KYC and AML compliance efforts to increase onboarding speed and efficiency.
Integrate Compliance Efforts into Existing Onboarding Processes
Your firm likely already collects all or almost all of the required KYC information when new accounts are opened. Instead of collecting information multiple times, consider integrating compliance efforts into existing processes to save time and effort.
KYC and AML can slow down onboarding when they are viewed as an afterthought and advisors have to repeatedly go back to customers to ask for information or double-check something they should already know. By integrating these processes into other onboarding systems, however, firms can get the information they need more quickly.
As you collect new client information to open the account, save it in a secure location designated for KYC and AML and then share it across secure channels. Instead of having separate systems for the onboarding team, back office staff, and compliance specialists, integrate all onboarding systems into one source of truth and share data so everyone has access to the correct information.
Don’t rush KYC or forget about it until the end. When firms try to rush through the verification process, things fall through the cracks and are more likely to be out of compliance. Take time to walk through the new customer journey, find where customers share information, and integrate KYC and AML compliance efforts into existing processes.
Digitize Compliance Efforts
Digital solutions have the power to significantly increase the efficiency of compliance efforts. Digital tools allow firms to collect customer information more easily, which streamlines the KYC process by gathering all the needed client information into one central location instead of having duplicate information in disparate systems.
Where digital tools really shine is by speeding up the verification process. Instead of manually hunting through public records to verify each client, you can quickly search online and even automate the verification process to search through online records databases. These automated digital tools allow firms to spend more time building client relationships instead of manually double-checking each piece of client information.
Keep it Simple
There are already plenty of moving parts when onboarding a new client and opening an account. And although KYC and AML are both critical pieces to the process, they don’t need to be overly complicated. Don’t feel you have to add more paperwork or numerous steps to the onboarding process to stay in compliance. Look where you are already getting the information you need for KYC and find a way to gather it in one spot to be verified.
When you feel overwhelmed by complex processes, your clients can feel it. And that’s no way to start a client relationship. Share with new clients why you are gathering and verifying their personal information. When they know the reasons behind sharing the information, they will likely be more willing to provide it promptly and build a trusting relationship with your firm.
Know Your Customer and Anti-Money Laundering requirements are crucial for all new customers. But they don’t need to overpower your onboarding efforts. Leveraging digital tools like Docupace and integrating compliance efforts into existing processes can keep your firm in compliance and protect your clients without adding unnecessary steps and stress. Find out more by contacting us today.
