In the field of client onboarding, there are two often overlooked processes, Client Classification and Suitability & Appropriateness Assessments. Streamlining these two processes can result in significant benefits to a financial institution’s compliance program, turning it from a cost-centre to a competitive advantage.
These processes are now quite high on the priority list of regulators, especially given the focus investor protection, and therefore getting them right will prevent negative regulatory attention. What’s more, streamlining these processes, which are also classic “bottlenecks” at financial institutions, means that firms can onboard clients faster, smoother, and from more jurisdictions, as well as trade more financial products with them.
According to Muinmos’ newly published white paper, “Want to Turn KYC Client Onboarding into a Competitive Advantage? Start with Cross-Border Client Classification, and Suitability and Appropriateness Assessments” an excellent compliance program not only protects the firm from regulatory pitfalls and shelters it from regulatory retribution, but also actively helps it grow.
Making More with Less
Of course, all compliance teams strive for excellence; but all also have limited resources. The most successful compliance programs are the ones which have been able to identify the specific areas in which they need to focus their resources in order to achieve this ‘double impact’ – both mitigations of negative outcomes and contribution to the overall positive outcome of the firm.
Being able to identify areas which regulators focus on is paramount, enabling financial institutions to align with regulatory priorities. It is also important to examine the firm’s existing compliance program and map its interfaces with the firm’s other functions and processes.
It is impossible for compliance programs wanting to avoid negative regulatory attention to operate without a well-ordered, thought-through Regulatory Classification process which includes Cross-Border Client Classification, and comprehensive product and service specific Suitability and Appropriateness assessments. These are complex processes but lie at the heart of both investor protection and business decisions.
For most financial institutions, both Cross-Border Client Classification and Suitability and Appropriateness Assessments are currently highly manual, highly time-consuming and usually performed only by specific personnel, like Legal or Compliance teams. And for most financial institutions, these are the makings of a classic bottleneck and business-inhibitor. A “traffic jam”, so to speak. On the road, whenever a traffic jam is resolved, traffic flows faster, smoother, and more motorists reach their final destination. The same effect occurs when solving an onboarding bottleneck – i.e. in this case a faster onboarding process and therefore improved conversion; a smoother onboarding process and therefore a better first impression and increased customer brand loyalty; and more clients onboarded overall.
Our White Paper delves into the complexities of Cross-Border Client Classification and Suitability and Appropriateness Assessments and covers essential strategies for a financial institution for enhancing their KYC client onboarding processes. It covers insights into optimising KYC processes and best practices for leveraging compliance as part of a business strategy. Visit Muinmos White Paper: Unlock Faster Client Onboarding to download it.
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