How To Choose A KYC Provider For An African Business
Over 80 financial institutions worldwide paid $2.7 billion in fines for anti-money laundering (AML) violations in 2021, averaging $34,151,237 per institution. However, these businesses had a common flaw, which was a weakness in their customer verification procedures that may be exploited for fraud and other nefarious financial activities.
Some African businesses have had a share of this oddity as leading financial institutions like GTBank and Access Bank have been hit with substantial fines for violating anti-money laundering (AML) and counter-terrorist financing (CTF) rules at various points in time, thus emphasizing the need of AML and CTF compliance.
However, what underscores all these contraventions and huge fines is not paying good attention to know-your-customer (KYC) rules and procedures for monitoring every business customer’s activities. While KYC checks are frequently linked with banks and other financial institutions, practically all firms that make payments or engage entities to make payments on their behalf require a KYC procedure.
Therefore, it has become essential for various payment platforms, fintechs, brokers, and wire transfers to make KYC a vital part of their onboarding and monitoring process. As such, African businesses must seek the services of KYC providers to help ensure their compliance with KYC rules to forestall fines and other sanctions.
As a sequel to this move to be KYC compliant, this article guides African businesses on choosing a KYC provider.
Who Needs KYC Service?
KYC service is available for businesses with a large customer base, which is always from medium to large-sized companies. So institutions that require KYC service are:
- Banks and other financial institutions
- Insurance companies
- Crypto industry
- Gambling companies
- Money transfer services
- Brokerages that offer trade securities and investment advice
- Travel businesses
How To Choose The Right KYC Provider For An African Business
- Establish Your Compliance Needs
A business must prepare its compliance plan before selecting the correct KYC service provider. This well-established plan would enable the company to grasp its specific compliance requirements. You can now see through different KYC providers to choose the most appropriate for your business.
However, it is possible to have a rocky beginning as a new start-up, but you can seek the advice of a professional compliance specialist in this regard.
It should be noted that there are KYC platforms today, but not all of them are suitable for every business. This is because some companies might need to update or upgrade their current systems, while others could require brand-new ones. Therefore, the best way is to figure out the ideal KYC platform for your business, which you can achieve by speaking to industry professionals for guidance.
- Weigh Your Options And Figure Out The KYC Provider
Market research should be done once the business completes its compliance plan. However, choosing the best-fit KYC provider may seem challenging due to the increasing demand for compliance software with a growing number of new KYC service providers in the market.
However, you can spot the suitable KYC provider in the crowds of providers by understanding anyone who piques your interest. So, endeavor to spend quality time checking the provider’s customer reviews, websites, or social media pages.
- Certification Of The KYC Provider
Certification and accreditation are verification procedures carried out by a neutral third party. This process strictly determines whether the KYC service provider satisfies specific proficiency, experience, and integrity standards.
Since accreditation assures businesses that their customers receive the proper knowledge and credibility, many financial institutions will only cooperate with recognized service providers.
Some of the advantages of using an accredited KYC provider are:
- Better assurance that all customer data is securely stored and easily accessible when required by regulators
- Reduction in the risk of noncompliance with regulatory requirements
- Application of sophisticated technological innovations
- Available Customer Support
A critical factor in your business success is the availability of a support team. You can prevent common mistakes and better understand how to incorporate compliance into your business model by working with a support team with a wealth of knowledge and experience.
When selecting a KYC service provider, you must consider the number of support staff available to assist with questions. While some businesses may offer a single line for all inquiries, others might have separate departments for customer service, technical support, and other questions.
Whether or not the company has adopted a digital strategy in its operations will depend on the business size.
- Flexibility Of The KYC Provider
Consider the service provider’s flexibility when selecting a KYC system. You must ensure that their system can change and grow with your company. This means it must be scalable and give you access to the data you require for onboarding or when making risk management decisions.
For instance, determine if the provider offers a Know Your Business (KYB) procedure if you intend to onboard natural persons and legal entities.
Why You Should Build Your KYC With Peppa
Peppa allows businesses to provide their users with KYC options necessary for their onboarding process. You can use Peppa to access your customer’s biometric data, AML data, financial data, etc., for identity verification and onboarding. We also have KYC APIs, which you can integrate to build a custom onboarding system for every navigation of customers in your business.
Conclusion
KYC is an important procedure for every customer-centric business, but getting a suitable KYC provider is of more importance. The provider must align with your business plan and the existential KYC requirements. Otherwise, there may be an imminent sanction irrespective of the KYC provider hire.
However, businesses must consider the above factors when seeking a KYC provider.
