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What is compliance, KYC (know your customer) and digital client onboarding

The terms compliance, KYC (Know Your Customer) and digital client onboarding are currently trending and we see them pop up in a lot of news and articles. But do you really know what these terms are, how they relate to each other and whom they affect? If you are not quite sure about what these concepts are, in the following series of posts we will explain them in depth.

By: Sara Santajuana, Marketing Manager in Addalia

¿WHAT IS COMPLIANCE?

Compliance is an Anglo-Saxon business term that refers to the safety measures adopted by a company to fulfil its legal requirements, and also to the obligations it has with third parties (clients, suppliers, employees, etc.)

Compliance is an Anglo-Saxon business term that refers to the safety measures adopted by a company to fulfil its legal requirements, and also to the obligations it has with third parties (clients, suppliers, employees, etc.)
This fulfilment is especially important for Spanish companies, because, since the reform of the Criminal Code of 2010, they can be investigated as legal entities, as Carlos Galán explain in a series of posts about the legal responsibility of the organizations. Therefore, a company can be considered guilty of charge if it doesn’t establish the necessary mechanisms to identify and prevent risks. In the same way, it has to pay attention and react when policy noncompliance happens, focusing especially in the following areas:

  • Data Protection: a series of rules to protect the data and the new European Regulation, which will come into force in 2018.
  • Stock Market Law.
  • Law on Prevention of Money Laundering and Terrorist Financing..
  • Inside Guidelines and Commitments like Risk Management and the Corporate Social Responsibility.

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What is ‘know your customer’ (kyc)?

KYC (Know Your Customer) defines the supervising regulations and procedures of companies, so they can be sure of both the identity and the nature of their funds. The goal is to avoid establishing commercial relations with individuals or companies that might be committing money laundering crimes, terrorism financing and other type of illegal trade.

The regulations to which these companies are subjected demand from them a double identification of their clients at the time they apply for a new account:

  • Formal identification: which can be done with an ID input.
  • Real identification: in which case the company must make sure that behind the request for bank transactions there’s an individual or a company (so the nature of the trade can be confirmed). This process of real identification implies comparing the documents in order to assure that the given information is veracious.

To complete the required information in the KYC processes, the data must be kept during the acquisition of the client, as well as during the whole time there is an on going association between the company and the client. The companies must make sure too to have valid documents at all times and request new ones when these expire.

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what is digital client onboarding?

Digital client onboarding refers to the process of identification without the need of physical attendance which allows users to register as new clients in a fully digital way. This telematics channel benefits both the client and the company; the user saves time not having to go to the office and fulfilling forms and the company, using new technologies such as the biometric identification, knows for sure that the process of authentication is safe, automatic, fast and effective.

So here are the definitions of compliance, KYC and digital client onboarding. On the next post we will tell you how the three of them are related. Stay tuned!

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Addalia provides the only technology for collecting and administrating documents via images for critical business processes. Our software offers secure and efficient automated solutions, it is flexible and modular and can be deployed in a standard or cloud-based form. As an end-to-end application or a solution for integrators, Addalia’s software has infinite possibilities, such as:

STANDARD OR CLOUD-BASED
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