Navigating KYC, KYB, and RFIs: Your Compliance Guide

Embedded finance opens a world of possibility for businesses that want to attract, engage, and retain more customers. With early adopters increasing customer engagement and acquiring new customers, your mind’s no doubt racing with all the new revenue streams and product innovations you could create with this powerful new technology.

But before you go there, let’s shift focus for a moment to an equally important (but often overlooked!) consideration: compliance. For businesses embedding financial products into their existing offerings, licensing and regulatory requirements add layers of complexity, time, and cost to a project. 

By partnering with a payment provider who prioritizes robust onboarding and compliance processes, you’ll be in a better position to protect your business — and your customers.

Ready to get started?

First, we’ll guide you through meticulously designed industry best practices, including Know Your Customer (KYC) and Know Your Business (KYB) procedures, as well as Requests For Information (RFIs).

What do KYC, KYB and RFI stand for?

KYC and KYB refer to the process of verifying the identity and background of your customers — KYC focuses on individual customers while KYB pertains to business clients. In essence, it’s about delving deeper into the profiles of those using your platform’s embedded finance features. 

For example:

• Does your customer have a legitimate ID? Ensure the customer’s name, address, date of birth, ID documents, and source of funds align.

• Is your B2B client’s online presence credible? Legitimate businesses should have a functional website, along with verifiable legal registration details and tax records.

• Are there any high-risk indicators associated with your customer or clients? You may need to scan public records, sanctions lists, politically exposed persons databases when dealing with countries where fraud is prevalent or transfers to other money-holding platforms that obfuscate the flow of money. 

In cases where individuals or businesses fail to furnish adequate information initially, an RFI questionnaire must be requested by your payment platform. For instance, address typos or cut-off photocopies may require further clarification.

An RFI may request:

• Official forms of identification 

• Physical addresses and countries the customer collects money from 

• Transaction volumes and types of goods or services sold

That way, you can assess the customer’s risk profile and demonstrate regulatory compliance. 

Why is it important to perform KYC/KYB on your customers?

While everyone desires seamless transactions for well-meaning, loyal customers, expedience carries inherent risks. With bad actors out there, stringent global regulations like Anti-Money Laundering (AML)/KYC laws compel businesses to uphold higher standards in verifying customer identities to curb corruption, money laundering, and bribery at scale. 

Even with a payments partner in place, the onus is still on you to onboard only compliant customers. By following compliance policies and regulations, your business can avoid fines and safeguard its reputation, avoiding pitfalls such as loss of consumer trust or business partnerships.

The stakes are high. Consider this: Failure to establish appropriate KYC/KYB procedures cost Dutch bank ING a staggering $900 million — one of the largest settlements in the Netherlands and a stark reminder of the consequence of corporate negligence. This crackdown on non-compliance now costs global businesses $6.6 billion in fines annually.

Are security and user-friendliness mutually exclusive?

A common concern lingers: Does prioritizing security compromise user experience? Will asking customers to “jump through hoops” prompt them to seek out competitors with less stringent requirements? 

Striking a balance between security and customer experience is the only way to foster their long-term trust and your long-term success. The good news? It’s possible for businesses to proactively adapt to revolving regulations and technologies, achieving frictionless experience while protecting customers at the same time.

How can Airwallex help protect your business—while improving your customer experience?

Airwallex provides a variety of solutions and onboarding offerings, to ensure that you can achieve the balance between security and customer experience regardless of your needs.

Our solutions include:

• Global KYC, AML, sanctions screening, and identity verification. Transaction monitoring, AML technology, and regulatory-facing obligations are also handled by Airwallex.

• Real-time global risk engine scouring every transaction, so protection remains robust long after the initial background checks.

• Automated onboarding with KYC STP (Straight Through Processing): Swiftly clear geo-specific KYC requirements with our proprietary solution that auto-enriches data and processes applications in seconds, offering a hassle-free experience for customers.* 

With multiple options to onboard your customers, choose the one that best fits your needs: 

• Hosted onboarding: Effortlessly guide users to an Airwallex designed and hosted web form, optimized for increased conversions. You will still be able to customize the visual appearance of the onboarding form to reflect your brand!

• Embedded KYC/KYB/RFI component: Sign up customers from across the globe using a simple, streamlined, ready-made integration that adapts automatically to comply with regulations specific to each geographical area and industry.

• Native accounts API: Fully control the onboarding experience, integrating KYC requirements into your everyday workflows with ease by leveraging Airwallex’s APIsFinally, familiarize yourself with our acceptable use policy to be aware of restricted and prohibited industry flags and/or sanctioned country exposure that can lead to RFIs or rejections. Being aware of this upfront lets you know what to collect from customers so they can pass through the onboarding process as smoothly and quickly as possible.

By prioritizing both security and user-friendliness, your partnership with Airwallex ushers you through the maze of compliance complexities with ease, fostering trust, and longevity in this ever-evolving world of finance.

*Note: KYC STP eligibility criteria apply.