Compliance Overkill Part 2: Onboarding Process

We focused on the topic that was identified as one that charities felt was their biggest challenge when dealing with international payment providers, namely ‘Compliance Overkill in the context of sensitive payments, opening an account, due diligence reviews, etc.

When it comes time to fulfil reporting obligations and regulatory requirements, FIs must show that they’ve properly conducted KYC (Know Your Customer) at onboarding and at times of sensitive payment activity. However, onboarding can be a painful experience for charities for a number of reasons, including piecemeal information requests, a lack of support through the onboarding paperwork completion process, and inappropriate or incompatible terminologies used in a payment provider’s questioning framework.

Following IPT’s continued engagement with UK INGOs, we spoke to one charity in January that was in the midst of its 7th (Yes! 7th!!) onboarding process in relation to financial service providers. What was more astonishing was that their onboarding process had been going on for over half a year at the time of speaking to us. Their most recent roadblock was that new trustees had moved into post since the onboarding process began, meaning that the financial service provider returned the charity to the beginning of their onboarding process. 

Charities are already tightly resourced from a personnel and time perspective, but the hours of completing paperwork, handling piecemeal back-and-forth requests, etc., when looking to access financial tools is yet another drain on very limited resources. While the financial sector continues with its drive to automate and digitise onboarding, which could greatly benefit charities, these processes cannot usually benefit them due to their often complex natures and associated risks. Charity applications always pose more questions than most and need a more case-by-case and specialised approach. So, how can banks and FIs become more accommodating of INGOs at the point of onboarding? 

The human approach is needed for the humanitarian sector when it comes to KYC, and it begins at the onboarding phase:

Site Visits

What better way to get to Know Your Customer than by spending time with them? We’ve made site visits a mandatory element of our onboarding process due to the huge number of benefits they produce. You get to meet the team you’ll be working with, get a feel for their values and team dynamic, and, most importantly, the best insight into the charity and its mission in person. Site visits also demonstrate a heightened approach to due diligence by any financial institution, so it’s a win for customer centricity AND compliance!

We Take the Workload

Applications shouldn’t be a box-checking exercise but an exploratory mission. Using our paperwork as a guide, we ask questions, take notes, and understand each organization’s nuances, before we complete the forms. Our clients all have a story to tell, and they’re all interesting! Charities are passionate about their work and love the chance to talk about it, so we feel it’s our job to take the time to listen and understand their challenges, which helps immensely with the paperwork completion process. 

Explain Why

It’s not always clear to charities from generic onboarding questions what the asks can be or what the requesting party wants to gain from the exercise. By conducting the exploratory questions in person, our prospective charity clients have every opportunity to ask “why?” – and let’s be honest, it’s always a great question! Not only does this enhance the charity’s understanding of our KYC responsibilities, but it also hugely reduces the level of piecemeal queries from the get-go.

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