KYC Remediation - how to effectively reverify the identity of existing customers

by Vicky Brien

In the aftermath of several financial services firms being fined over their AML processes, many companies are turning to HooYu to help them solve the challenge of reverifying their customers. In this blog, we explain how you can effectively reverify your existing customers, as mandated by the AML regulations, and how you can manage fears of identity theft and phishing when asking your customers to reverify.

Customer Verification

Reverification of existing customers is mandated in Anti-Money Laundering regulations across the globe. Firms both big and small have fallen foul of the regulators when they have investigated firm’s approaches to reverification of existing customers.

What do the regulations say?

As identity verification experts (and AML regulation geeks!) we’ve examined the regulations to discover what merchants need to do in order to comply with the regulations. There are lots of different areas within the regulations but it is in Part 3, Section 27 of the regulations you need to be aware of:

(a) any indication that the identity of the customer, or of the customer's beneficial owner, has changed.

(b) any transactions which are not reasonably consistent with the relevant person's knowledge of the customer. 

(c) any change in the purpose and intended nature of the relevant person's relationship with the customer. 

(d) any other matter which might affect the relevant person's assessment of the money laundering or terrorist financing risk.  

In other words, reverification is down to the Merchants risk-based approach. One size does not fit all and it will solely depend on your internal business processes, so whatever triggers occur (and by triggers, we mean changes in customer behaviour), the reverification process must happen.

Triggers can include:

- If the identity of the customer or beneficial owner has been changed
- Any inconsistencies in transactions or unusual financial behavior
- Change in business product/relationship
- Any additional matter that might affect the customer’s record under the AML regulations.

It’s important to remember that reverification has to be carried out during and at the start of your customers’ lifecycle.

Why is reverification such a large challenge?

As so many firms are aware, reverification is never an easy task and can often be a complex one.

- Many firms struggle to re-verify their customers due to customer fear of identity theft and phishing scams

- Many customers challenge why they’ve been asked to re-confirm their identity, saying that they “have been a customer for years”

- Many firms have masses of customers that were on-boarded before 1995 when new regulations were introduced

- Over time many firms have upsold customers to new products yet these customers were originally onboarded with a lower level of Customer Due Diligence commensurate with the risk relating to the original product or relationship

In today’s age of scams, fraud, identity theft & data breach, how can merchants effectively ask their customer to provide KYC info without the worry of their customers assuming it’s a scam?

Put yourself in your customer’s shoes

How do you currently communicate with your customers and for each of these channels, how likely is it that the customer will know that it really is their financial services provider that is asking them to reconfirm their details?  Is there a particular channel that carries an increased fear of identity fraud? For example, how confident do customers feel about being messaged via their online banking facility versus receiving an SMS from somebody that purports to be their bank?

Incentivise customers to undergo reverification

What’s in it for your customers in order for them to reverify? Creating incentives for your customers will encourage them to engage with you, whether it be playing on the dreaded FOMO of a new product or feature, or being creative with your communications, using different tactics to entice them will encourage them to provide the necessary identity information to be re-verified.

Tell them what you're going to tell them, tell them, & then tell them what you've told them!

Reinforcing the message to your customer at the right time through the most appropriate communication channel will help to remind them and segment in their mind about reverification. Create a multi-phased communications strategy to reach your customers at the right time with the right message.

Prepare your business for queries

Once you’ve reached out to your customers, it’s inevitable the questions will come flooding in, and that’s ok. Prepare your business for inbound queries and prep your team for pro-active outbound communications, proving the right answers and the right resources for your customer so that they know  that request from to reverify their identity really is them.  

Invest in technology

The HooYu Identity confirmation platform is designed to speed up this process. The reverification process will be simpler and more efficient for your customers. Our platform has been designed to help merchants overcome the worry customers have when it comes to re-confirming their identity. HooYu seamlessly fits into the reverification process.

There will come a point when your customer will need to re-verify their details, but by following our top tips your customers will feel confident and safe to carry out the process.

Catch-up on our on-demand Remediation Webinar here, to find out more about reverification and how HooYu can help.

Vicky Brien

Senior Marketing Executive