Customer onboarding is the process of collecting, verifying, and assessing the information of a potential client to ensure that they meet the legal and regulatory requirements for entering into a business relationship. The customer onboarding process is a crucial step in the financial services industry as it helps to mitigate the risk of financial crimes such as money laundering and terrorist financing.
The process can involve a number of steps, including identity verification, risk assessment, and compliance checks. Identity verification involves collecting and verifying personal information such as name, address, and date of birth. For companies, this may involve identifying the beneficial owner (UBO); the individuals or entities who ultimately own or control a company. The beneficial owner, who may be different from the legal owner or the director. Financial Institutions may request documentation such as a shareholder register or ultimate beneficial owner (UBO) declaration, or use services such as FullCircl to do this automatically.
As part of the client onboarding process, compliance checks are conducted to ensure that the potential client meets legal and regulatory requirements, such as anti-money laundering (AML) and Know Your Customer (KYC) / Know Your Business (KYB) rules.
The client onboarding process can vary depending on the financial institution and the nature of the potential client's business. However, it is generally a comprehensive and thorough process that requires the collection and verification of a significant amount of information. The importance of client onboarding cannot be overstated as it helps to protect financial institutions from the risks associated with financial crimes and non-compliance with legal and regulatory requirements.