For start-up companies still in their early stages, compliance can be one of the most frustrating tasks to accomplish — especially when growing a customer base and planning for global expansion.
Compliance solutions offered by FinTech partners are an excellent way to achieve real-time compliance models that are beneficial to both the business and its customers. Through advanced technologies and automation, a start-up can stay on top of evolving regulations without having to dedicate an entire department and its resources to compliance activities.
When searching for a compliance solution for your start-up, it is essential to know what to look for. In this article, we discuss the challenge of compliance for start-ups, as well as 6 key factors to keep an eye out for when choosing your compliance management solution.
In the early stages of a start-up, compliance needs can often fall to the wayside in favor of business growth initiatives, marketing, and building a clientele.
However, the legal requirements of compliance do not lessen just because your business is a start-up.
Early-stage start-ups with only a few employees and a small pool of customers are still subject to the same compliance regulations as larger companies and corporations — especially when it comes to anti-money laundering (AML) and Know Your Customer (KYC) regulations.
Yet, meeting compliance standards can be quite a challenge, particularly for small start-ups without very much capital to work with.
According to McKinsey & Company:
“Most AML activities require significant manual effort, making them inefficient and difficult to scale. In 2018, it cost U.S. financial services around $25.3B to manage money laundering risk.”
With the high cost associated with manual AML strategies, start-ups can easily fall victim to money launderers and other bad actors who target small companies and take advantage of the fact that they do not have well-established, consistent AML and KYC processes yet.
Here are 6 key factors to look for when searching for a compliance solution:
One of the trickiest components of compliance to deal with is the many moving parts associated with the compliance process.
When you are dealing with large amounts of customer, business, and partner data all coming from different sources, keeping this information organized can be a hassle. Moreover, dealing with multiple vendors, un-optimized workflows, and disconnected data systems makes it incredibly difficult to stay ahead of the regulatory curve. Employing the right regulatory compliance solution is a proactive approach to handle this multifaceted process, reducing complexity and enhancing organization.
To solve this challenge, it is essential to invest in an integrated compliance solution that allows for an end-to-end, streamlined process all from one central platform.
As you research different compliance solution providers, an important feature to look for is a well-organized dashboard that is easy to use and includes all the necessary functions for compliance.
From a compliance dashboard, you should be able to easily:
Finding a compliance solution that spans a wide range of regions is beneficial — and in today’s global economy and industries, it is often a necessity.
As your start-up gains traction in your industry, it is crucial to consider the specific compliance regulations in your region or country. Not only this but you must also consider what your plans for growth are and what future jurisdictions you may venture into.
While there are similar compliance regulations and requirements found around the world, each nation or region has slight differences in its compliance standards. Additionally, customers in certain areas of the world are deemed to be at higher risk, making it highly necessary to carry out thorough AML and KYC procedures for these customers.
Ensuring that not just your current jurisdictions but also potential future jurisdictions you plan to expand into is, thus, critically important.
Automation is the future of compliance.
In years past, start-ups depended on manual processes carried out by full compliance departments. For small, early-stage start-ups, developing and onboarding this compliance team often proved to be costly and unrealistic with their given capital and resources.
Nowadays, advanced compliance solutions leverage high-end technologies — like artificial intelligence and machine learning — to automate the entire compliance process. While tech professionals are still generally required for the implementation and management of an automated compliance system, the burden placed on your business is much lower compared to manual methods.
Plus, automated compliance models are highly effective when it comes to keeping up with newly released regulations across the globe. An automated system ensures your compliance model is always up to date.
It is of the utmost importance to keep your customers in mind when selecting a compliance solution.
Sometimes, compliance solutions may offer the advanced technologies you need to boost efficiency but lack the proper front-end optimization needed to delight your customers.
A good user interface should make the tasks completed by the customer as simple and straightforward as possible. Through the use of automation, low-risk customers can be more easily approved and you can avoid putting forth burdensome AML or KYC assessments on these customers.
Likewise, you can keep better track of your higher-risk customers without making them feel alienated.
Last but not least, make sure the compliance solution you select has automation technology that extends into its alert and notification system.
Without a manual compliance or risk department, automated alerts are crucial for keeping you aware of current risks your company is facing. Moreover, automated alerts help to ensure you are immediately updated in regard to new AML, KYC, or other compliance regulations.
Additionally, your compliance solution should employ the proper technologies to avoid false positives or irrelevant alerts, enabling your business to maintain a high level of productivity and efficiency. With the right compliance software solutions, you can enhance your automated alert system and easily stay abreast of potential risks or regulatory changes.
At KYC Hub, our end-to-end compliance and due diligence platform offers you the capabilities needed to protect your start-up from financial crime.
From frictionless onboarding and an optimized dashboard to continuous monitoring of customers at both the individual and corporate levels, our integrated compliance solution has everything your start-up needs to stay ahead of the regulatory curve.
To get started with KYC Hub, contact our team today.