Balancing the jewellery customer experience and AML compliance requirements
Bachir El Nakib
Balancing the jewellery customer experience and AML compliance requirements
Banks, financial institutions, and DNFBPs need to comply with national and global AML/CFT regulations. Even customers judge companies based on their compliance with regulations. So, complying with AML/CFT regulations is your legal as well as ethical duty that also builds trust in customers’ minds.
The KYC, CDD, and risk assessment measures under these regulations require you to collect information on customers before onboarding them. You must maintain these records and keep updating them. You also need to assess the risk levels of all customers to prepare a risk profile. But, the problem arises when in the process of complying with these regulations, customer experience suffers.
This is a serious problem for jewellers because there is heavy competition in the jewellery business. And customer experience is a key point of differentiation where you can gain an advantage over your competitors. If you do not involve in KYC, you may face money laundering risks; if you spend time on KYC, your customers may be disappointed.
Let us explore how customers experience difficulty and what are the possible solutions to improve it:
Why is KYC essential in the jewellery business?
- Customers might pay in cash for large jewellery purchase transactions. The source of this money is unknown and unaccounted for.
- There is a possibility of customers selling stolen jewellery in the market; its source is not known.
- Money launderers use jewellery as a form of currency to exchange it with other financial products that might be illicit.
- Cross-border and multi-jurisdictional jewellery transactions with different compliance requirements that have the involvement of money launderers or criminals.
With all these possibilities, it becomes essential for jewellers to practice the principles of AML and CFT. Specifically, knowing your customers is critical to reducing the likelihood of money launderers’ involvement. Jewellers must also review the existing customers’ accounts and identify gaps in the onboarding process to ensure compliance with KYC.
What problems arise in the KYC and CDD process of jewellers?
When potential customers come to the shop for purchase, you do not know anything about them. When they are trying to make a purchase, you stall the process midway to obtain all information about them for KYC.
Getting information such as name, contact details, profession, and proof of identity is the easy part of the process. Still, some customers would not like to divulge all this information for fear of data leaks.
The process becomes longer when jewellers collect more detailed information such as the source of funds, beneficial ownership, etc. Jewellers would then go on to perform another step of comparing the customer details on Sanction Lists, PEPs, and terrorist lists of governments.
All these KYC and CDD steps take a longer time to complete. This may irk the customers who may just want to do away with jewellery purchasing.
All these steps show that jewellers’ focus remains on complying with the regulatory obligations. The pressure from the senior management and fear of reputation risk also makes them pay attention to compliance.
But, due to this, they compromise the customers’ experience during the onboarding process. The jewellers do not value the customers’ time and efforts in coming to the shop. Such experience may lead to customers turning to other jewellers.
Can automation of KYC, CDD, and risk assessment procedures improve customer experience?
The best possible solution to improve customer experience would be the automation of these processes. You can automate the KYC process during customer onboarding as well as integrate customer relationship management with it. You can use the same data as customer intelligence to market your products to customers.
Automation will include asking customers to fill up the digital forms and submit their verification documents. You can also add other evolving technologies of artificial intelligence and machine learning to enhance the processes, specifically for streamlining the risk assessment and risk management processes.
Automation makes the handling of data easier and reduces human error. Thus, you can maintain customer data speed, accuracy, and reliability. And automation also helps you create a 360-degree view of the customer with verification from different sources.
Such automation improves your customer onboarding process, which builds customers’ trust in you. Thus, it’s not about compromising customer experience for regulatory compliance or vice versa. With automation, you improve your KYC and CDD processes that help you comply as well as improve customer experience.
Conclusion
Both customer experience and regulatory compliance are necessary. If you practice the former, it brings you good business. For the latter, you have no option because it is a legal obligation.
But regulatory obligations cannot be the reason to worsen your customer experiences. Jewellers must find a good balance between regulatory compliance and excellent customer experience. And, since automation is a sure-shot solution for it, adopt it and make your customers and regulators happy.
You start with automation of your customer onboarding processes. This improves customer lifecycle management that guarantees higher customer engagement. Thus, you have a competitive advantage over other jewellers.
Keep in mind that the primary purpose of automating your processes is to improve customer experience with no compromise on achieving compliance with AML and CFT regulatory
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