How to create scalable and compliant international KYB processes

Industry experts discuss international KYB and debunk common myths while sharing how to build a scalable global KYB process.

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⚡ Key takeaways
  • Copying and pasting your current KYB process when entering a new country could lead to trouble down the road. 
  • You have to account for regional regulations, data consistency and availability, and local consumer expectations. 
  • Be adaptable and create international KYB processes based on your company’s goals and risk tolerance.

Expanding into a new global market can certainly be a reason to celebrate. However, it’s not usually a simple undertaking, as many industries, including financial services and online marketplaces, require compliance with international KYB regulations. 

To learn more, we talked about common misconceptions and pitfalls related to international KYB with Wale Ayantoye, vice president of risk management at payment technology company Flutterwave, and Liam Dickson, head of trust and safety at Handshake, a job marketplace for college students. 

We’ll recap some of the main discussion points and takeaways here, but be sure to check out the complete on-demand webinar if you’re exploring international expansion or rethinking your international KYB processes. 

Busting two big global KYB misconceptions

The discussion started with the panel highlighting two of the biggest misconceptions businesses tend to have about KYB when expanding into a new country or region:

  • You can reuse your current KYB processes: “You can’t copy and paste processes as you expand to new markets,” says Liam. “That’s the biggest misconception, particularly when you're working with other teams within your organization.” In fact, starting from scratch may be easier than trying to copy, paste, and then rework your existing KYB processes.
  • If regulators don’t stop you from entering the market, they’ll leave you alone: Local regulators might let you roll out, and they may even leave you alone at first. But don’t be fooled into thinking that means you’ll be exempt forever. “The longer you stay in the market without fulfilling the regulatory expectations, the bigger the fine becomes,” warns Wale. 

Four big challenges in international KYB

KYB regulations may require you to gather and verify identity information about the businesses and ultimate beneficial owners (UBOs) that are creating accounts or operating on your platform, which can be challenging in a few ways:

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Wrangling inconsistent data 

There are many official business registers around the world, and you might enter a new market that has a centralized database with everything you need. But not likely. Generally, you can expect to encounter a lack of available and consistent data as you try to connect to multiple databases with different formatting and datasets. 

Naming conventions for the UBOs can also vary dramatically. You can’t assume a business owner’s name will look like common names from your home country because names could have completely different characters or numbers of words

Wale points out that each jurisdiction will have unique challenges, and you can address them immediately or progressively. But either way, you’ll need to address them if you want to succeed. 

Managing different consumer expectations

Understanding local attitudes toward sharing personal information and identity documents can help you personalize your KYB flows in each country you want to expand to. It’s also always helpful to take a step back and remember that you may be asking someone to share very personal information about their business and themselves. 

Liam points out that unlike the risk mitigation steps companies might take, it can be relatively easy to defend data collection for KYB — you can tell your users that legally you have to collect this information to comply with certain regulations. 

Still, you may want to give context for why you’re asking for specific data, how you’ll use it, how you’ll store it, and the limitations on how you’ll use the information. 

Creating scalable processes

Your company might ask you to set up a quick-and-dirty KYB process for a launch, even if the process isn’t scalable yet. But see point one above about how copy-and-pasting KYB won’t work. 

Liam says getting involved in the initial kick-off calls can be helpful. Try to talk to a local expert, explain what you’re doing, and ask if they foresee any problems in their market. “When you can have that conversation really early, it allows you to iterate that process and make it as strong as possible pre-launch.” 

Jeff Sakasegawa, trust and safety architect at Persona, also suggests setting expectations with internal departments early on. “Let people know what you do and why you’re performing these KYB procedures,” he says. And be honest, even if it might dampen the mood a little. “I may not be able to onboard a business as quickly as you want, but it’s because we're actually doing our jobs well, and that'll save us a lot of headaches down the line.”

Complying with varying regulations

We’ve seen a lot of countries and regions introduce KYC and AML regulations over the last couple of years: from the INFORM Act to DAC7, the Digital Services Act, and more. And there may be some uneasiness as additional regulations are introduced. 

Liam says there are two things you need to remember:

  • Generally speaking, regulations are relatively easy to research. 
  • Your legal team should be your best friend. Send them something nice.

He also suggests building off higher-level regulations, even if you’re going into a market that doesn't currently have strict regulations. 

For example, in the U.S., use the California Consumer Privacy Act (CCPA) as a starting point. “Regulations are coming,” says Liam. “You have to expect that whatever the higher regulatory market is now, the other markets are going to come up to that.”

Focusing on KYB in new markets, Wale says he’s seen American companies be successful when they work with a centralized solution provider to find local partners in those markets so that regulators in the U.S. recognize the solution provider and regulators in the global markets recognize the respective local partners. 

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A few partings words of wisdom

Before answering a few questions from attendees, each panelist wrapped up by sharing a few parting pieces of advice:

  • Jeff highlights that there isn’t one clearly defined path to success. You need to be adaptable and build your KYB processes based on your specific internal and external considerations.
  • Wale reminds viewers that they need to research and understand how regulations differ in each country. And that the local regulators already know the pain points. He asks whether you’re going to be transparent enough to go to them and discuss issues to find a solution?
  • Liam takes a stab at a new acronym, REF: regulations, expectations, and friction. Research the regulations, understand consumer expectations and industry standards in that local market, and consider what additional steps you can take to stop bad actors. 

Watch the on-demand recording if you want to learn more about creating and managing KYB during global expansions. Or contact us to learn more about Persona’s international KYB solution.

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