Introduction
Asia – a continent rich in cultural diversity, home to more than half of the world’s population, and a melting pot of emerging economies. As the fastest-growing region worldwide, it stands out particularly in the realm of payments, where over $900 billion was generated in 2019 – nearly half the global total.[1] This serves as a testament to Asia’s robust digital economy and the increasing influence of its digitally-empowered consumers who seek seamless, swift, and secure payment experiences.
Within this dynamic payments ecosystem, the importance of robust client onboarding cannot be overstated. In a sector where transactions are carried out at lightning speed, it’s crucial that payment providers know exactly who is making and receiving payments. This is to ensure compliance with regulatory standards, prevent fraudulent activity, and mitigate financial risk. Failing to adequately verify the identities of those involved in transactions can result in severe consequences, including regulatory penalties and reputational damage.
The exploitation of digital payment systems by cybercriminals underlines this necessity. For instance, an estimated 10% of cybercriminals use PayPal to launder money, often employing micro-laundering techniques where multiple, small payments are made so that laundering limits aren’t triggered. Other digital payment systems, including Skrill, Dwolla, Zoom and M-Pesa are similarly implicated, being exploited by 35% of cybercriminals according to the same study.[2]
To thrive in Asian markets and satisfy the demands of both clients and regulators, reliable and intelligent automation is paramount during client onboarding. This blog explores automation as a strategic approach to real-time client onboarding, and its potential to unlock immense growth in Asian markets.
Complexities in the Asian Landscape
Regulations and Data
As payment providers chart their course in the fast-paced and diverse Asian markets, the reality of navigating the region’s diverse regulatory landscape can present a significant challenge, adding an intricate layer of complexity to the compliance process. Regulations pertaining to Know Your Business (KYB), Know Your Customer (KYC), and Ultimate Beneficial Ownership (UBO) are varied, and so too is the availability of data. For instance, China maintains a UBO register that provides accessible data for firms, simplifying the KYB process[3]. In contrast, Singapore’s UBO register is only available to law enforcement, which can complicate the process for firms which are not aware of where else to look. Meanwhile, Indonesia is planning to create a public and open UBO register, signalling a shift towards improved data access.[4]
The practices and principles around KYC, KYB and UBO are designed to ensure that firms acquire a comprehensive understanding of their prospective clients. This understanding, built on accurate and timely data, allows firms to reasonably infer clients’ intentions, ultimately serving as a preventive measure against fraud and money laundering. To succeed and remain compliant in Asia, firms not only need to know what data exists in each region, but also where to find it, how to access and operationalise it.
Language and Culture
While data accessibility and understanding regulatory nuances are significant challenges, language barriers further complicate matters. Asia is a linguistic mosaic with numerous languages and dialects. Comprehending business contexts, regulatory documents, and customer expectations often involves processing data in multiple languages. Operationalising this multilingual data can be labour-intensive, and the stakes are high – any translation errors could lead to misinterpretations, non-compliance, and potentially significant penalties.
Moreover, cultural nuances and business norms further enrich and complicate the Asian payments landscape. Asia, in particular, has seen an explosive growth in mobile and digital payments, driven by consumer preferences, technological advancements, and supportive regulatory environments. In China, for instance, mobile payments dominate the scene with Alipay and WeChat Pay leading the charge. In contrast, Japan still has a strong affinity for cash transactions[5], and in India, UPI (Unified Payments Interface) has revolutionised peer-to-peer and consumer-to-business payments[6]. Being aware of these regional payment trends and preferences not only impacts the design of payment products and services but also determines the approach towards customer onboarding and risk management.
Turning Complexity into Opportunity
These complexities have traditionally led to a disproportionate number of time-consuming enhanced due diligence (EDD) checks when onboarding Asian clients in the west. However, in the next sections we elaborate on why this no longer needs to be the case. A recent history of firms being deterred from committing to the Asian market has left huge opportunities for those who are properly equipped to deal with the known challenges.
The Power of Automation
In the context of the challenges previously outlined, automation emerges as a decisive solution, transforming the complexities of the Asian payments landscape into manageable tasks. For instance, understanding and navigating the diverse regulatory landscapes across Asia can be a daunting task. With automation, however, this process becomes far more manageable.
Pull and Structure
Automation can aid significantly in the data collection required to satisfy KYC/KYB requirements. Automated tools can pull essential data from various sources, including UBO registers, if they exist, or other relevant datasets. With live connections to these sources, the latest and most accurate data is pulled in real time. Furthermore, once this data is obtained, automation plays a crucial role in structuring and formatting it, transforming it into actionable insights for firms. This process not only allows for consistency and repeatability but also negates the need for humans to remember intricate data locations and execute the repetitive task of data collection and formatting.
Translate
Addressing the linguistic challenges present in the Asian market, automation proves equally instrumental. Traditional manual translations can be laborious, expensive and prone to errors. Automatic translation is a relatively mature application of software, and is being improved even further by recent developments in NLP[7]. Advanced translation tools, including Asian Optical Character Recognition (OCR) technology, take this even further, turning non-Latin scripts into machine, and non-native, readable text. This aids in comprehending business contexts and customer expectations, reducing the risk of potential compliance breaches that could arise from misinterpretations.
Utilise
Harnessing automation’s power goes beyond gathering and structuring data – it extends to intelligent utilisation as well. Sophisticated algorithms can be deployed to identify beneficial owners from complex corporate structures, greatly reducing manual effort. Visualisation of UBO structures can also be automated, presenting data in a format that analysts can readily understand and act upon. This automated data interpretation streamlines workflows, allows firms to glean valuable insights from the collected data, and facilitates the swift decision-making crucial in the fast-paced Asian market landscape.
Real-Time Onboarding
One of the most powerful facets of automation is its capacity to enable real-time onboarding and alerts. In the fast-paced world of digital payments, delays in client onboarding can mean lost business opportunities
and diminished customer satisfaction. Manual onboarding processes, prone to errors and inefficiencies, simply cannot keep pace with the high-speed, high-stakes nature of the Asian payments landscape.
Checks
Automation changes this paradigm dramatically. The data gathering, structuring, and formatting processes facilitated by automation – as well as automated translations and OCR technology – all contribute to a streamlined onboarding process that can occur virtually in real-time. Firms can process and verify client data swiftly, getting new clients up and running more quickly than ever before.
Alerts
In the same vein, the power of automation can be harnessed to set up real-time alerts. For instance, should a change occur in the KYC/KYB data of an existing client, automated systems can be programmed to flag these changes as soon as they happen. This feature facilitates proactive risk management, allowing firms to respond immediately to potential compliance issues rather than discovering them after they’ve become problems.
Customer Experience
Additionally, the use of automation in real-time onboarding can aid with customer experience, offering immediate feedback and guidance during the onboarding process. If a client submits incomplete or inaccurate data during sign-up, real-time alerts can prompt them to correct the information then and there, preventing delays down the line.
Conclusion
In short, automation provides firms with the speed, accuracy, and proactive control they need to effectively navigate the diverse and dynamic Asian payments landscape. By harnessing the power of automation for real-time onboarding and alerts, firms are well-positioned to seize the immense opportunities in Asian markets.
However, developing and implementing these automated processes in-house can be a near impossible task whilst busy with your core business operations and growth initiatives. The complexities of regulatory compliance, linguistic diversity, and cultural nuances demand a specialised solution that can reliably manage these challenges across a wide range of jurisdictions in Asia.
[1] https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/the%20next%20frontier%20in%20asia%20payments/the-future-of-payments-in-asia-vf.pdf
[2] https://threatresearch.ext.hp.com/digital-payment-systems-like-paypal-money-laundering-part-3/
[3] https://asiaverify.com/ultimate-beneficial-owner/china/
[4] https://www.adb.org/sites/default/files/publication/849876/beneficial-ownership-transparency-asia-pacific.pdf
[5] https://www.cashmatters.org/blog/why-japan-prefers-cash
[6] https://www.aciworldwide.com/blog/how-upi-is-driving-india-shift-from-cash-to-digital-payments
[7] https://blog.inten.to/translating-with-gpt-4-the-latest-the-greatest-561025cb761c?gi=bcf32cdc2c48#:~:text=GPT%2D4%20boasts%20significant%20improvements,systems%20for%20in%2Ddomain%20translation.
Produced by AsiaVerify in partnership with RegTech Associates
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