Managing AML/CFT risk for Instant Merchant On-boarding.

ekyc, instant on-boarding, digitisation, fintech, regtech, sandbox – these are the buzz words that are often thrown around. Spoken by many but understood by few.

Every payment provider is looking at some form or shape ways to reduce the time to issue QR codes, install contactless terminals or provide access to their internet payment gateway. Some banks have even attempted to slap on a “web form” and subsequently calling it a day.

Here are the nuts and bolts to make your instant merchant on-boarding closer to reality.

The golden SEVEN in mitigating AML/CFT risk

Let’s begin with FATF (Financial Action Task Force) guidance for a risk based approach for New Payment Products & Services (NPPS). The inter-governmental body have published guidelines on how to mitigate AML/CFT risk specific to NPPS.

In the following FATF-NPPS risk matrix table, there are total of seven broad criteria and we have mapped out the content in lowering the risk score for each of these.

(Click to enlarge)

Step 1: Form your BART team

FATF guidance actually recognises the need for a risk based approach on NPPS given that an overly cautious approach to AML/CFT set of controls may result in unintended consequences of excluding entities from the financial system and thereby compelling them to use services that are not subject to regulatory and supervisory oversight.

The very first thing that needs to be done is for stakeholders within your organisation is to form a steering committee with senior leaders from the payments business, audit, risk and technology (Let’s call them BART). A senior management buy-in is a must as a successful NPPS project will require risk based approaches that will likely entail policy changes.

Start by stating the business objectives. Be specific. Instant on-boarding can mean many things to many people. State clearly if it’s instant approval, provisional approval, instant collection, instant activation, next day etc.

Step 2: FATF Risk Matrix mapping

A risk based approach requires your BART committee to focus on risk exposure mapped to the probability factor. Implement all the required controls to mitigate this exposure. A BART team that consist of experienced risk professional team members will be able to propose sophisticated controls to not only address AML/CFT requirements but also fraud risk and new business requirements.

For example, on the value limits risk criteria, you should consider having dynamic transaction amounts and frequency limits based on merchant categories; where more stringent controls are implemented on new accounts vs. known accounts. These controls should be as automated as possible.

Step 3: Use technology to enable your process and controls

The technology should support the processes and controls that you wish to implement. NOT the other way around.

Work with a technology provider that understands how to enable your payments business. There are lots of ground to cover as far as AML/CFT is concerned. Having deep tech and deep expertise across payments risk management will make the journey towards instant on-boarding a lot smoother. A robust origination platform will allow you to implement flexible AML controls, talk to other core systems, manage legacy platforms and deal with exception flows.

The biggest mistake that a financial institution can make is to first purchase some payment technology that has a “KYC” / “Digitisation” module and then figuring out how to make everything else revolve around it.

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10 Sep / 2018

Let’s Connect at Mastercard

Looking for an e-Commerce merchant protection solution that’s pocket-friendly yet big on features?

Come find us at the 2018 Mastercard Global Risk Leadership Conference and let’s chat!

 

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30 Jul / 2018

Japan’s largest payment processor, GMO Payment Gateway leads Series A+ round in Jewel Paymentech

Singapore (15 March 2018) – Jewel Paymentech (“Jewel”), provider of risk intelligence solutions to payment networks, banks and payment gateways has secured Series A+ funding led by GMO Payment Gateway Pte. Ltd. (a Singapore subsidiary of GMO Payment Gateway, Inc. (TSE: 3769)). The firm’s existing backer Tuas Capital Partners Pte. Ltd. also returned to co-invest in this round.

As digital payments begin to transform Asia to a cashless society, Jewel’s suite of solutions is set to tackle the different challenges faced in digital payment acceptance. These include making merchant signup instantaneous, onboarding of small merchants, allowing merchants to be more mobile across countries and making payments safer through fully automated risk technologies.

This new funding will support Jewel’s market expansion plans as well as to accelerate the development of new deep learning AI technologies to facilitate the cash to cashless conversion.

As part of the investment from GMO-PG, Jewel will also form a partnership that will see Jewel products being rolled out in the Japan market. CEO of Jewel Paymentech, Sean Lam said, “We’re extremely excited with the capital alliance formed with GMO-PG, which will enable to us to penetrate new markets in Asia region.”

 

About Jewel Paymentech

Jewel Paymentech is a financial risk technology company founded in 2014 with a mission to develop intelligent risk solutions for the banking and electronic payments industry. Jewel provides a complete suite of intelligent solutions to solve gaps in ePayment acceptance such as instant on-boarding, merchant due diligence, transaction laundering, counterfeit & illegal product management as well as transaction fraud management using predictive analytics.

Based in Singapore with offices in Malaysia and Hong Kong, Jewel currently provides ePayment AI risk management to the region’s largest banks and payment networks.

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15 Mar / 2018

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