May 04, 2017FAQ: Compliance and Onboarding in the U.S.


It's no secret that keeping up with compliance changes has caused a number of headaches for banks across the U.S., especially when it comes to onboarding new customers. We often field questions from our clients wondering what they can do to maintain compliance despite an ever-changing regulatory landscape. To save you some frustration, we've compiled a list of our most frequently asked questions:

Anti-Money Laundering

Anti-Money Laundering (AML) is a group of guidelines, directives, and regulations designed to stop the practice of generating income through illegal actions. The nature of the services and products offered by the financial services industry namely managing, controlling, and possessing money and property belonging to others means that it is vulnerable to abuse by money launderers.

Why is AML important during the onboarding process?

Banks need to install control processes to comply with AML and to ensure that their customers are not breaching legislative requirements. At the account opening stage, banks must ensure that they’re onboarding a trustworthy client.

How does Appway Onboarding calculate an AML risk rate?

Appway Onboarding solves AML with a configurable rule engine that calculates a risk rate (low, medium, and high) for each participant in a banking relationship, as well as for the relationship itself. Typical risk factors include the total assets under management within a bank, industry sector, domicile or registered country, nationality or incorporation country, purposes of the relationship, PEP matches, and negative media matches.

How does Appway Onboarding handle different approval processes?

The AML risk rate is the most frequent indicator used to drive the approval flow of onboardings and updates. During the account opening process, the risk rating is calculated by considering all available data in real-time. Appway Onboarding automatically triggers approval processes once the risk rating is calculated. Banks can ensure that their procedures are followed and that clients are onboarded in line with their risk appetite.

Due Diligence and Background Checks

How are background checks completed with Appway Onboarding?

A client background check will be performed in real-time while onboarding the client. The results from the databases are also shown in real-time. If a hit occurs, the front officer must leave a remark next to the result to clarify if the hit is positive or false positive. With this information, a compliance officer can quickly understand why the front officer went forward with the account opening process.

After a hit, Appway Onboarding automatically sends the background check to the compliance department for a second review or follows the bank’s policy procedures. The whole process is documented in an audit trail to keep track of who made what decisions, what information the decisions were based on, and when the decisions were made.

What due diligence databases can Appway Onboarding connect to?

Appway supports integration with multiple due diligence third-party vendors, including but not limited to Lexis Nexis, World-Check, and RDC, as well as with any internal bank system or list. Integration with third-party vendors is an out-of-the-box feature. However, in order for Appway to go ahead with the integration procedure, banks must have agreements with the vendor.

What benefits does Appway Onboarding bring to the due diligence process?

With the integrated background check, front officers and compliance officers will be able to complete background checks entirely within the tool, ensuring a seamless and efficient user experience. With real-time background checks, banks can spot compliance issues very early in the onboarding process.

Dodd-Frank Act

The Dodd-Frank Act was established by the U.S. government after the financial crisis in 2008. It aims to protect investors and consumers from false investments and from buying banking products without knowing the risks.

How does the Dodd-Frank Act protect investors?

Appway Onboarding builds a profile based on a banking client’s knowledge of and experience with financial instruments. Built-in tools check for consistencies; the onboarding process will not proceed if data is incomplete.

How does Appway Onboarding ensure customers are offered the most appropriate products and services?

With a questionnaire during the onboarding process, the front officer will get a deeper understanding of their client’s risk tolerance and capability to bear losses. Using this information, they will be able to filter out suitable banking products that meet the client’s needs. Banks can categorize clients based on their profile. The data provided allows financial institutions to reach out to their clients and advise them in their best interest.


U.S. banks must follow FATCA requirements to check whether foreign clients are taxable according to U.S. tax laws.

How does a digital onboarding solution help banks adapt to FATCA requirements?

To address this regulation, Appway provides an out-of-the-box rule engine to capture and monitor FATCA indicias during an onboarding process. While information is logged into an Appway process, the rule engine runs in the background, automatically evaluating matches and comparing the information with predefined indicia—a U.S. phone number, an American birthplace, or U.S. nationality, for example. The system then assigns a U.S. or non-U.S. status to each person.

Is the FATCA rule engine configurable?

The FATCA rule engine can be configured: FATCA indicias can be added and changed per the requirements of the bank. A FATCA indicia can be overridden if the front officer can prove that the relationship is not FATCA relevant. Also, the approval process of such a relationship can be routed differently and a second line of defense can be installed to check if the information is consistent.

Governance, Risk Management, and Compliance

A model of ensuring governance, risk management, and compliance throughout a bank’s entire ecosystem, from the compliance and internal audit departments all the way up to management.

How can Appway Onboarding ensure compliance and reduce risks across all departments in a bank?

Appway helps you connect all relevant departments within the bank while centrally managing processes and information across the organization.

With a centralized orchestration layer, banks will be in the position to control and view the entire organization’s data and processes. The management can systematically achieve objectives while addressing uncertainty and acting with integrity.

What benefits does an integrated service layer bring to a bank?

An integrated service layer allows banks to standardize processes and create transparency and control within the organization. Using a centralized orchestration layer, banks can apply regulation changes to all interaction modes. This will lead to efficient organization and a better ability to focus on the customer while serving the needs of the regulator.

Know Your Customer (KYC)/Source of Wealth

Wealth managers need to know their customers. It is important to ask the right questions during onboarding in order to guarantee KYC data quality. Banks need to identify and verify their clients. They need to know where the source of wealth is coming from and how the client will transfer the money to the bank.

How does Appway Onboarding capture necessary information for KYC?

Appway Onboarding comes with an out-of-the-box question manager. This allows banks to set up all necessary question and answer fields dynamically and according to their specific needs.

With soft/hard validation, different validation levels can be set up for different fields within the KYC section. A hard mandatory field acts as a blocking field, meaning that the relationship manager must fill in information in that specific KYC field to continue the process. With soft mandatory fields, the process can continue but at a later step the relationship manager needs to fill in the KYC information to conclude the onboarding.

With the section manager, a section can be made mandatory and trigger an action. These components come with Appway Onboarding, which supports banks as they guide their relationship managers through the KYC process in a defined and controlled way.

How long is data stored?

The data is stored in Appway Onboarding as long as it’s needed for the onboarding process. After all approvals take place, the information is transferred and saved in a CRM system. When KYC reviews are performed, KYC data can be recalled from a CRM System. The front officer can then update KYC data with new information about their client.

Now you’ve gotten an overview of how Appway can unburden banks of their compliance frustrations. To learn even more, download Transforming Compliance: From Cumbersome Reality to Increased Efficiency.

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Written byIgor DjurdjevicBusiness Practice Manager, Appway